It is 15 years since Cabinet dissolved the Development Brigade Corporation (DBC), only for Parliament to be informed this week that, actually the DBC that was supposedly dissolved still exists as a corporation with a bulging bank account that is accruing interest.
The corporation owns four erven at Grootfontein, as well as a portion of Farm Berg Aukas and still has operational subsidiaries.
This was revealed after the Auditor General released a damning report into the accounts and financial administration of the parastatal. Among others, it was also found that the supposedly defunct entity has for close to four years been paying a consultant to do their books.
“Some of us thought the DBC has been dissolved, but today we’re sitting and talking about the DBC. Please put us in further understanding of the status of DBC,” public accounts committee chairperson and RDP MP Mike Kavekotora asked.
“Where is the DBC? What happened to the DBC? Just give us the status of DBC, especially the operations of the company since 2004 to date,” he reiterated.
“DBC is not dissolved yet. In 2001 Cabinet directed specific actions to be implemented,” explained Gabriel Sinimbo, the permanent secretary in the Ministry of Industrialisation, Trade and SME Development, who currently acts as the accounting officer of the DBC.
Furthermore, it was discovered that a Cabinet-sanctioned interim board was advised by the Office of the Attorney General that any decision they take could be challenged in the courts, as there are no provisions in the law for the existence of such a body.
An interim board was appointed in late 2001 to round off the work of DBC and bring closure to the company, whose initial establishment was spearheaded by veteran politician Hidipo Hamutenya in the early 1990s.
Also, a letter from then premier Nahas Angula had given the board the mandate to continue “until further notice” and this is the reason that board chairperson Munu Kuyonisa and three others have not yet dissolved the entity. Other board members include Allison Hishekwa and Gilbert Mukwa.
Reportedly, DBC was brought to its knees by poor management, financial irregularities and unprofitable projects.
These and many other shocking revelations surfaced during the hearing, in which MPs serving on parliamentary public accounts committee pressed members of the DBC interim board for answers on the status of the company and its assets, among other things.
In 2004 former president Sam Nujoma instituted a presidential inquiry to look into the “usage and handling of all property, equipment and materials acquired by DBC.”
The select committee requested the accounting officer to explain why consolidated accounts were not prepared for DBC’s two subsidiaries, Namibia Brick Enterprises and Star Protection Services for the period of 2005 to 2013. Star Protection had to be transferred to Namibia Protection Services, but this has not yet happened.
Sinimbo was further requested to explain why the business of DBC decreased considerably over the same period. The committee wanted to know why the balance sheet at March 2013 was not free of material misstatements, given that the assets and liabilities reported in 2004 were not reflected in the financial records of 2005 until 2013.
They also wanted to know what happened to the assets and liabilities amounting to N$20,6 million not brought forward into the financial records after 2004.
Sinimbo was further requested to explain why the corporation did not comply with the DBC Act in the submission of certified copies of its annual financial statements and reports to the Auditor General for each financial year.
After a deed search the auditors discovered that DBC still owns three erven at Grootfontein and a portion of Farm Berg Aukas. In response the committee wanted to know why the properties are still registered in the name of the corporation.
Sinimbo also had to explain why a bank account balance of N$79 022 and N$75 659 in accounts receivable were not accounted for the period in question and the whereabouts of the funds. Further, the committee wanted to know what happened to a DBC property at Grootfontein, valued at N$19,8 million and requested documentary evidence.
An amount of N$695 204, which appeared in the year 2004 financial records for accounts payable was also not accounted in the years that followed.
It was discovered that there were also no financial statements for M&N Developments, Namibia Pioneer Engineering and Patriot Company. In addition, their combined estimated assets – amounting to N$14,3 million – could not be accounted for. VAT amounting to more than N$17,9 million was also not accounted for during the period under review.
Sinimbo was then requested to explain how retrenchment packages of DBC and its subsidiaries were accounted for.
“The interim board was to facilitate the rounding-off of the DBC, in terms of the timeframe that was not very specific, because of the activities that were involved. So the tenure of the board was, therefore, to cease as soon as the DBC was winded-up,” he said.
Kuyonisa then informed the committee that: “We had to come and wind up, but that did not happen. And because of that we addressed a letter to [the chairperson of the ad hoc committee of ministers Nahas Angula] in 2005.”
“Here is his response: ‘I inclose here two Cabinet decisions. Basically, Cabinet decided that further investigation be conducted in order to determine the nature of actions to be taken against individuals in this regard. Your board is deemed operational until further notice,” Kuyonisa quoted Angula.
He continued: “We were faced with some legal questions in terms of who we are, as per the DBC Act. We were to follow-up on certain things that certain managers did and, therefore, we wanted to make sure that we had the right to do what we wanted to do.”
According to Kuyonisa, it was the board’s desire to operate within the confines of its terms of reference and by 2001 it was ready to wind up the DBC. Everything they had to do had to be submitted for approval to the ad hoc committee of ministers, as well as to Cabinet, he said.
“As much as the decision was to wind up, one finds [a decision] of continuation. There was contradiction as to whether we are supposed to wind up, or capacitate, and that is why we wrote that letter to [Angula],” explained Kuyonisa.
Kavekotora stressed that the failure by Kuyonisa and his team to close down the DBC for good was tantamount to non-compliance. Kuyonisa replied that: “These entities had their own management and boards. Each time we had to do something… we were asking ourselves whether we are within our mandate.”
He said, legally speaking, he doubts that the interim board is the right structure to round off the work of the DBC, especially in re-engineering its divisions.
“In terms of the DBC Act, there is no provision for an interim board… We asked [legal advice] from the Attorney General and there is a letter to that effect that says the Act does not make provision for an interim board, so one day your actions can be interpreted as [not binding or legal],” he explained.
It was then decided that the select committee would seek further clarity on the legality of the interim board and study other crucial outstanding documents, which the DBC board did not include their submission.