The Botswana Development Corporation this week dismissed charges of conflict of interest in Odirele Merafhe serving in the corporation’s board while he is Chief Executive Officer of one of their biggest competitors.
Merafhe is the Group Chief Executive of Cash Bazaar Holdings ÔÇô a parent company of New Africa Properties (NAP) which holds Cash Bazaar’s property portfolio.
The company is in direct competition with BDC’s ÔÇô Letlole La Rona.
The NAP is Botswana’s biggest property company, which listed late last month with an opening market capitalisation of P1.2 billion, believed to be double the size of the Botswana Stock Exchange’s property sector. It represents a consolidation of the property interests of Cash Bazaar Holdings and partner companies.
The underlying portfolio consists of 65 properties, mainly retail centres, in Botswana and Namibia. Locally, the NAP’s property portfolio includes River Walk Shopping Centre, River Walk Plaza, Kagiso Centre, Mafenyatlala Mall and Gaborone Shopping Centre.
Letlole La Rona, the BDC property investment company, had listed on the BSE about three months earlier than the NAP. The BDC had said at the time of the listing that the main purpose of the private placement, public offer and listing was to allow Botswana institutions and citizen individuals the opportunity to own and participate in property investment, development and management.
Letlole la Rona is valued at P420 million, with 19 properties representing its portfolio, which include hotels, warehouses and factory shells in Gaborone, Francistown and Selebi-Phikwe.
Merafhe declined to speak to the Sunday Standard and referred enquiries to the corporation.
“Please direct your questions to the BDC Board Secretary,” he said.
A conflict of interest can arise when an employee has interests that may make it difficult to perform his or her work objectively and effectively.
The corporation, however, denies the possibility of a conflict of interest arising against the backdrop of Merafhe sitting on its board of directors while his company competes with that of the BDC.
“Mr Merafhe was duly appointed by the Minister to sit on the Board of BDC. He is not considered a rival and his strategic contributions to the Corporation through his membership on the Board are valuable. Mr Merafhe’s interests are disclosed in the Directors Interests Register. In addition, he declared his interest in Cash Bazaar Holdings whenever Letlole La Rona formed part of the agenda item to the extent of recusing himself from the meeting. Letlole La Rona has an independent Board of Directors, which guided the listing of same,” said the BDC spokesman, Gomolemo Zimona.
Asked how the BDC guards against the possibility of rival companies whose directors are members of the BDC board of directors using inside information to their advantage, Zimona said the confidentiality clause protects such.
“The membership of the BDC Board consists of individuals from different industries with professions and skills. We are confident that such professionals and directors know the duty of confidentiality espoused in the Companies Act, and would not under any circumstances breach fiduciary duties and principles of good corporate governance,” said Zimona.
The BDC spokesman said through guidance of the BDC Board, the Corporation from time to time comes up with policies aimed at promoting citizen empowerment, growth of the private sector and economic diversification.
“One of such policies is BDC’s Divestment Policy, which directs the Corporation to continuously review its portfolio with the view to divest from its mature investments while seeking new investment opportunities. It is this policy which guided the formation and subsequent listing of Letlole La Rona on June 15, 2011. This was another empowerment move by the Corporation and its Board of Directors following the listing of Cresta in June last year to enable Batswana to participate not only in the ownership of BDC investments but also in the economy at large,” says Zimona.