Finance and Development Minister, Kenneth Matambo, then heading the 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.
Sunday Standard 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.
Matambo and his managers, 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 in July 2007, the same month their more experienced competitor, CLFG, presented their quotation to BDC.
Information unearthed by the Parliamentary Special Select Committee of Inquiry reveals that unlike the more experienced CLFG, “the technical capacity of Shanghai Fengyue Glass was very much in doubt” and its project proposal to the BDC contained “demonstrable misrepresentations and falsehoods”.
Matambo and his management, however, kept the board in the dark, “by and large by design”, states the report.
While CLFG, who were snubbed by Matambo, have a total asset base of 4.1 Billion Yuan (about USD 630 million) and owns a hegemony of 5 billion Yuan (about USD 786 million). A BDC due diligence report revealed that Shanghai Fengyue Glass Company had a “very low net worth.”
BDC management, however, misled the board about the company’s worth. States the report: “It is worth noting that earlier in the briefing by BDC management to the board, a concern was raised by the board concerning the source of information about who Shanghai Fengyue Glass Co. really was. At the briefing, the BDC management assured the Board that the information was obtained through the Botswana Embassy in China, BEDIA and of particular note, that the information was obtained (in the wording of the minutes captured at the meeting of the 18th June 2007, “…obtained…at the company in China by one of the BDC officers. It is not exactly clear which officer of the BDC obtained the information”.
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.
The switch in partnership happened under Matambo’s watch. When board members started demanding 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, Matambo, then Minister of Finance and Development Planning, started purging the board.
Board members Thuso Dikgaka, Nightingale Kwele and Odirile Merafhe were fired by Minister Matambo on the day they were to start disciplinary proceedings against managers involved in the glass company saga.
The four Managers, who were facing disciplinary action, had sat in the same meeting with Matambo, then BDC Managing Director, when it was decided to go into partnership with Shanghai Fengyue Glass Co, despite compelling evidence that the company was a fraud.