DBC finances still unresolved

FIVE years after Cabinet ordered the closure of the Development Brigade Corporation (DBC) and Presidential Commission of Inquiry into its affairs, the finances of the now defunct company are still not sorted out.

Despite the business not being functional for years, it still posted losses of N$72,6 million during the 2003-04 financial year, while the accumulated deficit for its subsidiaries amounted to N$64 million. On Tuesday, the Auditor General’s latest audit report on the DBC was tabled in the National Assembly, indicating that the Ministry of Trade and Industry had failed to maintain any financial records for the company since it shut down in 2001 and its subsidiaries were not being monitored.”In these circumstances the auditors were unable to carry out all the audit procedures, or to obtain all the information and explanations considered necessary, or to satisfy themselves that proper accounting records have been kept,” said the audit report.Because no formal management structure existed at the time of the audit, it was not possible for auditors to obtain the management explanations that they needed.Because it is no longer operational, the audit report is of the opinion that there is virtually no means to recover the losses.The audit however noted an overall improvement in the finances of the DBC to the extent that it managed to push up the value of its total assets to exceed its liabilities by N$30 million.In 2002, Government allocated N$51 million to the DBC, which boosted its total income in 2003.During 2003-04, a loan of US$8,4 million including accrued and suspended interest due to the Exim Bank of Malaysia was repaid.The Namibian equivalent of this amounted to N$62,8 million and represents final settlement.The auditors said they found no evidence that Cabinet instructions regarding the mergers and transfers of DBC subsidiaries had in fact taken place.The Namibia Bricks Enterprises and M&N Developments (also a construction and brick company) were expected to merge in March 2001.Patriot Construction had to merge with the Roads Contractor Company (both being Government institutions) and the possibility of merging Star Protection Services with Namibia Protection Services had to be investigated.No signed financial statements for any of the subsidiaries are available for the financial years March 2002 to March 2004 and auditors for these companies said that no information was available to finalise the audits for these years.”It appears that controls in the subsidiary companies are not effectively monitored and it is likely that losses will continue,” remarked the AG.In the 2004 audit report, group results had to be based on results from 2000 and on the assumption that no trading took place during 2002-2004.All loans made to subsidiaries have been deemed irrecoverable.Collectively the assets of the five DBC subsidiaries were valued at N$14 million.However, auditors were unable to verify the fixed assets shown in financial statements due to their location.”The auditors did not obtain all the information and explanations considered necessary to satisfy themselves as to the existence of fixed assets,” says the audit.The auditors could also not confirm the existence of certain fixed-deposit and current bank accounts, which amount to N$5,3 million, and the group’s bank overdraft of N$905 782.The Permanent Secretary of the Ministry of Trade and Industry has been asked to locate these amounts and provide evidence of their existence and balances.He could not be reached when contacted by The Namibian yesterday to shed light on the winding-down of the DBC.The Auditor General concluded last month that he was unable to express an opinion on the financial statements and whether they represented the financial position of the DBC because of the myriad of loopholes in financial control.On Tuesday, the Auditor General’s latest audit report on the DBC was tabled in the National Assembly, indicating that the Ministry of Trade and Industry had failed to maintain any financial records for the company since it shut down in 2001 and its subsidiaries were not being monitored.”In these circumstances the auditors were unable to carry out all the audit procedures, or to obtain all the information and explanations considered necessary, or to satisfy themselves that proper accounting records have been kept,” said the audit report.Because no formal management structure existed at the time of the audit, it was not possible for auditors to obtain the management explanations that they needed.Because it is no longer operational, the audit report is of the opinion that there is virtually no means to recover the losses.The audit however noted an overall improvement in the finances of the DBC to the extent that it managed to push up the value of its total assets to exceed its liabilities by N$30 million.In 2002, Government allocated N$51 million to the DBC, which boosted its total income in 2003.During 2003-04, a loan of US$8,4 million including accrued and suspended interest due to the Exim Bank of Malaysia was repaid.The Namibian equivalent of this amounted to N$62,8 million and represents final settlement.The auditors said they found no evidence that Cabinet instructions regarding the mergers and transfers of DBC subsidiaries had in fact taken place.The Namibia Bricks Enterprises and M&N Developments (also a construction and brick company) were expected to merge in March 2001.Patriot Construction had to merge with the Roads Contractor Company (both being Government institutions) and the possibility of merging Star Protection Services with Namibia Protection Services had to be investigated.No signed financial statements for any of the subsidiaries are available for the financial years March 2002 to March 2004 and auditors for these companies said that no information was available to finalise the audits for these years.”It appears that controls in the subsidiary companies are not effectively monitored and it is likely that losses will continue,” remarked the AG.In the 2004 audit report, group results had to be based on results from 2000 and on the assumption that no trading took place during 2002-2004.All loans made to subsidiaries have been deemed irrecoverable.Collectively the assets of the five DBC subsidiaries were valued at N$14 million.However, auditors were unable to verify the fixed assets shown in financial statements due to their location.”The auditors did not obtain all the information and explanations considered necessary to satisfy themselves as to the existence of fixed assets,” says the audit.The auditors could also not confirm the existence of certain fixed-deposit and current bank accounts, which amount to N$5,3 million, and the group’s bank overdraft of N$905 782.The Permanent Secretary of the Ministry of Trade and Industry has been asked to locate these amounts and provide evidence of their existence and balances.He could not be reached when contacted by The Namibian yesterday to shed light on the winding-down of the DBC.The Auditor General concluded last month that he was unable to express an opinion on the financial statements and whether they represented the financial position of the DBC because of the myriad of loopholes in financial control.