The embattled privatization body, PEEPA, is expected to cancel the Botswana Telecommunications Corporation (BTC) privatization tender advertised in the local media a while ago, in a bid to avert possible court action.
This follows a decision by the PEEPA board to disqualify a joint bid by Collins and Newman, a leading local law firm, Standard Bank (known as Stanbic in Botswana) and Rothschild, one of the world’s leading independent banking organizations, to buy into BTC.
The PEEPA board disqualified the tender bid citing conflict of interest. One of the board members, Parks Tafa, is a senior partner at Collins and Newman and a board member at Stanbic.
A few months ago, PEEPA placed adverts in the media inviting interested companies to bid for shares in the privatisation of the BTC.
PEEPA has since announced plans to privatize BTC immediately after Air Botswana. This week, however, there was talk that PEEPA may withdraw the initial invitation tender and place fresh adverts to avoid possible lawsuits by the disqualified consortium.
Tafa is understood to be arguing that he was unfairly discriminated against and that the other competing consortium, featuring Barclays Bank Botswana and ABSA Bank, should also be disqualified because the chairperson of Barclay Bank Botswana, Blackie Marole, is also chairperson of PEEPA.
The aggrieved parties have already taken up the issue with Vice President Ian Khama. Although PEEPA seems to have caved in to threats of litigation, some board members feel that Tafa’s case is different from that of Marole because while Tafa is a shareholder in Collins and Newman, Marole does not have any shares in Barclays Bank Botswana.
This is the second time Tafa and his law firm, Collins and Newman, have been embroiled in a privatization conflict of interest controversy.
Sometime last year, PEEPA Chief Executive Officer, Joshua Galeforolwe, launched a veiled attack against Tafa and Collins and Newman, charging that “on a matter of principle” he found it unacceptable that certain people who sit on the board of PEEPA should have direct dealings with some of the agencies.
Documents passed to The Sunday Standard reveal that Collins and Newman acted as a legal representative in two of five transactions which have been placed before PEEPA.
In an earlier interview with Tafa, he said the allegations leveled against him were “outrageous.”
Tafa said he never solicited business from PEEPA, nor used his influence, as director, to divert business to Collins and Newman.
The Sunday Standard was able to raise a copy of the minutes from a meeting where PEEPA board members discussed the registration of a privatization trust fund which would warehouse shares of privatized public institutions to be bought by citizens at leisure.
According to the minutes, management advised that “the recruitment of an adviser to work on the project was due to commence in September, while the preparation of a trust deed was scheduled to commence in December for ultimate approval by the board in January 2006.” Concern was expressed that this scheduling was inordinately long for a project as simple as a trust deed especially since there were already precedents from the CEDA and Venture Capital that would be utilized.
The board accordingly directed that management needed not go through any elaborate tendering procedure for the recruitment of an adviser.
Management was to engage a lawyer with a view to expediting work to ensure that the Deed was ready in time for government to commit funds to the trust when the budget speech was made in February 2006.
The result of the meeting was a letter from Galeforolwe to another Collins and Newman partner, Lawrence Khupe, commissioning him to register the Deed.
On the upside, although PEEPA had budgeted P4 million for the legal costs, Collins and Newman billed PEEPA only P6 000.
“It does not mean that as a PEEPA lawyer I have to stop practicing law; that would be very bizarre. What it means is that I have to declare my interests and ensure that my interests do not work to the detriment of the company I work for as Director,” Tafa told The Sunday Standard at the time.
Galeforolwe was, however, unhappy that this constituted conflict of interest and warned that this planted “the seeds of future discord.”
The Sunday Standard was, however, able to raise a copy of the PEEPA “Directors Declaration of interest” in which Tafa declared his interest in Collins and Newman.
Galeforolwe was also unhappy that Collins and Newman was also Botswana Vaccine Institute’s legal advisor in a case in which the government-owned Vat Lab was trying to raise P100 million for the bond.