Wednesday, October 4, 2023

What and when did Matambo, Tumelo know about BDC scandal?

What do Finance Minister Kenneth Matambo and Botswana Development Corporation board member Serwalo Tumelo know about the Fengyue Glass scandal and when did they know it?

This is one of the questions that puzzled Botswana Development Corporation (BDC) board members who put together the terms of reference for a forensic audit into the controversial Fengyue Glass Company Botswana.

The Sunday Standard has been able to establish that one of the audit terms of reference specifically tasked the auditors with investigating whether Tumelo was ever involved in the Fengyue project dealings.

The auditors have not been able to raise anything suggesting possible involvement by either Matambo or Tumelo.

Matambo was, however, BDC Managing Director while Tumelo was board chairman at the time the Fengyue Glass Company deal was first put together. At the time, Tumelo, who has since been reappointed to BDC Board by Matambo, was also Permanent Secretary in the Ministry of Finance.

The first correspondence found in the BDC files related to the project is dated 6th January 2006. The letter was addressed by Ms Esther Kanaimba, then Acting CEO of the Botswana Export Development and Investment Authority (BEDIA), to Mr Matambo, then BDC Managing Director.

The letter states that BEDIA was investigating the possibility of Botswana investing in a glass production plant. While in Shanghai, members of BEDIA had met with Shanghai Fengyue that had indicated interest in investing in Botswana. BEDIA invited BDC to nominate an official to visit China in January 2007 for further discussions with Shanghai Fengyue.

At the time that Matambo and Tumelo left BDC, the Shanghai Fengyue deal had been concluded. It was also during the time of Matambo and Tumelo that the corporation snubbed China Luoyang Float Glass Group (CLFG) a world class company with experience spanning five decades for Shanghai Fengyue a small company that had never been involved in glass manufacturing, had a questionable credit rating and charged more than double the price for setting up the controversial float glass plant in Palapye.

It was also during Matambo and Tumelo’s time at the head of BDC that the initial partner presented to the BDC board Shanghai Fengyue Glass China was surreptitiously switched for Shanghai Fengyue British Virgin Islands. The new partner had never been involved in any business and was registered a few days before the agreement with BDC was signed.

Sunday Standard has been able to establish that the new company, Shanghai Fengyue Virgin Island was set up specifically for the Botswana project because Shanghai Fengyue China board had indicated that it did not want to do the Botswana glass project. Indications are that the new company did not have the capacity to handle a project the size of the Palapye glass plant and did not have the backing of Shanghai Fengyue China, which in any case also did not have the capacity to handle the project as it had never been involved in glass manufacturing and was a small trading company.

As it turns out, Shanghai Fengyue British Virgin Islands could not make its contribution to the shareholding of Fengyue Glass Company Botswana. Indications are that BDC managers stepped in to help the partner who was struggling to raise money for equity. So a transfer of US $10 million was made to Shanghai Fengyue China and, less than 20 days later, the money was then returned to the BDC joint venture company through Shanghai Fengyue Virgin Island as equity contribution.

To date, Shanghai Fengyue Virgin Islands has only made a contribution of US$ 16 million falling short of the agreed US$20 million. At the time Matambo fired three BDC board members and replaced them with Tumelo and former Debswana Managing Director, Blackie Marole, the fired directors were still awaiting answers to questions they had raised about the project.


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