ODC to refuse to pay back N$7m

THE Offshore Development Company (ODC) is challenging a move to declare it bankrupt, claiming that its financial position is sound and that the N$100 million it lost in a botched investment with a dubious company does not affect its ability to do business.

Listing its asset value as N$67 million, the company plans to tell the court next week that it chooses not to repay N$7 million to information technology company Silnam – rather than being unable to – because it disputes the legality of an alleged investment agreement between them. A company is deemed insolvent if its liabilities exceed its assets and it is unable to repay its debts.The ODC will argue that the claim for the N$7 million is not grounds for liquidation, that the ODC cannot be deemed incapable of paying its debts, that its assets exceed its liabilities and thus it cannot be declared insolvent.The ODC holds a 26 per cent shareholding in Silnam.The ODC is now referring to the missing N$100 million as funds “misappropriated from its coffers”.This week, the ODC filed a response to Silnam’s planned provisional liquidation application to the High Court scheduled for next week.It contends that details provided by Silnam on their investment with the ODC amounts to a “spurious” and “fraudulent” transaction.Silnam’s legal representatives will also push for ODC directors and management to be summonsed to testify on the investment in accordance with the Companies Act – a move which is being resisted by the ODC’s legal team, which maintains that the case does not warrant such a provision to be invoked.’GOVT WILL ALWAYS HELP’ As it is owned by Government, the ODC contends that it is able to approach this shareholder to “re-capitalise” its activities if the need is demonstrated.In response to claims by Silnam Managing Director Dasa Padachi that ODC employees who also double as Silnam directors discussed the investment with him on various occasions, the ODC contends that it “is not in the business of investments”.”It is unclear how the respondent could receive investments given the nature of its business.It boggles the mind how the applicant could contend that it could derive returns on the investment,” Permanent Secretary of Trade and Industry Andrew Ndishishi says in an affidavit.”I deny that the N$100 million represents solvency issues for the respondent”.FORGET IT, SAYS ODC Ndishishi further alleges that the ODC board was not aware that Silnam had “invested” with the ODC until last August.Silnam says that in 2003 it gave the ODC N$5 million to invest for it with Great Triangle Investments and transferred a further N$5 million directly to Great Triangle as part of an oral investment agreement with ODC Managers Philip Namundjebo, Nghidinua Daniel and Mabos Ortmann.According to Padachi, the “short-term investments” were to mature at a rate of 18 per cent a year.Silnam received only one return on its investment – an amount of around N$2,5 million.The ODC also disputes that the money returned to Silnam was a “repayment on the investment”, but does not say what it represents.Silnam has provided the court with written confirmation by the ODC in March 2005, that it still held N$7,5 million, plus interest, in an investment on behalf of Silnam.The ODC maintains that it cannot be held liable for money Silnam reportedly transferred directly to Great Triangle Investments.’INCESTUOUS’ CONNECTIONS Padachi has claimed that repeated attempts to have the rest of the money returned to his company have proved futile, and affected the cash flow of his firm.Nghidinua, ODC’s Acting Chief Executive Officer, as an alternate director of Silnam, denies that he was ever party to an investment agreement between the ODC and Silnam.However, he acknowledges transferring N$5 million in Silnam funds to the account of the ODC at Ortmann’s request.Daniel says Ortmann informed him that he planned to “manage” the money.Ortmann, on the other hand, acknowledges being in “discussions” with Padachi about “investing” money with Great Triangle investments, but says no investment agreement was concluded and no board approval for such a deal was obtained.No coherent explanation is however offered about what exactly was discussed on a purported investment.The ODC is challenging Silnam to show whether Namundjebo (also a Silnam director) was authorised to conclude the agreement on behalf of Silnam or whether Namundjebo as a director of Silnam, gave instructions to Padachi to conclude the agreement for Silnam.”The relationship was clearly incestuous giving rise to untold conflict of interest,” contends Ndishishi in an affidavit summarising consultations with Ortmann, Namundjebo and Daniel.In response to Padachi’s claim that the oral agreement was concluded between himself and Ortmann, Ndishishi again points to the relationship demonstrating “insurmountable conflict of interest”.Ndishishi goes on to say that ODC employees as well as Silnam should have known that the ODC is not a financial services provider and that an investment agreement would have rendered conduct on behalf of the parties in violation of the law.RETROSPECTIVE ACTION To date the ODC has not taken action against any of its officials embroiled in the disappearance of the N$100 million.However for the first time in these latest court documents, a hint of acknowledgement is made that employees acted outside their rights.Ndishishi labels the conduct of Ortmann with reference to Padachi’s claims of discussions between them as “questionable”.It has also emerged that in an apparent bid to get their house in order, Ortmann presented the ODC board with an unsigned written investment agreement for the ODC’s deal with Silnam only in August last year – asking for it to be backdated to May 2003.The board rejected the request.Padachi however claims that he entered into an oral agreement with Ortmann in September 2003.The ODC board never met in 2004.On behalf of the ODC board, Ndishishi says it is of the opinion that the investment as detailed by Silnam was “fraudulent”.The ODC also contends that the investment cannot constitute a liability to the ODC as Silnam should have been aware that any investment comes with associated risk for which it would have no redress.Maintaining its stony silence on whether it is making progress in getting the N$100 million back, the ODC says in court papers that it chooses not to divulge much on Great Triangle Investments so as not to undermine ongoing cross-border investigations.”It is difficult even to understand whether GTI is a juristic person and what its activities are,” says Ndishishi.”There are investigations underway to establish what GTI really was”.On Tuesday, the Cape Town High Court ordered the sequestration of GTI’s principal director Philip Fourie at the request of a Windhoek pensioner who invested N$7 million with the company.A company is deemed insolvent if its liabilities exceed its assets and it is unable to repay its debts.The ODC will argue that the claim for the N$7 million is not grounds for liquidation, that the ODC cannot be deemed incapable of paying its debts, that its assets exceed its liabilities and thus it cannot be declared insolvent.The ODC holds a 26 per cent shareholding in Silnam.The ODC is now referring to the missing N$100 million as funds “misappropriated from its coffers”.This week, the ODC filed a response to Silnam’s planned provisional liquidation application to the High Court scheduled for next week. It contends that details provided by Silnam on their investment with the ODC amounts to a “spurious” and “fraudulent” transaction.Silnam’s legal representatives will also push for ODC directors and management to be summonsed to testify on the investment in accordance with the Companies Act – a move which is being resisted by the ODC’s legal team, which maintains that the case does not warrant such a provision to be invoked. ‘GOVT WILL ALWAYS HELP’ As it is owned by Government, the ODC contends that it is able to approach this shareholder to “re-capitalise” its activities if the need is demonstrated.In response to claims by Silnam Managing Director Dasa Padachi that ODC employees who also double as Silnam directors discussed the investment with him on various occasions, the ODC contends that it “is not in the business of investments”.”It is unclear how the respondent could receive investments given the nature of its business.It boggles the mind how the applicant could contend that it could derive returns on the investment,” Permanent Secretary of Trade and Industry Andrew Ndishishi says in an affidavit.”I deny that the N$100 million represents solvency issues for the respondent”. FORGET IT, SAYS ODC Ndishishi further alleges that the ODC board was not aware that Silnam had “invested” with the ODC until last August.Silnam says that in 2003 it gave the ODC N$5 million to invest for it with Great Triangle Investments and transferred a further N$5 million directly to Great Triangle as part of an oral investment agreement with ODC Managers Philip Namundjebo, Nghidinua Daniel and Mabos Ortmann.According to Padachi, the “short-term investments” were to mature at a rate of 18 per cent a year.Silnam received only one return on its investment – an amount of around N$2,5 million.The ODC also disputes that the money returned to Silnam was a “repayment on the investment”, but does not say what it represents.Silnam has provided the court with written confirmation by the ODC in March 2005, that it still held N$7,5 million, plus interest, in an investment on behalf of Silnam.The ODC maintains that it cannot be held liable for money Silnam reportedly transferred directly to Great Triangle Investments. ‘INCESTUOUS’ CONNECTIONS Padachi has claimed that repeated attempts to have the rest of the money returned to his company have proved futile, and affected the cash flow of his firm.Nghidinua, ODC’s Acting Chief Executive Officer, as an alternate director of Silnam, denies that he was ever party to an investment agreement between the ODC and Silnam.However, he acknowledges transferring N$5 million in Silnam funds to the account of the ODC at Ortmann’s request.Daniel says Ortmann informed him that he planned to “manage” the money.Ortmann, on the other hand, acknowledges being in “discussions” with Padachi about “investing” money with Great Triangle investments, but says no investment agreement was concluded and no board approval for such a deal was obtained.No coherent explanation is however offered about what exactly was discussed on a purported investment.The ODC is challenging Silnam to show whether Namundjebo (also a Silnam director) was authorised to conclude the agreement on behalf of Silnam or whether Namundjebo as a director of Silnam, gave instructions to Padachi to conclude the agreement for Silnam.”The relationship was clearly incestuous giving rise to untold conflict of interest,” contends Ndishishi in an affidavit summarising consultations with Ortmann, Namundjebo and Daniel.In response to Padachi’s claim that the oral agreement was concluded between himself and Ortmann, Ndishishi again points to the relationship demonstrating “insurmountable conflict of interest”.Ndishishi goes on to say that ODC employees as well as Silnam should have known that the ODC is not a financial services provider and that an investment agreement would have rendered conduct on behalf of the parties in violation of the law.RETROSPECTIVE ACTION To date the ODC has not taken action against any of its officials embroiled in the disappearance of the N$100 million.However for the first time in these latest court documents, a hint of acknowledgement is made that employees acted outside their rights.Ndishishi labels the conduct of Ortmann with reference to Padachi’s claims of discussions between them as “questionable”.It has also emerged that in an apparent bid to get their house in order, Ortmann presented the ODC board with an unsigned written investment agreement for the ODC’s deal with Silnam only in August last year – asking for it to be backdated to May 2003.The board rejected the request.Padachi however claims that he entered into an oral agreement with Ortmann in September 2003.The ODC board never met in 2004.On behalf of the ODC board, Ndishishi says it is of the opinion that the investment as detailed by Silnam was “fraudulent”.The ODC also contends that the investment cannot constitute a liability to the ODC as Silnam should have been aware that any investment comes with associated risk for which it would have no redress.Maintaining its stony silence on whether it is making progress in getting the N$100 million back, the ODC says in court papers that it chooses not to divulge much on Great Triangle Investments so as not to undermine ongoing cross-border investigations.”It is difficult even to understand whether GTI is a juristic person and what its activities are,” says Ndishishi.”There are investigations underway to establish what GTI really was”.On Tuesday, the Cape Town High Court ordered the sequestration of GTI’s principal director Philip Fourie at the request of a Windhoek pensioner who invested N$7 million with the company.