Jooste cracks whip on SOEs

PUBLIC enterprises minister Leon Jooste has directed all parastatal boards to examine existing agreements with subsidiaries and other entities, as they can be held accountable if these are not in the best interests of state-owned enterprises (SOEs).

This comes amid reports of some SOEs being linked to allegations of board members and executives enriching themselves through criminal activities.

This allegedly sometimes happened in cahoots with ministers, as in the Fishrot saga, where an agreement between Namibia and Angola was used to clandestinely allocate massive fishing quotas to an Icelandic company in exchange for hundreds of millions in bribes. Two former ministers are implicated in this scandal.

In the letter leaked to The Namibian this week, Jooste said he wants all agreements and contracts not in the interest of SOEs to be cancelled or renegotiated.

“The purpose of this is to request that the board of directors, under your chairpersonship, reviews all existing commercial agreements between the company (and any of its subsidiaries) and any other legal entity entered into and currently in force.

“My intention is not to be prescriptive in detail and I would therefore like to leave it to your discretion to determine a suitable financial threshold with the understanding that minor agreements below such threshold should not necessarily be included in this exercise,” the letter reads.

The letter, dated 28 February 2020, was sent to all board chairpersons of SOEs.

Following the implementation of the Public Enterprises Governance Act of 2019, Jooste has extensive powers to go after board members who enrich themselves through corruption and who do not exercise a reasonable degree of care and diligence in the performance of their duties.

In the letter, Jooste said deals must be reviewed to ensure that they: “Represent the best possible value proposition to SOEs, are in line with the Growth at Home strategy and the spirit of the Public Procurement Act to give preference to local products and services – without compromising on quality, are not negatively affecting the financial sustainability of the company (the company can afford the contracts without requiring subsidies”.

The minister has, among others, the power to direct special investigations into the activities of SOEs, if it is suspected that corruption or other criminal activities are taking place.

Jooste also has the power to recover monies through a competent court, if a board member, or any other person, made a profit as a result of any contravention of the performance agreement, or if the public enterprise has suffered damage or loss.

In the letter, Jooste said he wants the outcome of his directive to ensure that all “commercial contracts and agreements are in the best interest of the company, the state and the public by extension and that upon completion of the exercise, the collective board will be held accountable for the quality of these agreements as per the provisions of the various applicable statutes”.

Jooste has given an ultimatum that final reports must be delivered to his office on or before 1 June 2020 in both soft and hard copy formats.

Namibia has 22 commercial SOEs. They include Air Namibia, TransNamib, MTC, NAC, NIP, Namport, NWR, NamPower, Roads Authority, Telecom, Namdia, Namcor, Nida and RCC.

is reliably informed that Air Namibia has started reviewing all its contracts and agreements.

TransNamib’s chief executive officer (CEO), Johny Smith, confirmed receiving the directive.

“Yes we have received it through our board,” Smith said.

NAC’s board chairperson, Leake Hangala said: “Whether I have received it or not, I cannot discuss a matter for my shareholder with the media. It is not fair”.

Over the years, SOEs have been hit by scandals involving questionable deals, allegations of nepotism, mismanagement of public funds for their own and cronies’ benefit, corruption and abuse of power.

Namibia has seen some SOE boards recycling the same people, with others sitting on more than two boards of different companies.

NIP, once a shining example of how SOEs should be run, was overshadowed by allegations of graft during the time its fired boss, Augustinus Katiti, and his team were in charge.

At TransNamib, controversial deals involving businessman Titus Nakuumba, and one of the Fishrot accused James Hatukulipi were struck and they cost the state fortunes. One such deal was the open-ended contract for the rehabilitation of the Kransberg-Tsumeb railway line, involving about N$200 million a year to D&M Rail Construction.

In September 2015, reported that Air Namibia was embroiled in two separate lawsuits of more than N$1 billion. At the time, the national airline lost one involving N$337 million on arbitration.

On Namcor, The Namibian reported in April last year that the parastatal had lost N$2, 2 million that was allegedly paid into a wrong account in 2018. The money was supposed to be paid to Hyrax Oil, but went into an Estonian account.

The parastatal had to fork out another N$2,2 million to pay Hyrax Oil. The company had won a tender to supply Namcor with lubricants in 2017.

While this has become a pattern, Namibia has never had cases where directors of SOEs are held accountable other than being merely dismissed.

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