Venture Partners Botswana (VPB) has failed to remit back funds totaling P129 million belonging to CEDA Venture Capital Fund (CVCF), a subsidiary of Citizen Entrepreneurial Development Agency (CEDA), the Public Accounts Committee (PAC) at the national assembly has heard.
This week Monday, Chief Executive Officer (CEO) of CEDA, Thabo Thamane, told PAC that a forensic audit has revealed that VPB, a company owned by Anthony Siwawa flouted investment procedures of the CEDA venture capital fund and only paid back P71 million, despite having been given P200 million to invest.
Under a 10-year deal, VPB was in 2003 tasked to manage the P200 million Fund and invest in different economic sectors through either debt or equity. The agreement was for VPB to invest in companies, grow them, and then return the money it took from CEDA after the businesses have matured. It emerged at the PAC that Siwawa’s company has failed to return the CEDA money, despite the fact that the 10 year investment plan and contract ended in 2013.
It also emerged that VPB, in companies that it invested in, over invested, so much that it became the majority shareholder, which was against the agreement. Thamane said they had to conduct an audit on the CVCF following the end of its 10-year lifespan to review the activities of the Fund since inception.
“We indicated that we wanted to do an audit because initially there was an agreement that CEDA was supposed to take 49 percent stake in each investment, but there were times where the Fund would go beyond that which then forced us to consolidate them to CEDA structures,” he said.
According to Thamane, this has however delayed the Agency’s financials as they are waiting for the results of the audit. CEDA has for the past four years failed to produce their consolidated financial results due to pending results of the Fund’s report.
Initially, the CVCF had targeted a 23 percent rate of return on investments. An external audit carried-out by PricewaterhouseCoopers (PwC) Botswana for the year ended March 2014, also questioned the CVCF’s decision to provide interest-free convertible loans to collapsed Delta Dairies when CEDA’s investment guidelines stipulate that financial assistance should be provided at subsidized rates.
PwC also queried the decision to take up a 94 percent stake valued at over P100 million in the dairy company when the guidelines only allow maximum investment of P30 million in a single entity.
At the end of the 10-year lifespan of the CVCF in 2013, some of the companies invested in such as Delta Dairies had been liquidated.
Some of the companies are, Aon Botswana, PG Timbers, Mabule Breweries, Airway Express, ZS Botswana, Builders Merchants Botswana. Tannery Industries Botswana has since been liquidated, while the other company is Biz Capital. The minimum amount for investment under the fund was P500,000 with a ceiling of P30 million.
Delta Dairies were bought by the retail giant Sefalana Holdings for P23 million after being liquidated over a number of debts. Among some of the creditors were P187 200 being fuel supplied by Tswana Fuel, P77 750 for professional services provided by BDO Services, P600 437.07 for cleaning chemicals and equipment supplied by VodaClean, P843 300.84 as salary arrears owed to Herman de Lange and Scharl Varnfield representing the over 54 workers that are owed salaries. The other P175 479.38 is for goods sold and delivered by General Packaging Industries, P2 158 274.60 for UTI Botswana which provided freight forwarding services, P1 144 747. 90 for money lent and advanced by Global Holdings Botswana and P4 624 560.18 (R5 610191.51) being for goods sold and delivered with services rendered by Tetra Pak South Africa.
Delta Dairies is said to have failed to pay the amounts they owed the creditors despite several demands and attempts made by the creditors, including attempts to attach some of the citizen-owned milk processing plant’s assets.