NSP shareholding raises legal questions

PRESIDENT Hifikepunye Pohamba’s call for greater corporate accountability and transparency a fortnight ago, may well be put to a serious test at the very place where he issued the warning – the Namibia Stone Processing (Pty) Ltd (NSP) plant at Omaruru.

Pohamba’s call for more accountability and transparency was probably more aimed at the beleaguered Avid Investment (Pty) Ltd, currently in the dock to explain what had happened to N$30 million entrusted to it by the Social Security Commission (SSC). Pohamba stressed that companies which were using public funds had a special obligation to see to it that such funds were properly used for the purpose intended.But like charity, fiduciary accountability is something that should start at home – and of the 10 shareholders in NSP, at least eight were allegedly breaking the law.All of them were in attendance at the opening of the N$54 million factory.For example, National Planning Commission Director General Helmut Angula and Safety and Security Minister Peter Tsheehama both listed shares in Namibia Stone Processing in the previous Members of Parliament Asset Register.Angula is currently the Chairman of NSP, while Tsheehama was one of the guests of honour at the factory opening, as were his other co-shareholders.However, an investigation into the actual shareholding in NSP showed that most of the individual shareholders were not listed in its official register with auditing firm Deloitte & Touche, in clear violation of Section 93 of the Companies Act.This section, which outlines the duties of loyalty, care and disclosure, is designed to avoid potential conflicts of interest among shareholders, limitations or barriers in shareholders and directors’ ability to perform their fiduciary duties.It specifically states (Section 93 (1) and (2)) that any shares sold in any business, whether for cash or for debt, should be listed in a shareholders’ register and so reported within 30 days to the Registrar of Companies.Section 93 (5) states that failure to do so amounted to “…an offence in law” on the part of all directors of such a company.The NSP directors at present are Omaruru businessman Michael Goagoseb, former Namdeb employee Oscar Iyambo Shigwana and two Angolans, namely Helder da Silva Milagre and Nuno Ventura dos Santos.According to the register kept at their registered head office, Windhoek-based auditors Deloitte & Touche, only current NSP CEO Shigwana, The Defence Foundation and the Angolan Minespre SARL are listed as shareholders.Of the 900 shares issued since NSP commenced business on October 26 2000, Shigwana currently holds 711 shares (79%), the Angolans 135 shares (15%) and the Defence Foundation 54 shares (0,6% – 1%).No explanation could be obtained how the remaining five per cent was held, although some sources suggested that this might have been promised to the Erongo Regional Council in return for its political support.NSP has borrowed extensively from public funds, including the Minerals Development Fund administered by the Ministry of Mines and Energy, and the GIPF (Government Institutions Pension Fund) to set itself up.Actual costs are estimated to run as high as N$70 million at the moment, with the Namibian Development Bank having recently stumped up N$8 million for operational capital.The other shareholders’ bashfulness in being listed as investors (although only the Angolans have so far paid N$7,5 million for their shares), may well have to do with the State’s biggest ever capital project to date: According to several independent sources, NSP has secured a one-year contract to supply all the marble and granite for the new N$500 million State House, currently under construction in Auasblick, Windhoek.The contract, which would showcase Namibia’s dimension stone to visiting dignitaries, would also net the NSP shareholders millions in profits.As one shareholder was overheard saying: “If you want to bathe in marble, you better be swimming in money!” Other sources have suggested that NSP might also benefit from plans to construct a new State House for Angolan President Eduardo dos Santos outside Luanda.Although this could not be independently confirmed, plans for a new palace for Dos Santos have been mooted for some years now.Interestingly, the listed business address for the Angolan company Sociedade Minespre SARL is given as 15 Luederitz Street in Windhoek.But the only office at this address is an apparent offshoot of State House Security – a woman who answered the door said it was “the Development Office (…) of the Ministry of Home Affairs”.This office is directly behind State House, on the corner of Munamava and Luederitz streets, and appears to be inhabited by Police and army officials.No such “Development Office” or department could be located in the Ministry of Home Affairs.Similarly, the Defence Foundation appears to be a non-registered trust – no such entity could be traced at the Master of the High Court, where all trusts have to be registered unless they are a Section 21 (Not For Gain) company.No such company is currently registered with the Ministry of Trade and Industry, either.Asked if the auditors did not have a fiduciary duty to ensure that all particulars filed with them were accurate, Deloitte & Touche senior managing partner Junius Mungunda said the NSP shareholding registry was compiled according to the clients’ instructions.”This was the clients’ instruction right from the start,” Mungunda said.”You must ask them about that.”NSP chairman Angula said he was not aware of the fact that they might be breaking the law.He said Shigwana had dealt with all legal aspects and should be asked to explain.”I am not aware of these things,” Angula said.”You have to ask our CEO about this, he dealt with all the legal aspects.”Shigwana appeared to be travelling since last Friday, and his cellphone remained switched off.Angula suggested that Shigwana was visiting all their quarries.Shigwana has, however, so far declined to discuss the NSP shareholding with other reporters.With all of its financing coming from public funds, and its best prospects for financial success apparently linked to the State House project, questions now arose as to why the new State House was being built at all, and who the real political sponsors of the N$500 million-plus project were in the first instance.At the heart of the issue is a lack of capacity and apparent unwillingness to enforce the company law, several lawyers have confirmed.Especially the auditing firm has a legal obligation to see to it that the Companies Act is adhered to, one senior lawyer said, who declined to be named for professional reasons.”This is a classic case of the economics of affection, where the power of political patronage gets used for personal financial aggrandisement,” Professor of Politics André du Pisani commented on the case.This phenomenon had led to corruption throughout Africa in recent history, and was probably President Pohamba’s biggest political challenge, he said.”Unless you can break up this economy of affection, sever the links between the power of patronage and the politics of personal financial gain, you will not be able to deal with corruption effectively,” Du Pisani said.”There should be no holy cows.”* John Grobler is a freelance journalist.johngrob@iway.na SOME KEY FACTS ON NSP Documentation obtained by The Namibian showed that nine different people, excluding the Angolans, were listed as shareholders in applying for funding from various public institutions since November 2000.The Angolan state-sponsored Minespre SARL bought its 15% shareholding in three separate tranches on 5 May 2002, 21 August 2002 and 20 February 2003 for a total of N$7 050 480, paying N$71 734.71, N$55 872.33 and N$36 825.16 per share respectively.Most of the unlisted shareholders hold between eight or 10 per cent shares in the multi-million-dollar venture.These shares are worth at least (on the average that the Angolans have paid) N$52 225 per share.This implies that the local shareholders, if they each got eight per cent shares, each got N$3,976 million worth of shares fo
r N$72 each – a handsome return, to say the least.The unlisted shareholders are: Samuel Goagoseb – Permanent Secretary of Home Affairs Eddie Amukongo – Namibian Ambassador to DRC Peter Tsheehama – Minister of Safety and Security Foibe Louise Jacobs – General Manager at NamPower Helmut Angula – Director General of NPC and Chairman of NSP Johannes Xoagub – Omaruru CEO Herbert L.Kempkes – owner of Makakata Enterprises Oscar L.Shigwana – CEO of NSP, a former Namdeb employee Michael Goagoseb – Businessman and farmer Xoagub sold a large tract of Omaruru town land to Michael Goagoseb for N$4 000, who in turn then sold it to Kempkes for the NSP factory site, netting Goagoseb at least N$380 000 profit in the deal.Pohamba stressed that companies which were using public funds had a special obligation to see to it that such funds were properly used for the purpose intended.But like charity, fiduciary accountability is something that should start at home – and of the 10 shareholders in NSP, at least eight were allegedly breaking the law.All of them were in attendance at the opening of the N$54 million factory.For example, National Planning Commission Director General Helmut Angula and Safety and Security Minister Peter Tsheehama both listed shares in Namibia Stone Processing in the previous Members of Parliament Asset Register. Angula is currently the Chairman of NSP, while Tsheehama was one of the guests of honour at the factory opening, as were his other co-shareholders.However, an investigation into the actual shareholding in NSP showed that most of the individual shareholders were not listed in its official register with auditing firm Deloitte & Touche, in clear violation of Section 93 of the Companies Act.This section, which outlines the duties of loyalty, care and disclosure, is designed to avoid potential conflicts of interest among shareholders, limitations or barriers in shareholders and directors’ ability to perform their fiduciary duties.It specifically states (Section 93 (1) and (2)) that any shares sold in any business, whether for cash or for debt, should be listed in a shareholders’ register and so reported within 30 days to the Registrar of Companies.Section 93 (5) states that failure to do so amounted to “…an offence in law” on the part of all directors of such a company.The NSP directors at present are Omaruru businessman Michael Goagoseb, former Namdeb employee Oscar Iyambo Shigwana and two Angolans, namely Helder da Silva Milagre and Nuno Ventura dos Santos.According to the register kept at their registered head office, Windhoek-based auditors Deloitte & Touche, only current NSP CEO Shigwana, The Defence Foundation and the Angolan Minespre SARL are listed as shareholders.Of the 900 shares issued since NSP commenced business on October 26 2000, Shigwana currently holds 711 shares (79%), the Angolans 135 shares (15%) and the Defence Foundation 54 shares (0,6% – 1%).No explanation could be obtained how the remaining five per cent was held, although some sources suggested that this might have been promised to the Erongo Regional Council in return for its political support.NSP has borrowed extensively from public funds, including the Minerals Development Fund administered by the Ministry of Mines and Energy, and the GIPF (Government Institutions Pension Fund) to set itself up.Actual costs are estimated to run as high as N$70 million at the moment, with the Namibian Development Bank having recently stumped up N$8 million for operational capital.The other shareholders’ bashfulness in being listed as investors (although only the Angolans have so far paid N$7,5 million for their shares), may well have to do with the State’s biggest ever capital project to date: According to several independent sources, NSP has secured a one-year contract to supply all the marble and granite for the new N$500 million State House, currently under construction in Auasblick, Windhoek.The contract, which would showcase Namibia’s dimension stone to visiting dignitaries, would also net the NSP shareholders millions in profits.As one shareholder was overheard saying: “If you want to bathe in marble, you better be swimming in money!” Other sources have suggested that NSP might also benefit from plans to construct a new State House for Angolan President Eduardo dos Santos outside Luanda.Although this could not be independently confirmed, plans for a new palace for Dos Santos have been mooted for some years now.Interestingly, the listed business address for the Angolan company Sociedade Minespre SARL is given as 15 Luederitz Street in Windhoek.But the only office at this address is an apparent offshoot of State House Security – a woman who answered the door said it was “the Development Office (…) of the Ministry of Home Affairs”.This office is directly behind State House, on the corner of Munamava and Luederitz streets, and appears to be inhabited by Police and army officials.No such “Development Office” or department could be located in the Ministry of Home Affairs.Similarly, the Defence Foundation appears to be a non-registered trust – no such entity could be traced at the Master of the High Court, where all trusts have to be registered unless they are a Section 21 (Not For Gain) company.No such company is currently registered with the Ministry of Trade and Industry, either.Asked if the auditors did not have a fiduciary duty to ensure that all particulars filed with them were accurate, Deloitte & Touche senior managing partner Junius Mungunda said the NSP shareholding registry was compiled according to the clients’ instructions.”This was the clients’ instruction right from the start,” Mungunda said.”You must ask them about that.”NSP chairman Angula said he was not aware of the fact that they might be breaking the law.He said Shigwana had dealt with all legal aspects and should be asked to explain.”I am not aware of these things,” Angula said.”You have to ask our CEO about this, he dealt with all the legal aspects.”Shigwana appeared to be travelling since last Friday, and his cellphone remained switched off.Angula suggested that Shigwana was visiting all their quarries.Shigwana has, however, so far declined to discuss the NSP shareholding with other reporters.With all of its financing coming from public funds, and its best prospects for financial success apparently linked to the State House project, questions now arose as to why the new State House was being built at all, and who the real political sponsors of the N$500 million-plus project were in the first instance.At the heart of the issue is a lack of capacity and apparent unwillingness to enforce the company law, several lawyers have confirmed.Especially the auditing firm has a legal obligation to see to it that the Companies Act is adhered to, one senior lawyer said, who declined to be named for professional reasons.”This is a classic case of the economics of affection, where the power of political patronage gets used for personal financial aggrandisement,” Professor of Politics André du Pisani commented on the case.This phenomenon had led to corruption throughout Africa in recent history, and was probably President Pohamba’s biggest political challenge, he said.”Unless you can break up this economy of affection, sever the links between the power of patronage and the politics of personal financial gain, you will not be able to deal with corruption effectively,” Du Pisani said.”There should be no holy cows.”* John Grobler is a freelance journalist.johngrob@iway.na SOME KEY FACTS ON NSP Documentation obtained by The Namibian showed that nine different people, excluding the Angolans, were listed as shareholders in applying for funding from various public institutions since November 2000.The Angolan state-sponsored Minespre SARL bought its 15% shareholding in three separate tranches on 5 May 2002, 21 August 2002 and 20 February 2003 for a total of N$7 050 480, paying N$71 734.71, N$55 872.33 and N$36 825.16 per share respectively.Most of the unlisted shareholders hold between eight or 10 per cent shares in the multi-million-dollar venture.These shares are worth at least (on the average that
the Angolans have paid) N$52 225 per share.This implies that the local shareholders, if they each got eight per cent shares, each got N$3,976 million worth of shares for N$72 each – a handsome return, to say the least.The unlisted shareholders are: Samuel Goagoseb – Permanent Secretary of Home Affairs Eddie Amukongo – Namibian Ambassador to DRC Peter Tsheehama – Minister of Safety and Security Foibe Louise Jacobs – General Manager at NamPower Helmut Angula – Director General of NPC and Chairman of NSP Johannes Xoagub – Omaruru CEO Herbert L.Kempkes – owner of Makakata Enterprises Oscar L.Shigwana – CEO of NSP, a former Namdeb employee Michael Goagoseb – Businessman and farmer Xoagub sold a large tract of Omaruru town land to Michael Goagoseb for N$4 000, who in turn then sold it to Kempkes for the NSP factory site, netting Goagoseb at least N$380 000 profit in the deal.