Friday, May 24, 2024

Stock exchange boss accused of corruption in multi-million automation contract

A legal dispute between Botswana Stock Exchange (BSE) and its former executive over unfair dismissal have revealed how the bourse’s Chief Executive Officer (CEO), Hiran Mendis was accused of secretly meeting with bidders for the purchasing of the BSE’s automated trading system. A special investigations unit later raised concerns about disharmony between the bourse’s senior managers and the CEO, saying such a situation was untenable and unacceptable.

The special investigations panel, chaired by then BSE board chair Rizwan Deswai, was set up to investigate concerns raised by former BSE IT Manager, Moefangedi Makwaeba about irregularities in the procurement of the bourse’ automatic trading system, which cost a whooping P8million.

Sunday Standard is informed that the BSE incurs additional costs of P1million every year to maintain and upgrade the system. Heads rolled at BSE in 2009 when a decision was made to automate trading at the bourse. Before the tender was awarded, the IT Manager was dropped from the tender evaluation committee. He later wrote a scathing letter asking to the BSE Main Committee questioning the decision to drop him from the tender evaluation committee that was tasked with evaluating bids for the automated trading system. Makwaeba also accused the tender evaluation committee members of improper conduct, saying they deliberately misled the Public Procurement and Asset Disposal Board (PPADB) by withholding crucial information. He also accused Mendis of indiscretions pertaining to unregulated and unauthorised meetings with bidders.

The six member tender evaluation committee comprised of Mendis, Makwaeba, representatives from the Ministry of Finance, BSE executives and Geoffrey Bakwena, a stock broker. However, in 2010 the Ministry of Finance decided to cut the number of committee members to three, citing budgetary constraints. As such, the IT Manager was dropped. Only Mendis, a certain Mr Mokwape from the Ministry and Geoffrey Bakwena remained, tasked with undertaking the necessary site visits to conclude the last stage of the technical evaluation. Unimpressed by his dropping, Makwaeba immediately raised complaints about the decision to drop him, saying the move would retard capacity building as two of the remaining three committee members would not be involved in implementation of the system once the tender had been awarded.

Makwaeba also told the BSE Main Committee that he was repeatedly harassed, frustrated and intimidated by Mendis, which led to him being put through a totally unnecessary disciplinary hearing after charges were hurriedly trumped up against him in bad faith. In his submission to the investigating panel, Mendis indicated that his relationship with Makwaeba soured sometime around 2009 when he refused to approve the IT Manager’s request to attend training in London at a cost of around P50,000. He further said he was not involved in the decision to drop Makwaeba from the tender evaluation committee.

“In any event, Makwaeba has no special expertise or experience in the functionalities of the automatic trading system that would make him indispensable,” Mendis shot back.

The investigating panel later found that there was no evidence to suggest any ulterior motives in the decision to drop Makwaeba from the tender evaluation committee. When explaining circumstances around his “unregulated and unauthorised” meeting with one of the bidders, Mendis told the special investigations panel that he met with Mr Jit Senevirate, a representative of MIT, one of the bidders, on 16 November 2009 and gave him P500 to pay for his VISA as he did not have Botswana Pula on him. Senevirate was due to make a presentation to the tender evaluation committee the next day. Sunday Standard can reveal that MIT later won the bid for the P8million automated trading system. The same company also supplied the BSE’s central securities depository in 2008. Founded in 1996, MillenniumIT (MIT) is based in Sri Lanka, Mendis’ home country and specializes in electronic trading systems.

The tender evaluation committee met on December 9th to address Makwaeba’s concerns, but he later raised complaints that the meeting was tainted with unfairness and favouritism. While it opined that Mendis’ interaction with Senevirate was ill advised, the investigating panel said he later disclosed to the tender evaluation committee that he had met with Senevirate. It also found that there was no evidence to suggest that the PPADB was misled.

Makwaeba also accused Mendis of harassment and intimidation, which led to him being put through a totally unnecessary disciplinary hearing. In his response, Mendis said he could not be accused of harassment as the disciplinary hearing had found that it was Makwaeba who used intemperate language. The investigation panel agreed, saying Makwaeba failed to provide any evidence to show that he was harassed and intimidated by Mendis. It directed Makwaeba to have apologised fully and unequivocally to Mendis and the tender evaluation committee within 14 days, failing which the BSE Main Committee would institute appropriate disciplinary action against him for bringing the bourse into disrepute.

“We recommend that Makwaeba be addressed by the main committee as to the ill-judged nature of making unsubstantiated allegations against senior managers of the BSE or any other organisation he comes into contact with,” said the panel.

The IT Manager was summoned for a disciplinary hearing in 2011 and later dismissed from work. He is currently suing the BSE for unfair dismissal.


Read this week's paper