The Botswana Teachers Union (BTU) will go into the weekend with a dark cloud over their heads after Bophose (PTY) Ltd summoned the Union and its investment company, More Power Investments (PTY) Ltd, to the High Court over what it calls a breach of contract.
The two companies entered into an agreement last year for Bophose to provide financial services for BTU members; identify insurance opportunities for BTU members as well as for the Union.
Bophose (PTY) Ltd has cited More Power (PTY) Ltd and BTU as first and second respondents respectively and is demanding a total of P28 million in damages arising from a breach of contract.
The company was also contracted to engage potential funders with regards to capital raising, including financial modelling, structuring, term sheet, negotiation and finalisation of key funding arrangement, amongst others.
Whilst the contract came to an end in January 2016, the parties continued to engage each other for the services sought.
“Although the Mandate Agreement was to endure for a period of a year, the parties subsequently, by their conduct novated and or entered into a new agreement on the same terms and conditions as the original Agreement, alternatively extended the Agreement on the same terms and conditions,” the company argues through its lawyers.
It further says the parties continued to hold meetings in respect of a number of negotiations with third parties initiated by the Plaintiff under the Mandate Agreement.
Through Gaoboi Legal Consultants Bophose argues that it executed its mandate to the satisfaction of the client and that the relationship between the two parties has never changed even after the elapse of one year of the agreement, giving him the impression that everything was okay.
“The parties exchanged correspondence via letters and electronic mailing medium of communication relating to the Plaintiff’s mandate under Mandate Agreement.”
Among the achievements is that Bophose initiated negotiations with First National Bank of Botswana (FNBB) for provision of members of the union with banking facilities under a group scheme more specifically loans and related facilities.
Bophose also states that it initiated talks with Alfa Insurance which talks were geared at securing insurance products for the members of BTU more specifically life cover for personal loans, comprehensive risk cover in respect of the motor vehicle and housing loans.
The company further argues that it initiated talks with Metropolitan Botswana which talks were geared at security insurance products for BTU members more specifically life cover for personal loans, comprehensive risk cover in respect of motor vehicle and housing loans.
All the aforementioned, the company argues were sanctioned by More Power/BTU and representatives of the latter attended all meetings where representatives of all the other companies were present.
“The Defendant continuously communicated through its officers, with representatives of the Plaintiff via electronic mailing system in relation to and concerning the loans and insurance facilities and products presented by the Plaintiff emanating from First National Bank as well as Alfa Direct Insurance Company and Metropolitan Botswana,” the company argues.
The company says that it sealed a deal with FNBB in September 2015, which was launched in March 2016 and the bank is now providing BTU with Group Scheme loan facilities. “In terms of the said contract, FNBB is providing the defendant’s Union members with motor vehicle loans, housing loans as well as personal loans on the same terms and conditions that were negotiated by the Plaintiff on behalf of the Defendant,” the company lawyers argue in the court papers.
They further state that More Power/BTU breached the contract by circumventing Bophose and talking directly to FNBB in respect of the same business proposal of the provision of loan facilities to its members. The loans are also provided under the same terms and conditions he negotiated, the lawyers say.
“The Defendant accepted the insurance cover proposals secured by the Plaintiff from Alfa Direct and Metropolitan Insurance companies but instead went behind the Plaintiff and used the same proposals to secure a contract with Regent Insurance company, a different Insurance Broker or underwriter,” he says in the court papers.
He argues that the Mandate Agreement between Bophose and BTU was that Bophose would negotiate a collection commission against all loan repayments from FNBB as well as commission on the insurance premiums payable to either Alfa Direct Insurance Company or Metropolitan Insurance underwriters.The two companies parted ways in January 2016, but Bophose argues that the termination amounted to an unlawful repudiation of the Mandate of Agreement existing between the parties.
Attorneys for the Plaintiff have indicated that they intend to subpoena FNBB staff members who negotiated with More Power and BTU representatives.
What is at stake
l In respect of FNBB deal, the Plaintiff was going to benefit 25% of the total monthly administration fee as well as the Collection Commission due to More Power or BTU.
P16, 404, 750.00 is the amount the company would have made from collection commission revenue from FNBB contract.
l In respect to Metropolitan transaction, the Plaintiff and Metropolitan Botswana had agreed that the Plaintiff would be entitled to 20% of the brokerage commission from total insurance premiums due to it from the defendant. P5,000,400.00 being the amount of commission or revenue share it would have gotten from Alfa Direct in relation to insurance cover for short-term loans.
l As for Alfa Direct Insurance, the Plaintiff and Alfa Direct Insurance had reached an agreement that the Plaintiff would be entitled to 15% of the total brokerage commission from insurance premiums payable to the said insurance company under the arrangement with the defendant.
P7, 170, 480.00 being the amount of collection commission that Plaintiff would have made from insurance life cover from Metropolitan Insurance Company Botswana.