Masisi in a hurry to dissolve Banyana Farms, says Auditor General

Following the controversial allocation of a significant portion of state-owned Banyana Farms, President Mokgweetsi Masisi has issued orders for the haste dissolution of the company overseeing the property. Measuring 149,000 ha, the land was originally bought in order to promote commercial cattle farming in Botswana. It is not illegal for presidents to engage in commercial [ihc-hide-content ihc_mb_type="show" ihc_mb_who="4,3,2,1" ihc_mb_template="3" ] enterprises. But it is frowned upon – especially when there is any suspicion of conflict of interest. Plenty of suspicion surrounds this transaction. Masisi did not meet the tender requirements but was allocated a portion of Banyana Farms in 2020. The Auditor General's report reveals that Banyana Pty Ltd received a Presidential Directive on March 30, 2022, instructing it to wind up within six months. The reason behind the President's decision for a swift dissolution of the company remains unclear. However, records indicate that Banyana was ill-prepared to expedite the dissolution process. The implications of the dissolution are also unknown. Acting Auditor General Keneilwe Senyarelo said the directive specified the transfer of farm leases to the Ministry of Lands Water and Sanitation Services upon closure of the company, while the farms themselves were to remain under the jurisdiction of the Ministry of Agriculture for support. “In the opinion of auditors…In light of the aforementioned cessation of the operations, the accounting policies have been altered to reflect the short-term nature,” says the Auditor General’s report. The report says that all assets and liabilities have been classified as current. “The carrying amounts have been adjusted to realisable and payable amounts respectively” adding that “The auditors noted that due to the new developments of ongoing-concern status of the company, management was required to remeasure right to use assets.” However, the report says, management did not remeasure on the assumptions used on IFRS 16 (International Financial Reporting Standards) and this resulted in significant journal amounting to P322 958. “In addition, management did not account for interest and depreciation expenses on lease liability and right of use assets workings and this resulted in the misstatement on depreciation of P44 646 and interest expense of P54 558,” the report says. The report states that management acknowledged the observation made but did not review the assumptions used in determining the lease term for the land leased from the Department of Lands (State Land) and the Ngwaketse Land Board (Tribal land) under IFRS 16, citing uncertainty stemming from a Presidential Directive issued on March 30, 2022, which ordered the closure of the company. Additionally, management expressed uncertainty about the timeline for winding down the company, as discussions with relevant government departments regarding leasing out the remaining portion of the farm were ongoing. This uncertainty prevented management from reliably estimating the remaining lease of the farms. Furthermore, the report notes that management expected the auditors to reassess the depreciation charge on the right-of-use assets and the interest charge on the lease liability, given their prior assistance to the company in implementing the disclosure requirement of IFRS 16. In terms of financial performance, the report indicates that during the reviewed period, Banyana Limited recorded a profit of P35,339, marking a notable improvement from the loss of P650,724 reported in the previous year (prior to fair value adjustments on other financial assets totaling P41,671). This profit was primarily driven by a 75 percent increase in operating income, which rose from P13,607 in the previous year to P23,770 in the reviewed year, in addition to derecognition gains on right-of-use assets totaling P322,598. [/ihc-hide-content]

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Masisi in a hurry to dissolve Banyana Farms, says Auditor General

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