Sunday, March 3, 2024

Parliament rejects Cabinet out of court settlement with Norilsk

The Parliamentary Committee on Finance and Estimates has raised a red flag over a Presidential Directive instructing government to pay Norilsk Nickel Group P430 million in an out of court settlement.

This follows a law suit by Norilsk against  BCL for walking away from a deal to buy its stake in a South African mine in 2016.

The Committee states in its report that “since the matter is under Judiciary process, which is another arm of Government, Parliament or the Executive should not interfere.”

The Committee also believes that since BCL which is being sued for reckless trading has been placed under liquidation, it is only proper for the creditors to be paid off the proceeds of the liquidation.

The Committee rejected the request by the Ministry of Mineral Resources, Green, Technology and Energy Security. The proposal was for the Committee to ratify the expenditure as “Cabinet had approved the settlement of USD 45 million on the basis that there is value in avoiding a potential protracted and uncertain litigation process across multiple jurisdictions.”  Cabinet also believed that a settlement of disputes at this state will allow for the liquidation process in respect of BCL Group to progress in a more expedient manner as well as reducing the on-going cost to Government of funding the litigation as per Presidential Directive dated October 2017.

The Committee is chaired by Ignatius Moswaane and when the matter was brought before it, Member Parliament Tawana Moremi was the Acting Chairman. Other members of the Committee are MP Likat Kablay, MP Shawn Nthaile, MP Kenneth Segokgo, MP Bogolo Kenewendo and MP Ngaka Ngaka.

Initially Norilsk Nickel sought reimbursement to the tune of US$270 million (about P2,5 million) from the Botswana government over a botched deal by BCL to buy a 50-percent stake of its Nkomati Mine.

The Russian mining giant had served notice to sue on the Minister of Mineral Resources, Green Technology and Energy Security, Sadique Kebonang, and the Minister of Finance and Development Planning Kenneth Matambo and the Attorney General.

Norilsk Nickel announced on its website that it intended to sue the government of Botswana “in respect of its involvement in the reckless trading of BCL Limited and BCL Investments Proprietary Limited (together “BCL”), with a view of recovering $271 million plus damages and other costs that are owed to Norilsk Nickel in relation to the sale of a 50 percent interest in the Nkomati Mine in South Africa and $6.4 million that are owed to Norilsk Nickel in relation to the sale of the Tati Mine in Botswana. Botswana is the ultimate shareholder of BCL through its corporate vehicle MDCB.”

Norilsk agreed to sell operations including its 50 percent stake in South Africa’s Nkomati Mine to BCL Group for $337m in 2014, later reducing its price to $271m. But BCL filed for liquidation in October in 2016 just before the transaction was due to be completed, with the Botswana government claiming that it was unable to afford the purchase.


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