Machinations for Khama’s Retirement Home

Machinations for Khama’s Retirement Home

During the course of last year, Botswana Housing Corporation (BHC) made an unusual request to acquire Botswana Power Corporation (BPC) staff houses in extension 9 valued at P3.8 million for President Ian Khama, who in turn buys it for himself at a cool P2.7 million, reveals The Business Weekly & Review Staff Writer KEABETSWE NEWEL. • BHC plans to buy Khama a P4m house from BPC • BPC tender committee clashes with management • BPC tender committee puzzled

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In April 2018, President Ian Khama will be leaving office. The BDP in July 2016 pushed through parliament legislation specifically to cater for the current President to be availed a retirement house to be constructed at a place of his choosing, whether within or outside Gaborone.

 
The President is now trying to build his retirement home. With his taste for the finest things in life, it appears the President will only settle for a retirement home in extension 9, the posh neighborhood in Gaborone close to State House, where rich businessmen, top chief executives and the leading government executives reside. A very quiet neighborhood, where it is rare to see an ordinary man walking in the street.

 

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Those in the know, inform that Khama has a plot in Extension 9, on which his retirement home is to be constructed. However, they say the adventurous ex-military man was not happy about the size of the plot. It was considered too small for the President’s dream home. Alongside his plot, BHC has various staff houses. It appears Khama’s solution to his ‘small’ plot was to acquire one of the BHC staff houses that adjoins his, join the plots, demolish the existing structures and construct the house of his dreams.

 

 
BHC as the procuring authority for the presidential retirement home sought to procure the house for him. However, it transpired that the plot did not belong to BHC but rather BPC. Forcing BHC to approach BPC to purchase the staff house, so as to satisfy Khama’s desires. Investigations reveal that BHC approached BPC and offered to purchase the house situated at plot 2425 at Extension 9 in Gaborone- Title Deed number 431/81 of 8th September 1981 on behalf of Botswana Government.

 

 
BPC then considered Lot 2425 to be a surplus asset in terms of Section 88 of the BPC Tender Regulations (Amended-June 2015) and treated the request by BHC as an unsolicited tender in terms of the BPC Tender Regulations (Amended-June 2015). Evidence reveals that the initial proposal from BHC was for BHC to swap their house on plot 5432 Gaborone Extension 28, Title Deed Number 543/1976 of 11th October 1976, and BHC offered P 529, 000.00 as the difference between BPC house and its own (BPC) house.

 

 
The offer from BHC was based on their internal valuation. BPC then engaged independent evaluator, Willy Kathurima Associates Pty Ltd to conduct an independent valuation. The house was valued at P3.800 000-00 (three million eight hundred thousand Pula) on the open market and with a forced sale value of P2, 800,000.00 (two million eight hundred thousand).

 

 
The BPC Board considered the matter on 26th October 2016 and resolved that BPC should sell the house at Plot 2425 to BHC at its Open Market value but BHC later approached BPC and negotiated the sale price at P3, 196,000.00 arguing that the existing house was “very old”, of which BPC acceded to, and subsequently made a sale agreement.
The Business Weekly & Review has established that a meeting was subsequently held at Office of the President (OP) on 14th December 2016 where both parastatal Chief Executive Officers (CEO)’s were present. BPC was represented by its new CEO. Several CEOs who are involved in the project of building a retirement home for the President are said to have been taking swipes at BPC at that meeting, accusing the utility service provider of delaying the release of the said Lot 2425 in Extension 9.

 

 
The meeting revealed that BHC could not legally purchase the plot for the President. It was explained at the meeting that BHC could not purchase and resell the property to the President because BHC policies provide for a one-man-one-purchase, and BHC has already sold a house to His Excellency before.

 

 
In order to circumvent the legal restrictions imposed on BHC, it was resolved at the meeting that the house be sold to Khama in his personal capacity by BPC and that BPC consider reducing the price to P2, 744,000 (two million seven hundred and forty four thousand), rather than the market value of P3.8 million.

 

 
On Tuesday 20th December last year, BPC Special Board Procurement and Tender Committee met on an impromptu meeting at1430 hours. There was only one agenda item. It was to discuss the Unsolicited Tender 1888/16-01 – The Sale of BPC Staff House at Plot Number 2425 in Gaborone to the 1st citizen.

 

 
At that meeting, the BPC Special Board Procurement and Tender Committee members enquired whether the same opportunity (unsolicited house purchase from BPC) is accorded to ordinary members of the public. However, the BPC executive management explained that it would depend on the circumstances presented on a case by case and explained further that the current scenario is a national priority resulting in BPC’s consideration to the unsolicited tender.

 

 
The committee members also queried on the price reduction from the open market value of P3, 8 million to the requested P2, 744 million to which BPC executive Management explained that P2, 7 million is the value of the land alone without consideration of the structure on the land, taking into account that the President proposes to demolish the structure as it is old.

 

 
The committee members however disagreed with executive management arguing that whatever plans were envisaged for the plot should not be of concern to BPC. They argued that the sole consideration should be to ensure that internal procedures are followed and due diligence done throughout the transaction, and not make favours for the President.
The committee members were also unhappy because Ministry of Land Management, Water & Sanitation Services was not the procuring entity for the said Lot 2425. BPC management however responded by stating that there has been a change in the law guiding the retirement of Presidents of Botswana, which makes it procedural for the President to purchase a lot for his retirement home to be built on.

 

 
The Business Weekly & Review has it on good authority that the board has requested for a resubmission of the paper as an unsolicited bid and to also redo the due diligence process and ensure that the Presidents (Pensions and Retirement Benefits) (Amendment), Act No. 22 of 2016, together with all regulations, policies and any such changes in law are referred and adhered to.

 

 
The board has also resolved to dispose Lot 2425 of at the amount of P2.8 million (from P3.8 million) being the Forced Sale value amount as defined in the valuation report from Willy Kathurima. There is no indication in the documents that consideration was given to whether or not this transaction was based on circumstances amounting to a forced sale and that neither the President’s aspirations nor the labelling of the circumstance of the sale as a “national priority” would amount to grounds for such.

 
The board however wanted the sale to be conditional upon receipt of a written consent by the Minister of Mineral Resources, Green Technology & Energy Security as well as the Minister of Finance and Economic Development; and that the valuation report from Willy Kathurima and as well as the minutes of the meeting of 20th December be circulated to the Main Board of Directors. At the time of going to press it has not been ascertained whether the due diligence has been completed.

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In his generation Newel is one of the most recognisable names in Business journalism. A recent finalist in Media Institute of Southern Africa Media Awards, Newel has written extensively in the boardroom dynamics around public pension funds and related investment interests. His areas of interest are companies and markets, including the financial reports of major companies in the country. Currently he is pursuing the developments around the management contracts for one of Africa’s most lucrative Public Pension Fund, the Botswana Public Officers Public Funds.