“Debswana is currently in the process of sourcing for a consultant for the provision of anti-fronting investigation for Debswana,” Agatha Sejoe, senior Corporate Affairs Manager (Brand and Stakeholder Relations) said in a written response to Mmegi enquiries. “We have implemented enhanced due diligence mechanisms to identify and eliminate fronting practices and continue to explore all possible avenues for more preventative measures.”
The consultant to be engaged has three main tasks, Sejoe said.
“The consultant will investigate all instances of possible fronting within Debswana’s procurement activities as referred to by Debswana from time to time. “The consultant will also prepare and submit a detailed report to Debswana with findings on matters referred to, for further investigation and action where required. “The consultant will also develop awareness programmes for procurement staff and suppliers to recognise and combat fronting,”
Hailed as the country’s single largest and most ambitious transfer of value from mining to citizens, the CEEP programme had a set a goal to empower citizen enterprises by redirecting P20 billion in Debswana procurement with the target of creating 20,000 between 2019 and 2024.
Debswana is one of the biggest procuring entities in the economy, but citizens and their enterprises have traditionally found themselves playing second fiddle to large, well-established multi-national entities and other foreign titans.
In terms of actual spending, official Debswana figures over the years showed that the CEEP was steaming ahead in the programme, reaching P21 billion in September last year.
However, other assessments showed that the programme was deeply infiltrated by citizen companies fronting for foreign interests.
Debswana executives previously publicly estimated that up to 90% of the diamond mining company’s contractors under the CEEP were fronting for private sector players outside the country. The disclosure was further worsened by revelations that most of these operating companies had no business accounts in Botswana as their payment of salaries were made from outside the country.
Debswana Head of Supply Chain, Phillip Lisindi, told a business partners meeting in Gaborone last October that issues of collusion and fronting had been abundant in CEEP, with Debswana suppliers mushrooming due to unfair practices facilitated by some Debswana employees for private contractors.
“We have found that 90% of service providers are fronting for companies outside the country,” he said. “During project appraisals when the said owners of companies are supposed to be answering technical questions, they are quiet and it’s always foreigners doing all the talking, showing that they don’t own these companies. “What is even more shocking is that most of these companies don’t have bank accounts in Botswana; salaries and liabilities are paid from outside the country. “This is a clear manifestation of fronting.”
Lisindi further revealed that the fronting and collusion often manifests in foreign transfer of shares, where citizens are awarded contracts and a few days later the company ownership shifts to foreign partners. He further told the meeting that locals who are involved in fronting often have ownership without control, failing to make critical decisions regarding project management, without consulting international parties.
Meanwhile speaking at the same meeting, Debswana Managing Director, Andrew Motsumi said that the fronting practices had cast a shadow that “seeks to threaten Debswana's citizen empowerment initiatives”.
“Moreover, instances of financial mismanagement and fronting within our programme have surfaced, casting a shadow over the good intentions of our initiative. “Let me be unequivocal: Debswana will not tolerate such behaviour. “Strict consequence management will be applied to any business partner found to have misappropriated funds or engaged in fronting, which is a contravention of both Botswana’s laws and Debswana’s policies,” he said.
