Govt to raise N$80m for BEE drug plant

GOVERNMENT intends raising N$80 million to start up pharmaceutical plant, Cabinet documents seen by The Namibian indicate.

The venture is to be channelled through BEE company Meduletu Pharmaceutical (Pty) Ltd, several independent business sources indicated this week. Meduletu Pharmaceutical is to be at least partly owned by a small group of well-connected businessmen with strong links to the ruling party, official records showed.But initially well-placed Government sources said a technical committee, which reviewed the Meduletu proposal, had advised against it, saying it was “unsuitable” and too costly.A secret Cabinet Action Letter (Decision No.12th / 28.06.05 / 01) directed the Ministries of Health and Social Services, Trade and Industry, Finance and the National Planning Commission to seek funds from potential Malaysian, Brazilian and other investors for the planned factory.The order to raise funding for this purpose is part of a wider directive and aimed at supporting a joint venture between the Namibian Ministry of Trade and Industry and Cuba’s Ministry of Basic Education to establish more industrial manufacturing in Namibia.The main subject of the Cabinet Action Letter was the bailing out of struggling uniform manufacturer Tropitex, The Namibian reported earlier this week.The directive resolved that Tropitex, controlled by former Old Mutual legal advisor and the son-in-law of former President Sam Nujoma, David Imbili and Cuba’s state-owned Sebradel, would have its N$3,5 million debt with the Development Bank of Namibia passed on to August 26, the Defence Force’s commercial arm.In the Action Letter, Cabinet also resolved its “renewed commitment” to co-operation in the pharmaceutical industry in terms of a Memorandum of Co-operation between Namibia and Cuba entered into last year.Files kept by the Registrar of Companies state that Meduletu Pharmaceutical is to be headed by Aaron Mushimba, businessman and brother-in-law of Nujoma.Auditors Grant Thornton Neuhaus & Co.’s share register of Meduletu shows that of the 300 shares currently issued in the company, Mushimba holds 84 shares (28 per cent).Former Otjozondjupa Governor Rehabeam Kamehozu owns the biggest allotment of shares – 120 (40 per cent) – according to the same records.The other shareholders are Windhoek pharmacist Jacques Marais with 24 shares (eight per cent), well-known Ugandan-born businessman Fred Sekandi with 12 shares (four per cent) and an outfit called Meal Services with 60 shares (20 per cent).The other non-shareholding directors are Maria Nakanyala and Anthony Bame.Records kept at the Registrar of Company show that Meal Services is controlled by Ed Davies, who is also the MD and largest shareholder in Independence Caterers.Independence Caterers is one of the three largest food suppliers to the Ministry of Basic Education’s school hostels.Grant Thornton & Neuhaus’s copy of Meduletu’s share register further lists the company’s board as Mushimba (MD), Marais, Kamehozu, Davies and Sekandi.The minority shareholder, Sekandi, first came to public notice as MD of mining start-up Tradeline (Pty) Ltd during the legal battle for control of the Toscanini diamond claims on the Skeleton Coast in 2002.Tradeline lost their case, with costs, in 2002.Sekandi was also involved in another start-up investment firm, MacArthur Baker International Namibia (Pty) Ltd.(MBI).MBI unsuccessfully tried to obtain funds from the GIPF before quietly closing its doors in 2004 after failing to pay Old Mutual overdue rent of about N$300 000.Old Mutual has obtained a judgement against Sekandi in this respect, past court records showed.Registrar of Companies files also show that Meal Services was formerly known as the Khadiya Fishing Company, which was then converted into La Mer Off-shore (Pty) Ltd, a Malaysian investment vehicle.La Mer had featured Swapo heavyweight Festus Naholo as a director before it was converted to Meal Services (Pty) Ltd on 27 August 1998.Mushimba, who as Meduletu’s MD will play a critical role in determining the successful outcome of the venture, has survived a string of spectacular financial crashes over the past few years.The first was the City Savings and Investment Bank, of which he was a founding member and MD, which collapsed under bad debt within some five years of its opening its doors.Prior to that, Stocks& Stocks Construction (Pty) Ltd, which built the Government Office Park, also folded while he was its MD.With it went Stocks & Stocks Hotels, which ran the Windhoek Country Club and Casino and the Swakopmund Hotel and Entertainment Centre.The State was eventually forced to take over the loss-making hotel chain, at considerable expense to taxpayers.More recently, Mushimba’s beef exporting plant in Witvlei, Uri //Khubis Abattoir, folded without exporting a single container of beef in the wake of sudden EU health restrictions a year and a half ago.Although no final distribution account has yet been posted with the Master of the High Court, it was widely reported that Uri //Khubis owed some N$70 million, mostly to the Government Institutions Pension Fund (GIPF) and the Agribank in the form of soft loans.Last year also saw Diaz Point Diamonds (Pty) Ltd.collapse, which also held a soft loan from the GIPF.A first distribution account held for inspection at the Master of the High Court showed a deficit of some N$35 million, with no assets.Other companies that are also linked to Mushimba, via his right-hand man Coen Wium, are Omina Investments and Omaheke Tannery and Leather Processing plant, according to Company records.Omina Investments in 2001 obtained a N$12 million loan from the GIPF, while the Omaheke Tannery – which was to be a spin-off of the Uri//Khubis venture – got a N$20 million loan from the same source.Both loans were written down to zero – i.e.there were no sellable assets left in the companies – by GIPF auditors Deloitte & Touche last year March, according to the GIPF’s 2003-2004 financial statements.It could not be established how the N$20 million loan to Omaheke was spent, with several of its directors declining to comment.Similarly, two of Omina’s directors approached for comment declined to do so.Although it could not be officially confirmed, the Meduletu project appeared to be to linked plans for such a plant in Okahandja.The town’s Mayor, Christophine (‘Citto’) Paulus, earlier this year travelled to Malaysia on the invitation of the Ministry of Trade and Industry to inspect just such a plant, according to documents in the possession of The Namibian.Paulus told the local Chamber of Commerce during a meeting in April that the Municipality intended opening an entirely new industrial area for the purpose of the plant to the immediate south of the town.The plant, they were told, is to be situated opposite the dormant former Modern Kitchen Unit (MKU) plant, several sources who attended the meeting said.The MKU plant, which consists of more than 10 000 square metres of warehouses and offices, has been standing empty for the past 10 years.The Chamber of Commerce’s officials therefore questioned the need to start building from scratch for the pharmaceutical plant, but Paulus dismissed their concerns, attendees at the meeting said.* John Grobler is a freelance journalist; 081 240 1587Meduletu Pharmaceutical is to be at least partly owned by a small group of well-connected businessmen with strong links to the ruling party, official records showed.But initially well-placed Government sources said a technical committee, which reviewed the Meduletu proposal, had advised against it, saying it was “unsuitable” and too costly.A secret Cabinet Action Letter (Decision No.12th / 28.06.05 / 01) directed the Ministries of Health and Social Services, Trade and Industry, Finance and the National Planning Commission to seek funds from potential Malaysian, Brazilian and other investors for the planned factory.The order to raise funding for this purpose is part of a wider directive and aimed at supporting a joint venture between the Namibian Ministry of Trade and Industry and Cuba’s Ministry of Basic Education to establish more industrial manufacturing in Namibia.The main subject of the Cabinet Action Letter was the bailing out of struggling uniform manufacturer Tropitex, The Namibian reported earlier this week.The directive resolved that Tropitex, controlled by former Old Mutual legal advisor and the son-in-law of former President Sam Nujoma, David Imbili and Cuba’s state-owned Sebradel, would have its N$3,5 million debt with the Development Bank of Namibia passed on to August 26, the Defence Force’s commercial arm.In the Action Letter, Cabinet also resolved its “renewed commitment” to co-operation in the pharmaceutical industry in terms of a Memorandum of Co-operation between Namibia and Cuba entered into last year.Files kept by the Registrar of Companies state that Meduletu Pharmaceutical is to be headed by Aaron Mushimba, businessman and brother-in-law of Nujoma.Auditors Grant Thornton Neuhaus & Co.’s share register of Meduletu shows that of the 300 shares currently issued in the company, Mushimba holds 84 shares (28 per cent).Former Otjozondjupa Governor Rehabeam Kamehozu owns the biggest allotment of shares – 120 (40 per cent) – according to the same records. The other shareholders are Windhoek pharmacist Jacques Marais with 24 shares (eight per cent), well-known Ugandan-born businessman Fred Sekandi with 12 shares (four per cent) and an outfit called Meal Services with 60 shares (20 per cent).The other non-shareholding directors are Maria Nakanyala and Anthony Bame.Records kept at the Registrar of Company show that Meal Services is controlled by Ed Davies, who is also the MD and largest shareholder in Independence Caterers.Independence Caterers is one of the three largest food suppliers to the Ministry of Basic Education’s school hostels.Grant Thornton & Neuhaus’s copy of Meduletu’s share register further lists the company’s board as Mushimba (MD), Marais, Kamehozu, Davies and Sekandi.The minority shareholder, Sekandi, first came to public notice as MD of mining start-up Tradeline (Pty) Ltd during the legal battle for control of the Toscanini diamond claims on the Skeleton Coast in 2002.Tradeline lost their case, with costs, in 2002.Sekandi was also involved in another start-up investment firm, MacArthur Baker International Namibia (Pty) Ltd.(MBI).MBI unsuccessfully tried to obtain funds from the GIPF before quietly closing its doors in 2004 after failing to pay Old Mutual overdue rent of about N$300 000.Old Mutual has obtained a judgement against Sekandi in this respect, past court records showed.Registrar of Companies files also show that Meal Services was formerly known as the Khadiya Fishing Company, which was then converted into La Mer Off-shore (Pty) Ltd, a Malaysian investment vehicle.La Mer had featured Swapo heavyweight Festus Naholo as a director before it was converted to Meal Services (Pty) Ltd on 27 August 1998.Mushimba, who as Meduletu’s MD will play a critical role in determining the successful outcome of the venture, has survived a string of spectacular financial crashes over the past few years.The first was the City Savings and Investment Bank, of which he was a founding member and MD, which collapsed under bad debt within some five years of its opening its doors.Prior to that, Stocks& Stocks Construction (Pty) Ltd, which built the Government Office Park, also folded while he was its MD.With it went Stocks & Stocks Hotels, which ran the Windhoek Country Club and Casino and the Swakopmund Hotel and Entertainment Centre.The State was eventually forced to take over the loss-making hotel chain, at considerable expense to taxpayers.More recently, Mushimba’s beef exporting plant in Witvlei, Uri //Khubis Abattoir, folded without exporting a single container of beef in the wake of sudden EU health restrictions a year and a half ago.Although no final distribution account has yet been posted with the Master of the High Court, it was widely reported that Uri //Khubis owed some N$70 million, mostly to the Government Institutions Pension Fund (GIPF) and the Agribank in the form of soft loans.Last year also saw Diaz Point Diamonds (Pty) Ltd.collapse, which also held a soft loan from the GIPF.A first distribution account held for inspection at the Master of the High Court showed a deficit of some N$35 million, with no assets.Other companies that are also linked to Mushimba, via his right-hand man Coen Wium, are Omina Investments and Omaheke Tannery and Leather Processing plant, according to Company records.Omina Investments in 2001 obtained a N$12 million loan from the GIPF, while the Omaheke Tannery – which was to be a spin-off of the Uri//Khubis venture – got a N$20 million loan from the same source.Both loans were written down to zero – i.e.there were no sellable assets left in the companies – by GIPF auditors Deloitte & Touche last year March, according to the GIPF’s 2003-2004 financial statements.It could not be established how the N$20 million loan to Omaheke was spent, with several of its directors declining to comment.Similarly, two of Omina’s directors approached for comment declined to do so.Although it could not be officially confirmed, the Meduletu project appeared to be to linked plans for such a plant in Okahandja.The town’s Mayor, Christophine (‘Citto’) Paulus, earlier this year travelled to Malaysia on the invitation of the Ministry of Trade and Industry to inspect just such a plant, according to documents in the possession of The Namibian.Paulus told the local Chamber of Commerce during a meeting in April that the Municipality intended opening an entirely new industrial area for the purpose of the plant to the immediate south of the town.The plant, they were told, is to be situated opposite the dormant former Modern Kitchen Unit (MKU) plant, several sources who attended the meeting said.The MKU plant, which consists of more than 10 000 square metres of warehouses and offices, has been standing empty for the past 10 years.The Chamber of Commerce’s officials therefore questioned the need to start building from scratch for the pharmaceutical plant, but Paulus dismissed their concerns, attendees at the meeting said. * John Grobler is a freelance journalist; 081 240 1587