Wednesday, February 21, 2024

NPF intrigue may have been tip of iceberg

With the amount of public reporting there has been on the National Petroleum Fund (NPF), one would think that it is the only special fund that Botswana has. The 2021 Covid-19 audit report lists 11 others that were used to establish another – the COVID-19 Relief Fund – as well as the amounts that were taken out of them. There are the Road Levy (P435 million), Housing (P125 million), Human Resource Development (P625 million), Tourism Development (P40 million), Tertiary Education Development (P150 million), Alcohol Beverages (P50 million), Road Traffic Fines (P50 million), Tobacco Products (P155 million), Guaranteed Life Insurance (P220 million), Revenue Stabilisation (P100 million) and Tourism Industry (P50 million) Funds. The NPF itself is not on the list but the last time it was mentioned (July this year) it had P800 million.

As the rest of the special funds, the NPF was virtually unknown until millions of pula were controversially withdrawn from it. The result was a series of court cases in which the chief custodian of the Fund, Kenneth Kerekang, was accused, cleared and re-accused of criminal wrongdoing. Kerekang was Director of the Department of Energy and upon his word, P60 million was transferred from the NPF to the bank account of Basis Points, an investment company owned by Bakang Seretse. Officially, this money was supposed to buy oil stock for Botswana Oil and Seretse’s company was to facilitate this transaction. Four months later, Seretse bought Kerekang a commercial plot in Gaborone West for P6 million.

A second attempt to divert P250 million from the NPF was thwarted. With regard to the latter, the original target, as Sunday Standard has reported, was not the NPF itself but the consolidated fund. The Directorate of Intelligence and Security Services (DISS) sought permission from the Public Procurement and Asset Disposal Board (PPADB) to directly appoint a company to build strategic fuel storage facilities across the country. Money for this project would have come from the consolidated fund. Public procurement law allows direct appointment of a supplier but smelling a rat and given the amount of money involved (hundreds of millions of pula), PPADB rejected DISS’ request, insisting that a supplier be identified through open tendering.

DISS didn’t want to open up the job to everybody else and so the two parties stalemated. A source told Sunday Standard that those sponsoring this enterprise feared that open tendering, which gives PPADB the final say, eliminated the certainty of their having to select a bidder of their choice. It was at this point that DISS approached another government department – the Department of Energy, which manages the NPF, and asked for P250 million.

As the source explained, the attractiveness of special funds is that, at least at the time aforementioned sums of money were diverted from the NPF, there was no real oversight on them. While the consolidated fund has layers upon layers of oversight, special funds were not strictly controlled. Minister of Finance and Economic Development, Peggy Serame said as much this July when she answered a question on these funds. She said that “vague provisions” in some of the funds “led to different interpretations, thus leaving room for accounting officers to use their discretion in spending the money held under such funds.” However, following the P250 million case, the government has implemented stricter controls.

So far, the NPF is the only fund for which results of the lax rules led to tragic results. In some cases, such laxity took the form of whole cycles of financial years going by without the funds being audited. 


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