CBD’s Big Fallout: Enter Grit
The appointment of a BDC employee to the Board of Letlole in December 2019 and the acquisition of the company’s shares by Grit gave rise to serious financial implications for company by triggering tricky clauses in the company’s Long-Term Incentive Plan. Staff Writer KITSO DICKSON reports
One of the tasks of the then Chief Executive Officer (CEO) of Letlole La Rona, Chikuni Shenjere-Mutiswa, was to ensure that company policies were up to date and appropriate for the organisation. He was also to bring this to the attention of the board chair, Boitumelo Mogopa, for ratification.
One of the things that he noticed were various errors in policies, some of which did not have a clause requiring that all changes be approved by the board. Some were not signed and had various niggles. Other changes included inserting a new logo and proposing removal of ambiguities and conflict in certain clauses.
An example was the Conditions of Service read together with the Discipline and Grievance Policy, which were at odds with each other regarding legal representation. Mutiswa’s concerns were shared with the chair as Letlole’s outsourced internal auditor also flagged them. Mogopa advised that the changes ought to be made quickly, given that a new shareholder, knocking on the door, was to be involved in the business and policies must be up to date. Her issue was the need to protect the property company’s existing staff heightened by fears that Grit Real Estate Income Group was lurking and things could change very quickly.
Sometime around 17 April 2019, Mogopa had convened a special meeting where Moatlhodi Lekaukau, who was then acting as Managing Director (MD) at Botswana Development Corporation (BDC), was present. At that time, BDC, the government’s investment arm, was holding a 66 percent stake in the property company, which is domiciled at the Gaborone Central Business District (CBD).
Lekaukau’s attendance was motivated by an imminent deal in the works between BDC and Grit. He needed to brief the board about the transactions and the direction of the business thereafter. Grit Services Limited (GSL), which is a subsidiary of the Grit Group, was in the process of acquiring 66 500 000 ordinary shares of Letlole held by BDC. This would result in reduction of BDC’s shareholding in Letlole from 65.8 percent to 42 percent while Grit’s stake would increase from 6.25 percent to 30 percent.
Lekaukau warned the board that after the transaction was completed, Grit would seek board representation in Letlole in line with provisions of the company’s constitution. He alerted the members of the board that what Grit could or could not do was entirely up to the Letlole board. But most importantly, he emphasised the need for support from the board in the course of this partnership which offered a number of benefits in line with BDC’s mandate and strategy. He urged the board to engage with Grit concerning negotiations and approving any board representation or a management contract.
It appeared that Letlole’s board was satisfied with what the then acting MD of BDC said. They now knew that Grit would be seeking appointment of its directors to the board of Letlole. The transaction between Grit and BDC was a critical factor, given the discussion that had been going on at Letlole regarding the company’s Long Term Incentive Plan (LTIP) being crafted at the time.
Mutiswa, as the then CEO, had received a message from a representative of Grit advising that the chair had told them that the board of Letlole had appointed two of Grit’s nominees, Fred Selolwane and Bronwyn Corbett, to the board. Confirmation of the appointments was later shared with Mutiswa by the chair on the same particular day.
Mogopa directed that a meeting be arranged which would include the new Grit appointees for the following week. Grit requested that formalities be expedited quickly. The process was handled by Executive Assistant Dinah Jonah in whom Mutiswa had considerable faith. Jonah had touted her compliance experience in her CV and in her then previous job. During her selection, Mutiswa had sought someone able to assist or step in on compliance issues when needed. Her CV also indicated experience in processing board appointments.
The company’s then Chief Finance Officer (CFO), Kamogelo Mowaneng (now acting CEO), had indicated that she was swamped with work ahead of the budget year and preparation for audit. She had previously asked that her team be excused from the due diligence related to properties that Letlole wanted to buy in Namibia. As such, she requested that she be excused from the meeting. She had previously accused Mutiswa of keeping the appointments of Selolwane and Corbett secret from her. But Mutiswa had argued that all communication was uploaded in the company’s communications facilities.
On 12 November 2019, Bafana Molomo, an employee of BDC, resigned from the Letlole board. Upon this, BDC sent out a letter to Mutiswa on 21 November indicating that they were nominating Oteng Keabetswe to the Letlole’s board in terms of Section 20.3 of the company’s constitution.
They requested that as a shareholder, a vote on his appointment be included as an agenda item for the AGM scheduled for 12 December 2019. This necessitated a re-issue of the notice of the AGM. At a special meeting on 26 November 2019, Mutiswa informed the board of Keabetswe’s nomination as a director, which was to come up for a shareholder vote at the AGM on 12 December 2019.
After that meeting, Tiny Kgatlwane, a board member and chair of the Audit, Risk and Compliance Committee (ARAC), reportedly opined in unsolicited remarks that Keabetswe, the nominated director, would be “easy” for her to “handle” were he to land on the Letlole board as his wife worked with her and reported directly to her. She reportedly also said he was too inexperienced and undercooked to be sitting on the board of a listed company such as Letlole. Keabetswe was later voted into the board.
As it became clear, the change in the shareholding structure and board representations later became a source of consternation, triggering serious financial implications to the company in line with the LTIP, which by then was still at infancy stage.