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Pula Steel: Corruption suspected

SHARE   |   Monday, 11 July 2016   |   By Phillimon Mmeso
Pula steel plant Pula steel plant

The recently closed Pula Steel Casting and Manufacturers – a subsidiary of BCL Limited launched as part of POLARIS II strategy – is under investigation from both Directorate of Corruption and Economic Crime (DCEC) and Directorate of Intelligence Security Services (DISS), The Patriot on Sunday has learnt. At the centre of the two investigations is how the project was carried out especially the construction of the plant which has since been closed as it did not comply with the Department of Waste Management and Pollution Control provisions. Also under DCEC’s radar is Selibe Phikwe Town Council especially the departments of Buildings and the Department of Waste Management and Pollution Control. The DISS is allegedly investigating the possible human trafficking cases of some Asian employees who recently boycotted work and reported the company management to Labour department for failing to pay them salaries.

Construction of the plant
An investigation by this publication has revealed that the building of the plant did not follow the Buildings Controls Act, with allegations of collusion between the contractors of the plant and some officials from SPTC. According to information gathered by this publication, SPTC’s department of Buildings was supposed to inspect each and every step of construction of the plant in accordance with the Buildings Controls Act but the opposite is said to have happened.
In 2014 Pula Steel requested Watson Construction, a civil engineering and building contractors to submit a quotation for the construction of civil to furnaces, machine and discharge foundation and other structures at the site. On the 15th of December 2014, Watson Construction through their Managing Director M. Ellithorne wrote to Pula Steel raising some queries on the drawings they received. Some of the queries that the civil engineering contractors raised was that the reinforcing details in general were lacking in detail. Watson has over 30 years’ experience in the construction industry. Reinforcing details particularly showing connections of one structure into another need to be defined, reads part of the response. He also sought reinforcing details showing starter bar configurations. “To complete the work in an acceptable time frame, bending schedules for reinforcing need to be produced.  We have this attended to at an additional cost,” reads a letter from Watson Construction MD Ellithorne to Pula Steel project manager.


The civil engineers also pointed out to Pula Steel project manager that floor details on the furnace structure were not clear and that machine and discharge foundation layout drawing is not clear and the “lines are too thick for this much detail.” There seems to be conflicting dimensions on different drawings, Watson Contractors pointed out to Pula Steel. Pula Steel rejected the recommendation by the Watson construction and engaged another company and the plan was approved by the town council. This has led to suspicion as to why the engineers from SPTC didn’t pick up the mistakes which has now been found by another department. According to a reliable source, this was contrary to the Buildings Controls Act Chapter 5:02 which states that: “Where plans of any proposed work are, in accordance with the building regulations, deposited with a local authority, the local authority shall pass the plans unless they are either defective, or show that the proposed work would contravene any of the building regulations or any other written law, and, if the plans are defective or show that the proposed work would contravene any of the building regulations or any other written law, the local authority shall reject the plans.” One of the reasons why the plant was closed is because it does not have a furnace and there was spillage of waste, something which was pointed out by Watson Construction in 2014.


Erection of steel bars
The erections of the steel bars at the plant were against the ISO 14713:1999 on Protection against corrosion of iron and steel in structures – Zinc and Aluminium coatings – Guidelines. Pula Steel erected the steel bars without first protecting them against corrosion which is called duplex system which is a combination of painting or powder coating and hot-dip galvanising.  It is an internationally accepted standard. The galvanised coating protects the base steel, supplying cathodic and barrier protection. Failure by the company to do that has rendered the plant very risky as steel easily corrode and the building can collapse.


Human trafficking suspicion
As the management of Botswana’s first steel plant are still battling as how they will comply with the department of Waste Control Regulations, security apparatus have entered the fray. At the centre of DISS investigations is on how Pula Steel recruited their Asian employees some which they vetted out.
In 2014 the Verma family, who are the managers of Pula Steel as well as shareholders, recruited more than 50 men purporting they were from India and were to work as engineers at the plant. The youngest was born in 1998 and the Department of Labour rejected the application but they were given temporary permits. Sources have revealed that some of the alleged Indian employees are actually from Nepal and didn’t possess any qualifications. Recently the young Nepalese employees have revealed that they were exploited by the Pula Steel management as they were not given salaries but just living allowances.

How they milked BCL until blood came out
After coming up with POLARIS II as part of diversifying their products, BCL Enterprises bought shares in a shelf company at P20 m reasoning that the owners of the company have experience in the steel production. Other shareholders include citizen owned company Wealth Generations whose directors are Botswana Democratic Party (BDP) former Secretary General Mpho Balopi and Brian Mosenene. As part of their ambitious POLARIS II strategy, BCL injected P89 million for the construction of the plant which was to be operational by September 2015. Three months into the construction of the project, the company was financially broke and BCL pumped additional P53 million into the project without increasing their stake in the company. The additional funding shot the amount BCL invested into the company to P162 million before it could start reaping its benefits. Efforts to get a comment from Pula Steel Corporate Manager Brian Mosenene hit a snag as his phone was off while DCEC didn’t respond to a questionnaire sent to them.