- Babereki Investments is broke
- Losses pile up to P65 million
- Babereki lost P12 m to Ernest Molome’s company
The Gazette reporter
Babereki Investments, the commercial wing of Botswana Public Employees Union (BOPEU) has paid P11 million to a company called Mamataz (Pty) Ltd for a controversial deal that never fully materialised, investigations have revealed.
Mamataz is a company owned by Ernest Molome, a close ally of former Babereki Investments Executive Chairman, Andrew Motsamai.
Molome, through his company Mamataz, was engaged to negotiate a loan facility on behalf of Babereki, with life insurance firm, Botswana Life Insurance Limited (BLIL). According to documents obtained by The Botswana Gazette, Mamataz was required to secure a loan facility of P120 million and the company would be rewarded with a 10 percent commission for its services. Insiders within the Union however allege that the P120 million loan had a catch.
BOPEU derives a significant portion of its revenue from commissions on the policies it sells to its members. It emerges that Botswana Life wanted those policies to boost their business, so much that Botswana Life was willing to give Babereki Investments a ‘sweetener’ to get the Babereki policy book. That sweetener was the P120 million loan facility.
While negotiation for the loan facility were between Babereki Investments and Botswana Life the latter wanted to transact directly Babereki Insurance Brokers, a licensed broker unlike Babereki Investments.
Sources who wanted to remain anonymous revealed to this publication that the loan was supposed to be for a single investment of P120 million with a commission of 10 percent due to Mamataz, but Botswana Life only provided a facility for P50million and wanted to spread the balance over the years and pay commission over the length of the contract to keep the Union and its investment arm in check and to ensure that they would not approach rival investors for the business.
However, the middleman, Mamataz demanded its commission payment in full, which according to a financial audit was remitted to it. Molome told this publication that he had signed a None-Disclosure-Agreement with the union and refused to discuss the details of the deal.
This publication has learnt that Botswana Life as a company listed on Botswana Stock Exchange Limited (BSEL), through its mother company, Botswana Insurance Holdings Limited (BIHL) is obliged to disclose its transactions to the BSE, due to the transparency requirements they were cautious and were not willing to pay the 10 percent commission to the middleman. Instead, Botswana Life paid P2 million to Babereki Insurance Brokers and not Mamataz directly, to avoid questionable transactions during their annual audits.
While only P2 million was paid by Botswana Life as middleman fees, Babereki Investments on the other hand paid up a total of P11.7 million into Mamataz account. Babereki Investments audited accounts for the year ending June 2017 reveal the transaction, and it was labelled a ‘loan facilitation fee’ with Botswana Life.
Contractually Mamataz was to have been paid P12 million for the facilitation of a P120 million loan but when the P120 million was made available in tranches a dispute arose on the commission payable. Botswana Life released P50 million in an initial tranche, but Babereki Investments paid Mamataz P11.7 million, despite the transaction being incomplete.
Evidence shows that Babereki has been losing money to as a result of unsecured transactions. During the 2017 financial year, Barereki Investments pumped in P6.1 million into three companies, Babereki Ka Lorato (Pty)Ltd, Future Sustain International (Pty)Ltd as well as Babereki Insurance Brokers (Pty)Ltd. Investigations reveal that P2.2 million, P3.5 million and P309 million were paid to these companies respectively.
Babereki Investments owns 51 percent shareholding in both Babereki Ka Lorato and Future Sustain International. It owns all shares in Babereki Insurance Brokers. As at 30 June 2017, audited financial results reveal that these investments were not performing and were impaired. Bopeu’s commercial unit invested an additional P3.6 million in Africa Wild Lodges and Safaris (Pty) Ltd. During the 2017 reporting period, it too was not performing.
Audit reports reveal that Babereki Investments advanced huge sums of money which were labelled as loans to subsidiaries, amounts of which have since been impaired.
Flying Mission Services (Pty) Ltd was loaned over P5 million. Future Sustain International was given P11.1 million. African Wild Lodges and Safaris was loaned P18.9 million while Babereki ka Lorato was also given P6.9 million. The company wrote in its 2017 annual financials that all loans disbursed to the associate subsidiary companies were not performing and thus impaired.
Over and above the facilitation of loans to its subsidiaries, Babereki Investments sought to embark on a project which would construct houses in Gaborone North for its members. The project had an estimated budget of P6 million, with P2 million paid to Quality Builders (Pty) Ltd and P4 million paid to GG Developers (Pty) Ltd. The money was released, however investigations reveal that despite the payment of P6 million, in relation to the development of the Gaborone North Housing Project, the project has not commenced.
Due to these non-performing investments, Babereki has since made losses amounting to a staggering P65.2 million during the 2017 full year.