Hosea Kutako duty-free dust-up

A LONG business relationship between the Namibian Airports Company and the company that has been running the duty-free shop at Hosea Kutako International Airport near Windhoek for the past decade is set to end on a very sour note today.

Under threat of an eviction order that was given in the High Court this week, the company owning the duty-free shop, SE Duty Free Trading, has been given until noon today to vacate the retail space that its shop has been occupying for ten years. Judge Elton Hoff on Wednesday ordered SE Duty Free Trading to vacate the premises.He also ordered the company to pay the legal costs of the Namibia Airports Company (NAC), which went to court to get an eviction order against SE Duty Free Trading.Judge Hoff further dismissed a counter-application in which SE Duty Free Trading had asked the court to allow it to remain on the premises while it fights the NAC’s decision to award the latest tender for the lease of the duty-free shop to another company.Since being informed that the NAC has decided to award a new five-year contract to another company, Paragon Investment Holdings, with SE Duty Free Trading’s lease for the shop to come to an end at the close of November, the latter company filed a case with the High Court in which it asked that this decision be set aside.Paragon, which was co-founded some five years ago by widely known Namibian comedian and businessman Lazarus Jacobs, who is an executive director of the company, won the lease contract over SE Duty Free Trading and another tenderer, United Africa.According to Samson Kaulinge, a former Director of Customs in the Ministry of Finance who is now the administrative and financial director of SE Duty Free Trading, the lease was awarded to Paragon despite the fact that his company’s tender was higher than both Paragon’s and United Africa’s.Judging from the projected financial turnover figures placed before the court, the duty-free shop has a high turnover and is potentially highly lucrative.According to Kaulinge, his company offered to pay the NAC a monthly rental of N$270 900 for the first year of the new five-year lease contract, or 28 per cent of the shop’s turnover, whichever might be the highest.It had been paying rental of some N$111 236 a month or eight per cent of its turnover under the lease that has just ended.Paragon, by comparison, offered to pay N$200 000 a month in the first year of the lease period or 18 per cent of the shop’s turnover as rent, while United Africa offered a monthly rental of N$180 000 or 18 per cent of turnover.The three tenderers’ offered monthly rental was to increase each year, until it amounted to N$396 625 for SE Duty Free Trading in the fifth year of the lease period, and to N$292 820 for Paragon and N$263 538 for United Africa in the same year.The three tenderers’ offer of the percentage of their turnover that they were willing to pay as rent as an alternative to the monthly amount offered remained the same at 28 per cent for SE Duty Free Trading and 18 per cent for both Paragon and United Africa, according to a document that the NAC filed with the court.According to this document, SE Duty Free Trading based its calculations on estimated annual turnover that varied between N$15,1 million in the first year of the lease period and N$24,39 million in the fifth year.SE Duty Free Trading also calculated that over the five years of the lease period, it would have paid rent of at least N$19,8 million – based on the monthly rental amount offered – or up to N$28,4 million, based on the projected turnover of the shop.Paragon would pay between N$14,6 million and N$18,2 million over the same period, and United Africa offered to pay between N$13,18 million and N$18, 28 million, according to one of the documents filed with the court.SE Duty Free Trading’s lowest projected rental payments over the lease period would thus have been some N$5,2 million more than the lowest amount offered by Paragon.If the tenders had been evaluated fairly and equitable – as required by the Constitution – it would have been awarded to SE Duty Free Trading, Kaulinge claims in an affidavit filed with the court.The problem, however, is that the NAC changed its evaluation criteria for the tender from those that were set out in the tender requirements that had been published initially, without advising SE Duty Free Trading of this, Kaulinge claims.He stated that his company was offering to pay rental of N$270 900 a month to NAC for the period that it was to be allowed to keep its shop operating while its review application was being dealt with in court.The NAC however wanted the company to vacate the shop premises at the airport, since Paragon’s lease is starting on February 1 and it plans to use December and January to refurbish the shop.SE Duty Free Trading’s review application is expected to be heard in the High Court only deep into next year at the earliest.Dave Smuts, SC, represented the NAC in court on instructions from Engling, Stritter & Partners this week.Esi Schimming-Chase represented SE Duty Free Trading on instructions from Andreas Vaatz & Partners.Judge Elton Hoff on Wednesday ordered SE Duty Free Trading to vacate the premises.He also ordered the company to pay the legal costs of the Namibia Airports Company (NAC), which went to court to get an eviction order against SE Duty Free Trading. Judge Hoff further dismissed a counter-application in which SE Duty Free Trading had asked the court to allow it to remain on the premises while it fights the NAC’s decision to award the latest tender for the lease of the duty-free shop to another company.Since being informed that the NAC has decided to award a new five-year contract to another company, Paragon Investment Holdings, with SE Duty Free Trading’s lease for the shop to come to an end at the close of November, the latter company filed a case with the High Court in which it asked that this decision be set aside.Paragon, which was co-founded some five years ago by widely known Namibian comedian and businessman Lazarus Jacobs, who is an executive director of the company, won the lease contract over SE Duty Free Trading and another tenderer, United Africa.According to Samson Kaulinge, a former Director of Customs in the Ministry of Finance who is now the administrative and financial director of SE Duty Free Trading, the lease was awarded to Paragon despite the fact that his company’s tender was higher than both Paragon’s and United Africa’s.Judging from the projected financial turnover figures placed before the court, the duty-free shop has a high turnover and is potentially highly lucrative.According to Kaulinge, his company offered to pay the NAC a monthly rental of N$270 900 for the first year of the new five-year lease contract, or 28 per cent of the shop’s turnover, whichever might be the highest.It had been paying rental of some N$111 236 a month or eight per cent of its turnover under the lease that has just ended.Paragon, by comparison, offered to pay N$200 000 a month in the first year of the lease period or 18 per cent of the shop’s turnover as rent, while United Africa offered a monthly rental of N$180 000 or 18 per cent of turnover.The three tenderers’ offered monthly rental was to increase each year, until it amounted to N$396 625 for SE Duty Free Trading in the fifth year of the lease period, and to N$292 820 for Paragon and N$263 538 for United Africa in the same year.The three tenderers’ offer of the percentage of their turnover that they were willing to pay as rent as an alternative to the monthly amount offered remained the same at 28 per cent for SE Duty Free Trading and 18 per cent for both Paragon and United Africa, according to a document that the NAC filed with the court.According to this document, SE Duty Free Trading based its calculations on estimated annual turnover that varied between N$15,1 million in the first year of the lease period and N$24,39 million in the fifth year.SE Duty Free Trading also calculated that over the five years of the lease period, it would have paid rent of at least N$19,8 million – based on the monthly rental amo
unt offered – or up to N$28,4 million, based on the projected turnover of the shop.Paragon would pay between N$14,6 million and N$18,2 million over the same period, and United Africa offered to pay between N$13,18 million and N$18, 28 million, according to one of the documents filed with the court.SE Duty Free Trading’s lowest projected rental payments over the lease period would thus have been some N$5,2 million more than the lowest amount offered by Paragon.If the tenders had been evaluated fairly and equitable – as required by the Constitution – it would have been awarded to SE Duty Free Trading, Kaulinge claims in an affidavit filed with the court.The problem, however, is that the NAC changed its evaluation criteria for the tender from those that were set out in the tender requirements that had been published initially, without advising SE Duty Free Trading of this, Kaulinge claims.He stated that his company was offering to pay rental of N$270 900 a month to NAC for the period that it was to be allowed to keep its shop operating while its review application was being dealt with in court.The NAC however wanted the company to vacate the shop premises at the airport, since Paragon’s lease is starting on February 1 and it plans to use December and January to refurbish the shop.SE Duty Free Trading’s review application is expected to be heard in the High Court only deep into next year at the earliest.Dave Smuts, SC, represented the NAC in court on instructions from Engling, Stritter & Partners this week.Esi Schimming-Chase represented SE Duty Free Trading on instructions from Andreas Vaatz & Partners.