BOPEU money fuel endless euds at the union

Money in staggering amounts and investments that permit loopholes for personal enrichment may be what lies at the heart of the fight for control of BOPEU

BOPEU money fuel endless euds at the union

For a few years now, the leadership of the Botswana Public Employees Union (BOPEU) has been in and out of the courts fighting for power. The power can be substantial, considering that BOPEU is the single largest trade union in Botswana with over 36 000 members on subscription. It is also said to be the largest in terms of assets and investments. Being at the helm of BOPEU, especially as president, confers this kind of power.

This is evidenced by former president Masego Mogwera’s unwillingness to give up the powerful seat despite after she was dethroned from the presidency a few years ago. Mogwera appears determined to reclaim the BOPEU presidency but faces feisty resistance from Olefile Monakwe, who dislodged and replaced her.

On 30 November 2020, Mogwera won a case in which she contested her suspension from BOPEU. A panel of three High Court judges, Tebogo Tau, Chris Gabanagae and Gabriel Komboni, on Friday ruled that the 27 April 2019 decision to suspend Mogwera from the union was unlawful. BOPEU had argued that on 1st December 2019, Mogwera was expelled from the union at a Special General Congress. It argued that since she was no longer a member, she could not be its president until her expulsion is set aside or interdicted. She may have won a case against her suspension but she has another tough matter to battle, which is her expulsion from BOPEU.

Monakwe quotes article 12.1.4 of the BOPEU constitution according to which for one to hold a position in the union, one has to be a member of the union. On 2 May 2019, Topius Marenga’s position of General Secretary was terminated and, according to Monakwe, Marenga never challenged that decision which still stands. This decision was taken at the National General Congress, the same supreme structure that got rid of Mogwera. Monakwe says the same National General Congress also confirmed him as president of BOPEU. The same structure, which he says is the highest structure of the union, also confirmed Kaboyaone Rash Sedimo as General Secretary of the union.

But Mogwera wants to be re-instated to her former position of BOPEU president and thus to replace Monakwe, who, on the other hand, holds that he and his faction are the rightful leaders of BOPEU.

In an interview, Mogwera said since the decision to expel her was influenced by her suspension, the fact that the suspension has been lifted means that the expulsion automatically falls off. She said the ruling makes her the rightful President of BOPEU, despite her pending case before the Courts to have the expulsion also nullified.  

The tussle for the leadership of BOPEU can be traced back to BOPEU’s money that is believed to have been badly invested by a board resolution at the time when Mogwera was president. One of the reasons the previous leadership was deposed, together with ex-chairman Andrew Motsamai and Mogwera, is the manner in which the BOPEU money was handled, according to Monakwe.

He says that on 2 October 2017, the National Executive Committee (NEC) of BOPEU took a decision to conduct a forensic audit after the president presented financial challenges of the union. After the forensic audit was done, Mogwera, who was then president, withheld the report that was expected to reveal details of BOPEU challenges and their causes. “This is one of the things that cause conflict in the union,” Monakwe says, adding that this brought doubt on Mogwera and her commitment and ability to serve the union.

He says it has been said Mogwera denied knowledge of bad investment decisions taken by Babereki Investments (Pty) Ltd but there is evidence of board resolutions signed by Mogwera as president of BOPEU authorising the investments that put BOPEU in financial distress together with other board members then. Monakwe says the forensic audit was only released after the NEC filed in court for it to be released. Babereki Investments is an investment company fully owned by BOPEU.

To her defence, Mogwera said she was the one who raised alarm, after realizing that some bad investment decisions were being taken. She denies that she was part of those investments, despite that she was part of the board that authorized those decisions.

HOW BOPEU MONEY WAS BURNT

According to Monakwe, Babereki Investments’ borrowings amounted to approximately P60 million that he says were for purposes of investment. The funds affected BOPEU negatively because the union invested in dysfunctional or non-profit bearing enterprises that never paid any dividends to BOPEU, thus impacting its financials. Monakwe says when BOPEU’s audited financials were presented to the NEC in April 2019, it emerged that Babereki Investments was in such financial distress that BOPEU was compelled to transfer assets (property) valued at P23 million to it so as to strengthen its balance sheet and restore its financial credibility. This helped the company to bounce back.

According to Monakwe, Babereki Investments bought shares in companies without evaluating such shares in due diligence. He says the companies in which Babereki Investments bought shares never submitted audited financials while some of them were never audited in their periods of existence. “Due diligence was never conducted,” Monakwe asserts. “And while Babereki Investments bought shares in those companies, it also gave then millions of pula in loans.”

THE WORTHLESS INVESTMENTS – A PEEK INTO THE FORENSIC REPORT

BABEREKI KA LERATO

According to the forensic report done by ENS Forensics (Propriety) Limited, on 11 February 2016 Babereki Investments received a letter from funeral undertakers, Ka-Lerato (Pty) Ltd, offering Babereki Investments 70 percent of its shares. On 11 February 2016, Ernest Molome acting as an agent, made a presentation to the Board of Babareki Investments of an offer of 70 percent shareholding in Ka-Lerato. It emerges that Ka-Lerato did not present its audited financials to Babereki Investments, according to the audit report. The forensic audit states that there was no valuation of the funeral undertakers and no due diligence was conducted. Further, it states that the investment amount requested by Ka-Lerato was not based on any verified financial information.

On 3 March 2016, a Babereki Investments Special Board meeting resolved to obtain 51 percent shareholding in Ka-Lerato for P2.295 million and to change the company’s name to Babereki Ka-Lerato. Former CEO of Ka –Lerato, Lazarus Molefi, then retained 25 percent of the company while Mamatza Enterprises (Pty) Ltd, a company owned by Ernest Molome and others, held 24 percent shares in the new entity. However, the P2.295 million payment for the 51 percent shareholding went directly to Molefi.

Subsequent to that investment, Babereki Investments took out a loan of P8 million from Babereki Insurance Brokers on behalf of Babereki Ka-Lerato. Further, six executive vehicles were hired from Avis for use by directors of Babereki Ka-Lerato and Future Sustain International (FSI). This Avis account at that time was in arrears of P468 000. Altogether P17 million was spent by Babereki Investments on Babereki Ka-Lerato, according to the report.

FLYING MISSION SERVICES

Another finding of the report was that on 13 October 2016, Babereki Investments Board resolved to invest P1.176 million in Flying Mission Services (Pty) Ltd (FMS). Chairman Motsamai was at the time authorised by the board to execute all the necessities to enable implementation of the board resolution.

On 2 February 2017, at a Babereki Special Board meeting, an investment consultant, Don Gaetsaloe, is said to have presented a due diligence report on FMS according to which the entity was about to be liquidated. Nonetheless, Babereki Investments bought a 40 percent stake in FMS on 4 August 2017 for P2.314 million. Further, Babereki Investments provided a loan of P7,686 million to FMS payable over a period of six years from 1st December 2017. This loan is said to have been given to FMS despite the board’s express reservations regarding any further investments in FMS at a board meeting on 28 June 2017.

On 10 September 2017, the report points out, Babereki Board of Trustees resolved to disinvest from FMS with immediate effect. As at 30 June 2017, Babereki Investments had invested a total of P6,985 727.91in FMS.

FUTURE SUSTAIN INTERNATIONAL

The report further shows that on 26 January 2016, Future Sustain International (Pty) Ltd (FSI) proposed to sell 50 percent of its shares to Babereki Investments. The presentation is said to have been made by Benjamin Raletsatsi, then sole director of FSI. On 3 March 2016, the Babereki Board resolved to purchase 51 percent shares in FSI for P3.57 million and provide a further loan of P7 million for the purpose of expanding the business.

When the investment was made, the value of the shares or the method used to calculate it was not known according to the report. Further, after Babereki Investments, Molome appeared as a shareholder owning between 15 percent and 18 percent but it is not clear how he obtained the shares since he never injected any funds into FSI, according to the findings. Further, letters of guarantee worth P3.5 million were issued in respect of FSI against two companies, Boditse (Pty) Ltd and Hi-Lift Services Botswana (Pty) Ltd, for debts owed by FSI. These debts were never paid, prompting the companies to institute legal action against Babereki Investments. Altogether P13.5 million was invested in FSI.

MOLOME’S MAMATAZ ENTERPRISES (PTY) LTD

The forensic audit reports shows that on 8 January 2016, Molome’s company, Mamataz Enterprises, was appointed as a consultant to raise capital for Babereki Investments for a period of 24 months. Babereki Investments needed around P1.2 billion. On 11 September 2016, Botswana Life Insurance Limited wrote to Babereki Investments agreeing to provide funding, although the amount of this was not disclosed , according to the audit report.

It further emerges that on 2 September 2016, a facilitation letter was signed between Babereki and Mamataz in which Babereki agreed to pay Mamataz 3 percent of the capital raised as facilitation fees which was to be paid in six tranches. It emerges in the forensic audit report that while Babereki Investments received only P50 million from Botswana Life instead of the P1.2 billion it sought, Mamataz was paid P13 104 000 in a one-off transaction. This is inspite of the fact that 3 percent of P50 million is only P1.5 million.

QUALITY BUILDERS and STOFFBERG

According to the audit report, Babereki Investments paid a total of P8.960 million to Quality Builders Botswana (Propriety) Limited for construction of affordable houses and offices for Babereki without approval of the board.

The report also shows that on 25 August 2015, the Babereki Investments Board approved P20 million in investment in Soffberg Investment (Propriety) Limited. The investment is said to have been split between share capital and medium-term debt. However, due diligence done on the company had stated that it was likely to have been overvalued. Inspite of that, the forensic report states that on 3 March 2016, a Babereki special board meeting resolved to obtain a 30 percent shareholding in Stoffberg for P3.6 million and appoved a loan of P16.4 million to the company.