Paul Smith breaks silence on MDCB exit

Speaking out: Smith
Speaking out: Smith

Former Minerals Development Company of Botswana (MDCB) chief executive officer, Paul Smith has finally broken silence over the manner in which he exited the company, alleging that a ‘devious’ scheme was orchestrated to get rid of him through a technical clause in his employment contract.

Smith had his contract terminated early this year after serving just a year of his five-year contract. He says government paid him millions of pula for the termination.

Speaking exclusively to Mmegi Business this week, Smith opened up about how, just months into his job, he became a marked man for querying many decisions taken at BCL which exhibited ‘gross incompetence and incapability’ of the mining company’s board and management.

He says he was to later ruffle feathers again with MDCB board members and BCL management and the board when he recommended that BCL no longer had a business case and had to be shut down.

Proclaiming that he was not fired but had his contract terminated on a technical clause in a scheme that involved temporarily dissolving MDCB, Smith says he was now speaking out to clear his name following numerous reports that have potential to damage his near three-decade international career in mining and finance.

“Normally to fire a person, you have to go through a disciplinary process, give a warning, a hearing and all those labour processes.

“That was not done because they realised that they were not going to prove any wrong doing against me. On top of that, I believe not taking me for a hearing was a deliberate move because then a lot of issues around BCL, EIH, and Norilsk and the dubious relationships at BCL would have come out.

“Instead they decided to shut down MDCB and exploited a clause in my contract which stipulated that if government decided to stop the company, then my contract would be terminated and I would be paid a certain amount. To say a person was fired it implies misconduct on their part and that’s not what happened,” said the South African born metallurgist and investment banker.

Smith said he was also coming out now, seven months later, to clear his name as his recommendations and actions have now been vindicated by the recently released liquidator’s report on BCL.

A letter seen by Mmegi Business shows how the Ministry of Minerals, Green Technology and Energy Security reversed all the transactions Smith executed, which included the asset transfer of BCL, Morupule Coal Mine (MCM) and the 15% stake in De Beers to MDCB.

“I have been instructed to advise that, all shares previously transferred, or in the process of being transferred to MDCB from various mining companies where government is/was a shareholder be transferred back to government with immediate effect. All dealings with government shareholding must now be referred to the permanent secretary in the Ministry of Minerals, Green Technology and Energy Security,” reads the letter dated April 05, 2017, six days before Smith’s contract was terminated.

As part of a mandate to separate government regulatory role in the mining sector from that of ownership of assets, Smith transferred government shareholding in the three companies to MDCB as the first phase of the transition. The second phase was to entail MDCB taking over government shareholding in Debswana, Botash and Diamond Trading Company of Botswana (DTCB).

According to Smith, the surreptitious scheme to get rid of him was a classical case of ‘shooting the messenger’ because his candid way of dealing with problems as a professional manager not only threatened long-standing relationships amongst stakeholders but also exposed gross inadequacies in corporate governance across the board. “As a professional with 27 years experience in mining and finance, I wasn’t going to just play along and not ask questions on unsound decisions taken at BCL by its board and management and even afterwards on the EIH proposed deal. I am not a politician. And now the liquidator of BCL in his recent report has validated all my recommendations. That’s why I was terminated in that manner. I had done nothing wrong and there were no grounds to fire me,” he said.

Despite the reversal of the transactions Smith had executed, MDCB carried on  operating and a new chief executive officer has since been appointed. The Minister of Minerals, Green Technology and Energy Security Sadique Kebonang confirmed the reversal of the transactions saying the transfer of BCL, MCM and De Beers shares was an error in the first place as MDCB’s mandate stipulates that it was not supposed to own shares in existing companies but invest in new ventures. “Yes, the share transfers were reversed, because the mandate of MDCB was not to have shares in existing mining houses owned by government but rather to invest in new mining ventures locally, regionally and internationally,” Kebonang told Mmegi Business yesterday.

Smith insists the mandate of MDCB, as agreed upon by the ministry and Cabinet in April 2016,   included the transfer of all existing government shareholding in mining assets. 

A report on the full interview with Paul Smith will be carried in tomorrow's Mmegi BusinessWeek

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