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Inside the P241m 'ironclad' Israeli spy deal

New spy boss, Peter Magosi’s bid to nullify a US$22.6 million (P241 million) deal with an Israeli arms firm, could be doomed to fail as his predecessor, Isaac Kgosi signed an ironclad contract which guarantees payment to the Israelis, Mmegi has established.

Exclusive documents seen by Mmegi this week suggest Magosi will have an uphill climb to avoid paying the Israelis the outstanding balance of P118 million owed for various military equipment, including weapons and drones supplied under the contract.

Kgosi, in an ongoing criminal matter in which asset manager, Bakang Seretse and others have been charged with money laundering, funded the contract by diverting P230 million he received from the National Petroleum Fund (NPF).

Documents indicate that Kgosi paid half the contract price 12 days after he signed the contract in Gaborone on November 9, 2017 with Mordechi Barashi, the vice president of Dignia Systems, the Israeli arms firm.

The Memorandum of Agreement seen by Mmegi shows the deal was for the military equipment and surveillance platforms with associated training over three years, inclusive of all applicable taxes.

The deal floundered however, after Seretse, the former energy affairs department director, Kenneth Kerekang and another asset manager, Botho Leburu, were arrested for their alleged role in routing the funds to the Israelis.

Magosi, who took over from Kgosi in May, is attempting to disentangle the spy agency from its obligations to the Israelis, who had reportedly supplied most of the equipment, with only a few items outstanding and being assembled in Israel.

Magosi wrote to Barashi on August 13, stating that the spy agency could not continue with the deal.

“Please refer to the meeting between yourself and Directorate of Intelligence and Security officials at DIS headquarters on 31st July 2018 whereat we discussed the status of the above contract. We write to confirm that we are constrained in continuing with the performance of the contract on the basis of its non-conformity to standard government procurement procedures; rendering it grossly irregular,” Magosi wrote.

In his letter, Magosi told Barashi that the funds used to effect part payment to his company in furtherance of the contract are not only the subject of criminal investigation by the Directorate on Corruption and Economic Crime (DCEC) but at the High Court has also issued a restraint order against the same funds.

“In view of the above, we advise that we will not be able to continue with the execution of the contract. Our continued performance in that regard may be construed as condoning the gross anomalies referred to above thereby legitimising the contract. Moreover, further implementation of the contract may also render the

Directorate liable for contempt of a court order.”

The spy boss told Barashi that the DIS had taken a decision to suspend the execution of the contract with immediate effect until investigations have been concluded and issues on the legality of the contract have been determined. He further advised that his letter served as notice of the suspension of all obligations under this contract including “discontinuation of shipping activities by Dignia Systems and/or further delivery of goods in transit”.

However, intelligence sources close to the matter say the DIS’ exit from the deal may not be that simple, as clauses within the contract support the Israelis’ contention that they must be paid, regardless of issues within Botswana.

One of the clauses involves the DIS giving Dignia 90 days termination notice and even then, all dues must be paid.

“The client may terminate this agreement at any time by giving 90 days written notice. In the event of such termination, all unbilled, accrued and unpaid fees and expenses payable to the contractor at the time of the termination shall immediately become due and payable,” reads a clause in the contract.

Legal hawks following the case believe the Israelis hold all the aces in the case.

“The Israelis will sue and win. The government does not have a case here. There is a rule called privity of contract, which means the contract is valid as between the two who signed it and it is enforceable as such. These are the only people that have rights and obligations in respect of the contract. They are the only ones who can sue each other,” a lawyer said.  Another source close to the deal said that any impropriety in Botswana may not affect Dignia Systems. “It is not for them that Kgosi may have not followed procurement processes. There is a contract, they have performed and rightly must be paid.”

Meanwhile, available documents suggest both President Mokgweetsi Masisi and his predecessor Ian Khama knew in advance about the deal between the DIS and Dignia.

The contract between the spy agency and the Israelis lists the Office of the President as a client suggesting top level briefing of authorities such as Khama, Masisi, former Minister of Presidential Affairs, Governance and Public Administration Eric Molale, his Assistant Minister Thato Kwerepe and Permanent Secretary to the President (PSP) Carter Morupisi amongst others.




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