Tycoons tussle for CBD: Mogae, Dada & Co at war for P70M honeypot
Skeletons are tumbling out of the closets in a Central Business District investment project owned by among others, business tycoons Satar Dada, former president, Festus Mogae and diplomat-cum businessman Sam Mpuchane following an unpopular and far-reaching decision to oust Business Botswana president Lekwalo Mosienyane, who is largely accredited with masterminding the transformation of their once run-of-the-mill dream into a complete paradise.
Following several attempts by government to confiscate the ten hectares of land due to several violations of the land development covenant by Smart Partnership Enterprise- a consortium of Botswana’s business tycoons, an agreement was reached by the partners to engage Mosienyane to drive the project forward.
Mosienyane, a renowned architect and urban designer, with a wealth of experience in creating suburbs such as Phakalane Estate and Melrose Arch in Johannesburg, was given the role of breathing life into the idea and to “fulfil certain pre-development management functions in respect of the project.”
He was mandated and tasked to convince the Government to extend the development covenant and make the 10 hector mega development viable. His additional role was to provide architectural/property development services – market research, development feasibility and financial viability allowing the SPE the opportunity to peg their level of investment. The initial plan as conceived and submitted by the developers-among them Mogae, Lawrence Lekalake, Mpuchane, Bertha Mochekwane, Martin Mannathoko, Sheila Tlou, Maclean Letshwiti, Judy Tsonope, Tebelelo Seretse, Tshipa Mothibatsela, was that of a shopping centre governed by the registration of the land use as Commercial/Retail.
Mosienyane however viewed the land use limitations as a recipe for failure and instead successfully converted the land use from Commercial/Retail to Mixed Land Use to include ‘residential, recreational, tourist and common facilities like hotels, offices, filling stations and restaurants among many others. This exercise had initially been unsuccessfully attempted by William Lee Engineers on behalf of Smart Partnership according to documents shared with this publication.
Apart from this vigorous pursuit of conversion of land use, Mosienyane ‘s company was also tasked with “the duty to research and report on the extent to which the land could be profitably developed, focussing on the feasibility and viability of the potential development.”
A confidential document passed to this publication shows that Mosienyane further supplemented the information by displaying the number of tenants he had already spoken to, all of whom had expressed interest in the project. Among those who had joined the expression of interest were nine well-established hotels, two Banks, one Ministry and various restaurants.
In a leaked document related to the dispute between the parties, Mosienyane points out that “it was the intention of both JHI and Smart Partnership Enterprises (SPE) that by Mosieyane accepting the benefit of the contract, he became party to the contract and entitled to claim from Smart Partnership.”
Mosienyane claims that the parties did accept the benefit and obligations by accepting involvement and rendering services as envisaged by the contract.
Regarding remuneration for services rendered, the contract provided that, “should SPE not appoint the same Architects and Quantity Surveyors being Mosienyane for the final development stage, Smart Partnership would be obliged to pay Mosienyane in full for all the services rendered which fees shall be in accordance with the standard professional tariffs as set out by the Botswana Institute of Development Professionals (BIDP).”
The relationship soured when Smart Partnership snubbed Mosienyane by appointing Paledi Morrison and Partners Architects and Design Consultants. At this juncture, Mosienyane, it is understood reminded them that they were violating the agreement.
The project was directed by Tshipa Mothibatsela of Mothibatsela and Associates Consulting Engineers, a shareholder of Smart partnership, former Director of Botswana Ash, Non-Executive Director of ABC Holdings Limited and Director of Primetime Property Holdings Limited.
Mothibatsela awarded the architectural contract for the Final Development Stages to Paledi Morrison and Partners Architects and Design Consultants without tendering for the work, according to some disgruntled shareholders of SPE.
Paledi Morrison and Partners Architects and Design Consultants is alleged to be close to Dada- a towering figure within the partnership- and has done most of Dada’s engineering works. “While still in control Mosienyane had rejected Mothibatsela in one of the tenders for a Civil and Structural services, and we assume it was payback time because Mothibatsela was now in a control post as his appointment as a director or overseer of the second phase which Mosienyane had hoped and prepared for,” stated a source from within the partnership stated on grounds of anonymity.
Influential figures within the SPE alleged that Mosienyane ‘wants to eat alone and has hatched a brilliant strategy to so.’
Following his failure to secure the final phase job, Mosienyane then billed Smart Partnership for the services he has rendered demanding that he be paid in full P15. 8 million for the work done at pre-development stage.
The partners however have not acceded to Mosienyane’s bill forcing him to seek recourse at the High Court where it is understood he is also seeking a 10 percent interest per annum and collection commission being 10 percent of the capital and costs of suit.
In an interview with this publication, SPE shareholder and CBD project coordinator and former Bokamoso Hospital Chief Executive Officer, Kabelo Ebineng said he is constrained to speak on the matter as it is sub judice.
“It is true that the matter is now before the courts and I will not be making any comments on it,” he said giving an answer almost the same to that of Mosienyane who said he is constrained not to speak on the matter for the same reasons.
Another heavyweight, within the partnership, former President Mogae told this publication that he is an indirect shareholder in Smart Partnership Enterprises and like other Batswana does so through a c ompany of investors called Northern Investments. As a result he never sat on the board nor held any leadership position in Smart Partnership Enterprises mainly due to his assignment in the South Sudan peace process.
Mogae advised that “he is not aware of the latest developments at Smart Partnership Enterprises and (was) also not aware that Mosienyane was the Project Architect, and therefore unfamiliar with the said developments regarding his contract.”
Another shareholder, Dada distanced himself from the dispute saying it started before his arrival into the partnership. “I am aware of Mosienyane’s matter, it started way back before I was part of the project, I am sure Mpuchane is better placed to give you answers,” he said.
Mpuchane however differed with Dada ‘s assertion that he came late into the project saying Dada had always been part of the project from the word go. “Dada is a shareholder and has been with us from the onset. Some of the answers you seek are confidential while the one on Mosienyane is currently before court,” stated Mpuchane.
SPE’s side of the story is that Mosienyane’s company-MPI entered into a contract with JHI Botswana and not with SPE and further argues that MPI’s contract was on a risk basis. As such SPE points out that MPI cannot be due any remuneration arguing further that the development on site is no longer as envisaged by MPI.
The Dada factor and how smaller partners were side-lined
SPE is a partnership between well established companies made of Botswana’s business tycoons and developing business companies. The land was acquired from the government under the understanding and covenant that smaller businesses were going to benefit from larger company’s financial backing as well as from their experience in the field of development.
In a document passed to this publication in relation to the dispute explicitly shows that initially the ten companies comprising Smart partnership were to raise and contribute an amount of P7 million each in order to raise P70 million to pay the consultants and to pay for the initial stages of the project. Despite making promises, the smaller businesses failed to raise the capital.
Dada whose equity contribution is said to be the largest in the partnership purported to bail out the smaller and less financially endowed members of SPE who could not raise their share of the equity.
There are further reports that he initially opted to assist with the finances and deterred partners from going to the banks for loans, further suggesting that if they were willing, they could buy him out at a later stage.
“Most fell for the trap, but how do you buy out a person who has channelled in countless millions which millions accrue in value for him to your detriment?” Remarked a source within the partnership.
The current set up of loans the agreements that secure them requires that when dividends are declared, it is Dada who benefits and as the property increases in value so does the value of the shares making it even more difficult for the ‘bailed out’ smaller companies to reaffirm their positions and investments.
Ebineng however dismissed the reports that Dada funded some of them, “we contributed as is the case with every partnership, did Dada tell you that he funded us?” he said before sealing his comment with a question.
Dada however was cagey with information, “you are now asking highly confidential matters. How much I have contributed to the project is between me and my partners.” he responded to this publication.
For his part Mogae, said while he is “aware that a decision was taken to approach many other Batswana regarding the aspect of equity investment in the Project, he was not privy to the detail relating to Satar Dada.
Despite having countless business magnates, a highly-placed source within the partnership said Dada ‘s voice seems to be carrying considerable weight. “He is a shrewd negotiator and often basks in his financial muscle to influence decisions which many may not agree with,” the source said.