The UNIGEM conundrum

SHARE   |   Sunday, 09 November 2014   |   By Ditiro Motlhabane

• Govt issues tenders for GEMVAS contract 

• BOPEU out of UNIGEM

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• Trade unions consolidate economic power

Botswana Public Employees Union (BOPEU) made an official exit from the shareholding of Union Gemvas (UNIGEM (Pty) Ltd) - a half a billion Pula joint venture which administers the Government Employees Motor Vehicle and Residential Property Advance Scheme (GEMVAS) - last Friday bringing to an end a tumultuous four-year relationship. 

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The disinvestment from the Botswana Federation of Public Sector Unions (BOFEPUSU) owned company could see the union walking away with miniscule benefits after injecting P1.2 million for the 20 per cent issued share capital at inception in May 2010. This is because in the four years of existence, the company’s balance sheet has not grown much.

On the other hand, the departure could be an early Christmas present for the four remaining trade union partners, as they are expected to divide the shareholding among themselves to now reach 25 per cent each. But uncertainty still clouds the future of the GEMVAS contract as government has remained tight-lipped on the tender just two weeks before its expiry at the end of November 2014. Although UNIGEM has made an enquiry with the Ministry of Finance and Development Planning (MoFDP) - the procuring entity, no correspondence had been made by the end of the week.  "We are awaiting a response from ministry of finance," said UNIGEM Chief Executive Officer, Jullian Willie, midweek.

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There has been speculation that government does not want to extend the management contract for UNIGEM due to a prolonged fight between the employer and BOFEPUSU, which intensified publicly ahead of the October general elections. The departure of BOPEU from the federation business has also been closely linked to government's intention on the GENVAS contract in some quarters. 

Permanent Secretary in the Ministry of Finance, Solomon Sekwakwa, defended his ministry, saying they have long advised UNIGEM about the extension of the contract for six months.  He said his ministry is currently busy preparing an invitation to tender (ITT) documents in accordance with the law governing procurement of public assets and contract law. He said as it is law that all government jobs be put to tender, they are following the same process in order to protect the contractor and the procuring entity. "The intention is that from now until the expiry of the extension, we would have completed the tendering process and awarded the tender to the winner," said Sekwakwa. 

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He denied that his ministry has been procrastinating on making pronouncements on the future of the GEMVAS contract because the employer is planning to take it away from trade unions due to the ongoing labour disputes between the parties. "We do not know the basis of such allegations. We have nothing to do with conflict between trade unions and government. We are professionals with a huge responsibility for this country. It would be immature of them to suggest that we are involved in under hand plans. There is a need to separate business from politics," said Sekwakwa.   

Is UNIGEM under-performing? 

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The annual general meeting held by UNIGEM leadership last Friday accepted BOPEU’s withdrawal from the company and ejected its representative Sikalame Seitiso from the proceedings.  In a previous interview when quizzed why BOPEU is leaving the shareholding of the multimillion Pula conglomerate, its president, Andrew Motsamai, claimed that UNIGEM is not doing well and as shrewd businessmen intent on profi-making,t they want to explore better investment opportunities. Insiders have, however, rubbished Motsamai's claim as hogwash and baseless. In justification sources within BOFEPUSU argue that far surpassing expectations that a start-up business does not make enough profit to pay dividends to shareholders within the first five years, UNIGEM has done that from the word go. 

On Friday Motsamai reiterated that UNIGEM is crumbling. "There is no investment there. We may not even recoup the P1.2 million we invested in 2009. It has been written-off by auditors," he said. Motsamai said BOFEPUSU leaders are dishonest about performance of the company and are not telling their members the truth. He said the poor performance was also confirmed by a valuation done by BDO Spencer valuers last year. He said the company financials show that UNIGEM has been making losses ever since formation. "When we wanted to sell our shares last year, we came across cash-flow projections showing that in the next six years UNIGEM would be making a P1.6 million loss per year, a cumulative loss of P7 million," he said.  

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Motsamai also accused the other leaders of trying to politicise the issue of their disinvestment by alleging that his union has been promised the GEMVAS contract. He also denied that they are deliberately trying to destabilise the federation, saying the decision is purely business. He said even if they are buying assets with dividends BOPEU is not wrong to disinvest from them. He dismissed talk that he is selling out to the employer as nonsensical and ridiculous. He said every public servant has an opportunity to be awarded scholarship as he has already done twice before, and therefore it is not news that he could benefit from such provision. "I don't want to comment on the issue of specially elected because it is nonsense. I cannot discuss petty issues and will not answer to that as it does not add value to the labour movement. It is propaganda and desperation calculated to discredit me. Politics should not be mixed with business. We are simply protecting our members' investment. The money we invested belongs to our members and we are doing our best to be accountable. It is a struggle to have UNIGEM audited, thus making it difficult for us to account to our members," he said.

UNIGEM has been paying dividends through acquiring assets for the federation in a strategic move to prevent financial mismanagement and dispel accusations by the employer that trade union leaders use funds from the joint venture to finance attacks on the employer or are misappropriating funds for personal gain.  By using dividends from the first two years, UNIGEM bought an office block near Kgale Mews for P1.4 million where the federation secretariat is currently housed. In the third and fourth year, a three-floor, 700m2 office complex valued at P8.5 million - UNIGEM house - was purchased. The offices are fully let out to different clients. In 2012 the federation established Botlhe Medical Aid, currently administered by UNIGEM, and in 2014 purchased Federated Insurance Brokers for about half a million Pula as a precursor to entering the financial services market. "Motsamai is doing all this for personal gain as he does not have access to funds while under UNIGEM. He is misleading his followers into believing that UNIGEM is not good investment but he is wrong," a source said. 

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In addition, a recent announcement by outgoing Director of Public Service Management, Carter Morupisi, of extending the repayment period for loans financed by GEMVAS from 10 to 20 years has seen membership increase five-fold. The book value of the scheme is estimated to be hovering around P500 million. "While in the past we processed about 15 applications per month we are currently seeing an approval of about 80 successful applications per month," said Willie. 

Even the demeanour of the man sitting at the helm of a supposedly sinking ship betrays any suggestion of trouble on the horizon. As he confidently paces around his office on the second floor of the magnificent Turnstar building in the old Gaborone central business district (CBD), Willie declares that the future of UNIGEM is bright. There is talk in the labour movement that BOPEU has struck a deal with the employer that should they successfully destabilise and weaken BOFEPUSU, they stand to benefit through the award of the GEMVAS contract to a company closely associated with their investment arm-Babereki Investments. GEMVAS is currently administered by UNIGEM.

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It is further alleged that Motsamai had been promised other perks including a scholarship to go for further studies abroad next year. He is alleged to have rejected the scholarship offer as it would take him away from the union leadership and out of action for some time. The close relationship Motsamai is alleged to have enjoyed with the employer, especially president Ian Khama at the height of the 2011 public service strike, has also accelerated suspicions. Motsamai was later forced to resign his position as Secretary General by other BOFEPUSU leaders on accusations that he was in cahoots with the employer and was selling out. From then on, seeds of discord had been sown between Motsamai and the other federation leaders. The disagreement over the theme of the 2014 May Day commemoration calling for regime change, further strained the relationship despite that the meeting that proposed it was chaired by Topias Marenga - BOPEU secretary general. The final straw that broke the camel's back came in another fall-out over the hit list prepared by BOFEPUSU to decampaign  politicians who were viewed as enemies of the workers ahead of the October general elections. These developments culminated in last week's disinvestment in UNIGEM shareholding by BOPEU.

  

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The financial position, asset base and economic power of UNIGEM looks set to platoon following the envisaged consolidation of the different benefit schemes, central registries and funeral schemes in different trade unions to harness the power of numbers. The resolution, contained in the 2010 Thaba Thula declaration, was revisited at the UNIGEM annual general meeting last Friday where a decision to form a task force in the next two months (by the end of 2014) was made. The task force will establish modalities for consolidating all the benefits schemes with similar operations in the four remaining BOFEPUSU trade union members to bring them under the central administration of UNIGEM. Could the centralisation of the administration of the schemes resuscitate infighting between union leaders and management committees of the subsidiaries? This is a question that some observers ask. Already there is an ongoing catfight between BLLAHWU Burial Society and the union central executive committee over who should head the subsidiary as chairman. In the roll out of the consolidation strategy after assessment and valuation of assets of the subsidiaries the shareholding and accruing dividends will be calculated on the fair percentage value, union leaders said. "No. We do not anticipate such infighting. The consolidation will unlock a lot of potential as the scope for investment will be broadened thus further improving the benefits to individual members," said Willie. 

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Before the formation of UNIGEM in 2010, Manual workers union (NALCGPWU) already had Lesaka Investments formed in 2005, while BLLAHWU Group of Companies was formed in 2008. Two years down the line (in 2012) BOPEU formed Babereki Investment, an investment vehicle in the mould of UNIGEM, following tensions with other partners during the 2011 public service strike. It was followed by BOSETU's PEUBO Investments in the same year and later BTU's More Power Investments in 2013. UNIGEM was born of a marriage consumated at a South African resort in the North West province - now known as The Thaba Thula Declaration. The Declaration was entered into on June 12, 2010. It was the first major joint venture project between the BOFEPUSU partners except for small shareholdings and partnerships in different businesses that already existed within individual trade unions.  It was borne of the realisation that collective investment is more lucrative than when pursued by individual trade union subsidiaries. The remaining UNIGEM trade union shareholders are National Amalgamated Local and Central Government and Parastatal Workers Union (Manual workers), Botswana Sectors of Educators Union (BOSETU), Botswana Land Boards, Local Authorities and Health Workers Union (BLLAHWU) and Botswana Teachers Union (BTU).  

Hardly a week after BOFEPUSU President, Masego Mogwera (also BOPEU vice president, and Labour Secretary, Johnson Motshwarakgole, denied a fall-out between the leadership of the union and the federation, BOPEU has stopped their monthly subscription to the latter citing attacks by other leaders as their major concern. 

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On Friday BOFEPUSU Secretary General, Tobokani Rari, said they had not received any communication on the subscriptions issue from BOPEU. He said in case a member fails to pay monthly subscriptions they give him the benefit of the doubt by calling them for a meeting to discuss problems causing such failure. "There are no hard and fast rules on the subscriptions issue because circumstances may vary from one union member to the other," he said. 

BOPEU convened all regional chairpersons to a meeting in Maun over the weekend to discuss the recent developments. 



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