Govt called out on RCC

Fritz Jacobs, who tried in vain to save the RCC from judicial management, says private sector players are ready to move in and feast on billions in tenders.

13 June 2018 | Government

Outgoing Roads Contractor Company (RCC) board chairperson Fritz Jacobs claims there are deliberate plans to do away with the parastatal in order to favour private sector interests in the country.

The beleaguered chairman, who has come under fire for brokering a N$580 million funding deal with a Chinese company in order to keep the RCC afloat, resigned together with fellow board member Elsie Skrywer yesterday, following a cabinet decision to follow through on placing the entity under judicial management.

“The plan to close the RCC and start a new RCC-type public entity will cost the country far more than N$2.5 billion and more time… in the meantime, there will be players who will move into the vacuum and capitalise on the billions of investments earmarked in the roads development plan of the country,” Jacobs said.

He and Skrywer's resignations follow those of Anna Mathebele as RCC board vice-chairperson, Elzevir Gelderbloem and Melkizedek Uupindi as board members.

“The company most certainly can be turned around. It is a company with great potential,” Jacobs said.

“I firmly believe in the future of the RCC.”

Public enterprises minister Leon Jooste yesterday dismissed the allegation raised by Jacobs, saying there were no discussions held at cabinet level that suggest a new RCC would be created.

A decision had been taken in 2017 to place the RCC under judicial management, with Jooste making the announcement at the time.

“Under judicial management, the board is effectively disempowered and the company is managed under the judicial manager. Executive management usually continues as usual, other than the CEO,” explained Jooste.

When asked if there is a possibility that the judicial management bid could be opposed by interest groups, such as employees and trade unions, Jooste said “no”.



Chinese deal off

The cabinet committee on overall policies and priorities last week reversed a decision to allow the RCC board to rescue the embattled parastatal, and has finally decided to go back to its original plan to place it under judicial management.

The announcement was made by works minister John Mutorwa following the conclusion of a committee meeting that decided it would be better to go down the original route of judicial management.

Under judicial management, a manager is appointed by the Master of the High Court to among others, try and steer the entity out of trouble. If it cannot be rescued, it will be liquidated.

The board of the RCC, led by Jacobs, was given a chance to revive the RCC, and entered into a deal with Chinese construction firm Jiangsu Nantong Sanjian.

Under the deal with the Chinese entity, the RCC arranged off-balance sheet financing from Jiangsu to the tune of N$580 million, which would have seen the Chinese company raking in over N$2 billion in contracts for an initial loan outlay of N$580 million.

The partnership would have stretched over 14 years, with a five-year repayment period at 15% interest per year.

The arrangement also stated that Nantong Sanjian would become the RCC's major partner in the projects.

However, cabinet stopped the RCC board dead in its tracks from entering into the arrangement, following its failure to seek advice from the attorney-general and the approval of the line ministry.

This prompted the cabinet committee to direct the works ministry to prepare affidavits to support the RCC's judicial management court application.

“The decision was intact, taken in September 2017 already. The bill has been approved in principle by cabinet and is ready to be tabled by the minister of transport. The minister of transport will table the bill since he is the current shareholder minister as defined in the RCC Act,” said Jooste.



PS in hot water

Cabinet had initially directed Mutorwa to consider dismissing the RCC board, while secretary to cabinet, George Simataa was asked to take disciplinary action against works permanent secretary Willem Goeiemann.

Goeiemann is accused of withholding vital information regarding the RCC-China deal from Mutorwa.

“I asked him (Goeiemann) why he never shared the agreement with me and all he told was that he got the document with difficulty. I told him that even if he had got the document with difficulty he should have at least shared it with me,” Mutorwa told weekly Confidente last week.

When approached for comment by the newspaper, Goeiemann did not deny that he had not shared the document with Mutorwa.

“I was also given the agreement a day or two before Mutorwa got it,” he said.

The RCC has also been instructed to provide the minister of finance with updated financial statements to enable treasury to determine whether salaries of employees should be paid until the judicial management process is satisfactorily and successfully completed, Mutorwa said in statement released on Monday.

With the ball now in Mutorwa's court, the works minister did not say when he would start making arrangements for the tabling of the judicial management bill.

According to Mutorwa, it will be business as usual for the RCC, in the meantime.

“The RCC as an organisation will continue with its projects and there will be no disruptions. The RCC as a juristic body is not dissolved,” Mutorwa said.

The works minister also provided his assurance that CEO Seth Herunga would not be affected, saying: “The RCC CEO is an appointee of the board. The outgoing board did not raise any complaints against the CEO, thus the CEO position is not affected.”

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