On Wednesday morning or at least before afternoon, one of the most successful parastatal CEOs in the history of the country, Botswana Ash’s no-nonsense man Montwedi Mpathi was inside the Botswana Ash (Pty) Ltd company corporate plane, on the way to the soda-ash mining town of Sua Pan. He was accompanied by very same men who had sacked him the day before, on Tuesday, Botswana Ash chairman Ian D. Forbes, and others who represent Chlor-Alkali Holdings (Pty) Ltd (CAH) the South African technical partner in the parastatal Botswana Ash (Pty) Ltd. Tuesday 31st October was the last day Mphathi would lead the mining company, after that 2 hour extraordinary board meeting held within the lush surrounds of the Grand Palm, to the west of Gaborone.
Within the space of three hours over a couple of jugs of coffee, without formal charges nor a hearing, the men from CAH had dismissed perhaps one of the most recognised names in local corporate leadership.
By the time he took that flight a memo had already been dispatched to BotAsh staff. Its subject? Montwedi Mphathi – Managing Director. It read in short, “This letter serves to advice (sic) you that with effect from the close of business Tuesday 31st October 2017 Montwedi Mphathi has left the employ of Botswana Ash in order to pursue other business interests”. It was only when that memo hit the staff, circulated through the media industry that Mineral Resources, Green Technology and Energy Security Sadique Kebonang was alerted to the saga. Out on official business in Seoul, South Korea, Kebonang was unaware of the internal happenings within the company, until after the event.
Speaking to this publication Thursday, Kebonang said he was shocked that such a serious decision can be made without engaging the citizen shareholder. “I would have expected that we would have been consulted over this decision, as early as when, and if, the MD was charged. It is simply arrogant that such decisions can be made without our input” said an irate Kebonang.
Mphathi, or Monty, as those close to him call him, was always going to be a challenge for the South Africans accustomed to working in an environment where power dissipates from top down. Your superior tells you to do something, no questions are asked, you do it! Mphathi is the exact opposite, intellectually sharp, experienced and independent minded. It is instructive that he was dismissed for “insubordination”.
CAH came to own 50 per cent of Botswana Ash, and thus became a technical equal shareholder against Government’s 50 per cent ownership, in 2010, when the company bought various portions of the parastatal owned Anglo Amercan (14 %), De Beers (14 %) AECI Ltd (14%) FirstRand Bank Ltd (3.96%), Standard Bank Group Ltd (2.47%) Nedbank Ltd (1.57%). Government on discovery of the deposit of Soda Ash in the north central part of the country, had kick-started the mining company in 1991 to produce both Soda Ash and Salt for exportation.
Botswana Ash had attracted the South African giant due to its strategic presence in an otherwise very unique industry. The SA giant, was itself an operator of companies further up the value chain, among them NCP Chlorchem (South Africa) and Walvis Bay Salt (Namibia). Botash produces around 300 000 tonnes of ash and 650 000 salt per year and is one of the best run parastatals in the country. In a year in which another major government mining entity, BCL, collapsed reportedly from a mix of mismanagement and industry downturn taking with it about 5000 direct jobs, Botash had become the blue-eyed boy of the parastatal landscape, recently paying Government about P90m in dividend. The company holds more than P300m in reserves, while targeting another P300m in EBITDA, according to the company’s media briefing earlier this year.
But behind that façade of its reported success, Mphathi has been fighting a losing battle, internally. Mphathi expressed concerns over wrong doing in the financial reporting of the company. This followed from reports that there had been extensive underreporting of the company’s assets especially the exported soda ash when it arrived in South Africa. In one case stock worth P28m reportedly disappeared in Johannesburg. Other concerns raised, according to those close to Mphathi, included transfer pricing, overstating costs thereby denying government revenue both from dividend and tax revenue.
According to sources one of the major turning points in the relationship, arose when, recently, CAH attempted to buy out Government, offering to pay P400m for Government’s 50 per cent shareholding. However a due diligence report compiled by RMB Botswana on behalf of the MDCB, Government’s mineral investment arm, reportedly put the value of the operation at P1.3bn. Government officials saw the offer by CAH as insincere. Various senior government officials who spoke to this publication complained of a general lack of accountability and in some cases arrogance from the board led by the CAH team.
For Mphathi things came to a head when he made a decision that many say was fateful – he suspended a senior member of the financial department. Mphathi, those close to him argue, instigated an extensive probe into the dealings between BotAsh and some CAH subsidiaries in South Africa to which the parastatal sent its produce for processing. Mphathi suspected collusion between his financial officials, some members of the board, and South African companies. The suspension caused great consternation among the CAH arm of the BotAsh, especially from Board Chairman Forbes.
The investigation commenced a mere two weeks ago. It is said Forbes explicitly warned Mphathi not to suspend the official, promising him that he would pay a heavy price.
This week when the board descended on Gaborone, Mphathi took it that the investigations would come before the board for discussion, and maybe he would have the opportunity to brief the board about his differences with Forbes on the matter.
The week started as normal for the men and women who run one of the few remaining successful mining parastatals. The board took up a room at the Grand Palm and sat to deliberate on the business of the company. Mphathi was excused from proceedings, and, informed that he would be the subject of the deliberations. The meeting took two hours, no more than that. When the board members emerged from the gathering, some left, leaving behind only the chairman and two other board members. Forbes informed Mphathi that the board had resolved to sack him. That he had been found guilty of insubordination, by ignoring the warnings of the Chairman. Other reasons were given to justify the decision, namely that the due diligence conducted by RMB was conducted without their input. Board members who were present say the rest of the charges were only mentioned glibly, the objective being to get rid of the outspoken MD.
But back to the flight, all this was business, nothing personal. The flight to Sua Pan came at the right time as far as the South Africans were concerned. It had been decided it would make sense, to help the outgoing MD, for him to travel in the corporate jet, so that he would arrive in Sua Pan earlier, so that he would pack his belongings earlier and leave the company house sooner. In a way it was to the convenience of the South Africans, the man they had always wanted out was finally out of the way. Forbes would not comment on this matter. Mphathi’s phone was off by time of going to press. A message left for him was not responded to.
It remains to be seen what action the Minister will take. The Mphathi saga will once again cast a shadow over the role of Government representatives on parastatal boards. Unlike BCL before it, the relevant ministry has not interceded to protect its representative, like BCL the passive role of those appointed to represent the tax payers and government’s investments, in strategic institutions needs to be scrutinised.