Govt cripples Unigem

SHARE   |   Monday, 17 August 2015   |   By Ditiro Motlhabane

• Gemvas' P5 million system remains idle
• Some employees on six months contracts
•  Gemvas value estimated at P600 million
• BOFEPUSU sets up newspaper business

The termination of a multi-million pula contract for administration of Government Employees Motor Vehicle and Residential Property Advance Scheme (GEMVAS) from Unigem in May 2015 has crippled the trade union investment company leading to some employees retained on six months contracts, The Patriot on Sunday has learnt. Three months after government, through the Ministry of Finance and Development Planning (MFDP), pulled the plug on Unigem the company is alleged to have retained skeletal staff on contracts for six months. Government has now trained their sight on acquiring the services of Unigem executive management with whom megotiations are ongoing. Following the takeover, government engaged Unigem on consultancy basis for P1 million in June 2015 to facilitate the process.
Unigem Chief Executive Officer Julian Willie rubbished allegations that the withdrawal of Gemvas has thrown his company into financial doldrums. He said except for only two temporary employees who remained behind when the Ministry of Finance took over 98 per cent of staff working on the scheme and some short term employees, they do not have employees on temporary contracts. He said just like in any other organisation Unigem employees work on contracts ranging between six months and two years, which are reviewed when the term ends. He explained that currently some staff members' contracts come to an end in December 2015, some in 2016 and others in 2017. "(Ministry of) Finance got almost 98% (33 out of 35) of staff working on the scheme. Only two remained and have been given six months temporary arrangement.


The status of all other employees in our subsidiarises has not changed," said Willie. He said despite that Gemvas was their biggest source of revenue its withdrawal cannot be said to have crippled the company as it was not their only livelihood.   Unigem is a  50 per cent shareholder and administrator of Botlhe Medical aid, and owns 60% Federated Insurance brokers, which Willie said sustain the business. Sources close to the company said it is on the verge of announcing two major investments in financial services sector (asset management and legal insurance), which Willie declined to discuss. 
The Patriot on Sunday can also confirm that government has paid Unigem P5 million for the purchase of a computerised sytem for processing public servants' applications under the scheme. Despite the transaction government has not collected the system and employees at the ministry of finance are forced to process applications manually, three months since takeover of the scheme.

It has also emerged that the MFDP has over the years rejected innovations proposed by Unigem to improve benefits and service delivery for public servants in the scheme. MFDP failed to approve a suggestion for in-house registration of mortgage bonds for free; to review government guarantee with participating banks to favour government and reduce risk;consideration of permanent allowances when calculating the ceiling as in the case of nurses and Botswana Defence Force (BDF); ellegibility criteria to be raised from 25% to 33%;combination of salaries for public servants and that opf the spiuse working in parastatals; and considering financing agricultural implements and machinery, multi-residential developments and other commercial developments since government employees can now engage in private business.


The report reveals that even though Botswana savings bank revised their pricing from 7.5% to 8.75% effective December 2014, majority of public servants were still using the bank for residential applications ast at 15 May 2015. This appeared to be risky on the bank side as the turnaround time for disbursements increased tremedously due to liquidity crisis in the banlking sector. The MFDP was noticfied of the challenge but never intervened, leading to a sharp decline in applications at the bank. While the bank handled 94% of applications under the scheme in January 2014, which amounted to P23.496 million this decline to just 47% percent applications worth P5.513 million in May 2015. From as far back as 2013 the MFDP has refused to implement a decision to reduce interest rates under the scheme with some banks after Unigem succesfully negotiated the best rates at First National Bank and Standard Chartered bank. Since being notified on June 25, 2014 MFDp has never acted on the proposal leading to public servants to continue to suffer exhorbitant interest rates.

Meanwhile BOFEPUSU leadership has by-passed Unigem management and made a decision to take up majority shareholding in a new publication set to be launched soon. The publication is partly co-owned by local journalists-cum-businessmen. However the decision has set the federation leadership on a collision course with their investment company-Unigem, The Patriot on Sunday is reliably informed. Documents seen by this publication show that the federation has made a request to Unigem to fund the newspaper business and avail resources ( a loan for P150 000, two vehicles and office space at Babereki house) to support its establishment despite that the decision was never sanctioned by investment experts at the company.

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