Wednesday, June 12, 2024

Inside the BDC cesspool

Fresh information has emerged on how Botswana Development Corporation (BDC) ditched a world class company with experience spanning five decades for an upstart competitor company that charged more than double the price for setting up the controversial float glass plant in Palapye.

The Telegraph has raised documents detailing a quotation from China Luoyang Float Glass Group (CLFG) complete with a letter of commitment. CLFG which is the birthplace of Luoyang Float Glass Process ÔÇô one of the three float glass processes in the world has a track record of more than 50 years and has been involved in projects in Brunei, Algeria, Indonesia, Pakistan and more than 15 projects in China quoted slightly more than USD 34 million for the glass project. CLFG presented its quotation to BDC on July 2007.

BDC however opted for Shanghai Fengyue Glass Company which quoted more than USD 73 million for the contract. Investigations have turned up information that the company that was awarded the Palapye float glass project, Shanghai Fengyue Glass (British Virgin Islands) was only registered on July 2007, the same months their more experienced competitor, CLFG presented their quotation to BDC. Unlike CLFG, Shanghai Fengyue Glass has no track record in any area of business and its capacity to provide funding to this type of project was unknown.

A forensic audit commissioned by the BDC board unveiled startling information about the project contract award: The initial partner presented to the BDC board was Shanghai Fengyue Glass China and not Shanghai Fengyue British Virgin Islands. As it turns out, Shanghai Fengyue British Virgin Islands is now the partner with BDC in Fengyue Glass Botswana while Shanghai Fengyue China is now the Engineering, Procurement and construction services (EPC) contractor. At the time of going to press, the BDC board was still awaiting an explanation on the change of shareholder from Shanghai Fengyue China to Shanghai Fengyue British Virgin Islands and on how Shanghai Fengyue China ended up as EPC contractors.

While CLFG who were ditched by BDC have a total asset base of 4, 1 billion Yuan (about USD 630 million) and owns the hegemony of 5 billion Yuan (about USD 786 million) Shanghai Fengyue Glass China who were presented to the board as partners could not obtain and produce a performance bond.

A performance bond is a financial tool used to guarantee that in the event of a developer or contractor’s default, funds are available to finish the construction. Shanghai Fengyue Glass China was however engaged as EPC contractors under mysterious circumstances and the lapse in financial security was kept away from the board by BDC managers. The BDC partner Shanghai Fengyue Glass British Virgin Islands whose relationship with Shanghai Fengyue Glass China is shrouded in mystery and sinister conspiracy theories however have not been able to raise its full contribution to equity for the partnership with BDC in Fengyue Glass Botswana. The BDC board has demanded to be provided with proof of payment and date of payment of equity contribution by Shanghai Fengyue British Virgin Islands as stipulated in the BDC board resolution of June 2007, and the shareholders Agreement.


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