Tuesday, November 30, 2021

Why BDC board members were fired

The three Botswana Development Corporation board members may have been fired to pave way for a plan by the corporation to fork out an additional P30 million part of which would be given to Shanghai Fengyue Glass BVI.

Minister of Finance and Development Planning, Ken Matambo has fired Botswana Development Corporation (BDC) board members who have been pushing for disciplinary action against corporation managers implicated in corruption claims surrounding the controversial glass manufacturing plant in Palapye.

Matambo on Tuesday dropped Nightingale Kwele and Thuso Dikgaka who were leading the campaign for disciplinary action, and Odirile Merafhe, a day before the board was to commence disciplinary hearings against three BDC managers.

Former Debswana Managing Director, Blackie Marole, has been brought in as Board chairman, while retired Permanent Secretary in the Ministry of Finance and Development Planning, Serwalo Tumelo, has been brought in as board member.

Tumelo was Chairperson of the BDC board during Matambo’s tenure as the corporation’s Managing Director.

It is believed that the three sacked directors, who were demanding a detailed explanation from Fengyue Botswana Glass Manufacturing justifying the utilization of the project funds and the cost overrun, would raise difficult questions over the planned P 30 million additional funding.
Although a forensic audit has revealed that Shanghai Fengyue Glass BVI, which is in partnership with BDC in Fengyue Glass Botswana, has not made its full contribution to equity in the glass manufacturing company.

The BDC earlier this month made an application to the board for authority to “inject additional equity of P23 360 118.73 into Fengyue Glass Manufacturing Botswana. P 9 000 841.73 of which is to reimburse Shanghai Fengyue for expenditure already incurred for geological and finance charges.
These funds are required to partly finance the provision of power step-down transformers and diesel power plant.

The BDC management further proposed that should Shanghai Fengyue fail to contribute their portion of P19 034 392.69 to its shareholding to also part finance power step ÔÇôdown and their transformers, BDC should inject the entire additional funds required of P 33 393 669.69 as preference shares in Fengyue Botswana Glass Manufacturing. That the BDC be allowed to convert the above Preference Shares of P33 393 669.69 into equity in 12 months in the event that Shanghai Fengyue completely fails to contribute its pro rata share of P19 034 392.69.

At the time of the forensic audit, the glass manufacturing plant project was behind schedule. Although it was only at 48 percent completion, the BDC contributions had been exhausted because disbursement had been made in advance of progress. The audit found that contractors were overpaid and, in some instances, paid for supplies not delivered. The BDC was left with only P100 million working capital, which was to be used once the project has been commissioned.

Some of the board members who have been fired are understood to have earlier this year voted against the re-allocation of P 46 million of the working capital into the project construction phase. They were, however, out voted. The BDC board has been insisting on a list of suppliers to the project and their relationship with both Shanghai Fengyue China the EPC contractor and Shanghai Fengyue BVI the BDC partner in Fengyue Botswana Glass Manufacturing. They also sought to establish the management structure set up for the project, including authorization of payments to the contractor. This was after the forensic audit revealed that Fengyue Botswana Glass Manufacturing has “failed to establish any structures or processes or control in the company”.

This presented a problem now that the BDC management has once again approached the BDC board to approve re-allocation of P 28 227 899.00 in the form of preference shares to cover scope variation. That the above preference shares be consolidated with existing preference shares and carry the same terms and conditions. BDC management is further asking that the corporation should absorb the adverse exchange rate movement of P62 999 617.00.

There are fears among some board members that money is being siphoned from the glass manufacturing project and the board had demanded information from Shanghai Fengyue China the EPC contractor, “as to how they pay themselves as both EPC contractor and project manager. The board has also proposed that the BDC, as guarantor to the Fengyue Glass Manufacturing Company Botswana letter of credit, should write a letter to Standard Chartered Bank requesting for Fengyue Glass account information and letter of credit details.


Read this week's paper