The founding Managing Director (MD) of Turnstar Holdings, Gulaam Abdoola, is a respected property magnate. He played an instrumental role in the growth of the group’s business and asset base. A report conducted by Desai Law Group (DLG) shows that Abdoola is the single largest beneficial shareholder of the company as its founder.
He is well known and respected in Botswana business circles as a property developer and owner, principally through his family owned enterprise, GH Group Proprietary Limited (GH Group). The DLG report found that it has been the case over the past two decades that a property project is developed throughout the construction risk period by GH Group and is then sold by GH Group to Turnstar. A case, by way of example, identified by DLG is the Nzano Centre in Francistown and Mlimani City in Dar-es-Salaam. Both these shopping centres were developed by GH Group under the supervision of Abdoola, and then acquired by Turnstar. They are now a profitable component of the company’s property portfolio.
Abdoola was instrumental in the early establishment and development of the swanky Game City in Gaborone, which remains one of the flagship developments of Turnstar and by which the Group is known. DLG says the way GH Group property developments were acquired by Turnstar would have been on a fully disclosed basis with full board approval and where relevant BSE transaction threshold were triggered, BSE guidance and/shareholder approval. Infact, DLG states that it was not only the case that Abodola was on occasion the seller of properties developed by him to Turnstar, but also that he was effectively appointed to scout for new, high quality business and acquisition opportunities on an ongoing basis for Turnstar. He would then bring them to the Board for approval and possible progress to the next stage (including acquisition).
DLG found that it was also agreed by the board that Abdoola was to disclose fully to it any project he was to undertake at GH Group or otherwise in his personal capacity, whether or not there was any interest by Turnstar in the relevant project. Although not recorded in any formal agreements, Abdoola’s contract of employment does not make any specific reference to the arrangement. The board was, for all practical purposes, happy with this arrangement as effective as there was an in-house resource whose skills, experience and network were deployed for the benefit of the company.
This was the prevailing arrangement when Abdoola brought both the Palazzo Venezia and the Okavango Place transactions to the Board in 2017 and 2019 respectively. DLG points out that there was nothing unusual in Abdoola doing so as this was continuation of past practice. Because Abdoola was the go-to guy who knew what he was doing and had proven this, the Board took his word. Infact, DLG found that no due diligence or proper advisory was procured for the Okavango Place transaction. While some attention was given to the Palazzo transaction, the DLG report hinted that more could have been done by the Board to avoid this debacle. Unbeknownst to them, they fell for scams hook, line and sinker.
It would then seem Abdoola is at once Turnstar’s strength and weakness. Arguably, Turnstar management and Board rely on Abdoola. Board chair nominee Butler Phirie accepts a certain element of reliance but not without qualms about whether it is excessive or untoward. He says the MD has been dominant as the go-to market officer or leader of the business. “He identifies possible investments for the company,” Phirie points out. “That on its own is the work of the MD. Would you then say the Board is reliant on the MD to bring business? You are paying him to do exactly that. But is it untoward or excessive (reliance)? Is it not what should be happening?”
Phirie has been involved for about a year or so with Turnstar and says he has not felt that the Board is controlled by the MD. “I don’t have that feeling and therefore I would say that for any type of decision-making the board does not have an independent thought process to refuse, amend and to do what it has to do because it seemingly has a powerful MD who is also a shareholder,” he reasons. But with such reliance on Abdoola, shareholders have called for development of a succession plan. Internally, Phirie says some restructuring is taking place with the position of Chief Operations Officer (COO) being introduced. “We have created that position to strengthen internal structures,” he explains. “Before it was MD and CFO but we now want to have the next line after the MD.”
Against this background, Phirie says the business will continue in existence “with or without some of us or anybody for that matter. That is a big thing with corporates – they must exist without us, with the MD or without the MD”. This is not to say the Board is not cautious that Abdoola himself will leave at some point, he adds quickly. “Therefore, what are we doing? We have a pool of people in the company that we think can step up,” Phirie notes.
With the COO position being established, Phirie says the whole thing will being seamless and able to accommodate strengthening by bringing external people whenever such a need arises. “We are not worried about him (Abdoola) retiring,” he emphasises. “We think Turnstar should be strong enough to withstand one man retiring.” At the company’s last interaction with shareholders, some expressed a desire for Abdoola to step down. Phirie considers it a fair ask, given that there was a “regrettable” loss of P73 million in fair value terms.
