How BOPEU is losing millions
Oarabile Mosikare | Friday September 8, 2017 17:14
This is the period before and after the current suspended executive chairperson of the company Andrew Motsamai was employed. Motsamai assumed the position on February 2017. He was given 10 days leave of absence on Wednesday. This follows talks of rampant abuse of resources and poor business decision at the Babereki Investments, a commercial arm of Botswana Public Employees Union (BOPEU).
It is alleged that over millions of pula went down the drain via multi-million investments at Future Sustain International (FSI) and Fly Mission Services (FMS). It is alleged that he funded the Umbrella for Democratic Change (UDC) with undisclosed amount, an allegation that he denies vigorously.
It has emerged that one of BOPEU partners in one of their many businesses disappeared into thin air after the union had popped up millions of pula in a joint venture.
This has been disclosed in the minutes of Babereki Investments board of directors meeting held on June 28, 2017. The human resource manager Pambana Masame presented the update on FSI. Masame explained that Benjamin Raletsatsi and a company by the name of Mamataz disposed their shares in FSI to OBM Capital in February 2017. He went further to explain that FSI board approved a request from OBM Capital to close shop during the month of March 2017 and re-engineer the business process, revamp and stock the shops.
He further explained that shops were closed but OBM Capital owned by Bernard Meleko, a South African, did not turn up to provide shops with stock as per the agreement. The company did not trade, therefore affecting its cash flow. Critical members like the Managing Director and Regional Manager South were leaving the organisation for greener pastures. The accountant was serving a notice from the day of the meeting.
“The company also lost Samsung branded store in River Walk which was purchased from 3G Mobile due to breach of contract. The agreement of the contract didn’t allow closure of the shop and lack of stock, which FSI breached,” Masame reported. The management was also updated on FMS and they concluded that they would disinvest from the company if Babereki Investments is not given a management contract.
On October 13, 2016 the board approved investment in FMS with an initial investment of P2 million debt secured by two aircraft being A2-MJM and A2-FME. An equity valuation was made by Lavender Fields on FMS, which recommended an investment of P10 million to be split as P2.4 million equity (to acquire 40% shareholding) and P7.6 million debt. Following the full utilisation of the P2 million, a further investment of P3.1 million was made up to May 31, 2017 as per resolution dated March 27, 2017 to bring investment to P5.1 million.
As part of turn around strategy it was resolved that creditors such as Puma Energy who were threatening liquidation be paid. They also resolved to pay monthly loan repayments to First National Bank (FNB), staff salaries and insurance for all six aircraft and procument of new spare parts for aircraft. “Subsequent to the meeting held on 27th March 2017 with Flying Mission being the shareholders of FMS, Babereki understanding was that Flying Mission agreed to appoint Babereki to carry out management of FMS in the form of management control agreement, to easily implement the recommendations of the due diligence report, a position which Babereki still maintains,” the report reads.
Contrary to the board position, FMS holds a different view that there is no such understanding and would instead prefer a third party to be appointed to the company should that be the case. The rationale is that Babereki’s appointment would give Babereki unfair advantage over FMS and tilt the scales towards Babereki at the board level. In light of this, Babereki has suspended capitalisation to FMS until the deadlock is resolved.
The finance supervisor, Mooki Motlhatso explained to the board of Babereki Investments that for the past 11 months the company has been making losses close to P3.8 million. Motlhatso also explained that the loan book is seating currently at P109 million in the balance sheet and went on to explain that the loan book is depreciating due to various factors that affected the organisation. He said Babereki in house loans were suspended at some period of time due to lack of funding.
The meeting was also briefed that they have been offered a loan amounting to P1.2 billion by Sanlam but only P50 million has been disbursed through their subsidiary Botswana Life. Furthermore, it was explained that by Sanlam not releasing the money this had impacted negatively on Babereki loan business, which is stranded with no cash. The board was told that Bona Life has also expressed an interest to fund Babereki Investments for P100 million.
It has also emerged that on September 1, 2017 Motsamai wrote to Bona Life updating them about their deal. In the letter Motsamai said the board approved the P100 million loan facility with the interest rate at 9.5% over a three year tenure. The board also approved the credit life business to Bona Life with effect from October 2017.
Motsamai has denied allegations of misuse of funds and channelling money to the UDC. “I have never funded any political party. Anyone with that proof should produce it.” In the August board meeting minutes, there are no funds attributed to political funding.