Murky Namdia N$50m loan probed
The money was meant to be a loan but it was never returned to the fund.
OGONE TLHAGE
WINDHOEK
The role of former attorney-general (AG) Sacky Shanghala and the utilisation of the Diamond Valuation Fund (DVF) to provide seed capital for the formation of Namibia Desert Diamonds (Namdia) has been brought into question.
Shanghala was the AG at the formation of Namdia and was only reshuffled later in February 2018 to head the justice ministry.
Namdia in its infancy was allocated N$50 million as seed capital, of which N$20 million was allocated in start-up capital while N$30 million was its initial operational expenditure.
The money was meant to be a loan but it was never returned to the fund.
“In a Cabinet Submission from MME dated 8 July 2016 it is stated that these funds will be treated as a loan. In a later Cabinet Submission from MME, dated 17 October 2016, it is stated that the loan will be paid back 'in the form of social contributions towards the Harambee Prosperity Plan'. In the financial statements of Namdia, these funds are disclosed as equity,” the report states.
Namdia CEO Kennedy Hamutenya told Namibian Sun upon enquiry that the money was still listed as equity on its balance sheet.
The company, he said, was able to pay back the loan in the form of a dividend to government of N$50 million, Hamutenya said.
The use of the DVF to fund Namdia was motivated by Shanghala's office. An official report from the public enterprise ministry seen by Namibian Sun questioned the use of the fund to capitalise Namdia.
The purpose of the diamond fund was to defray the costs of evaluation of any unpolished diamond pursuant to the provisions of the Diamond Act and to defray the expenses incurred in administering the said Fund as per its enabling Act.
“Questions were raised whether it is acceptable that the DVF be used for such purposes and how the funds are subsequently treated,” the report said. The report also questioned whether it was acceptable that the fund make loans and that Treasury approval should have been sought.
“The Act is silent on that. In the absence of clarity in terms of the Act, one would expect a loan to be repaid,” the report said.
Shanghala gave an opinion that seed capital qualifies to be funded from the DVF.
His opinion is essentially based on the argument that Namdia was established to obtain better value for diamonds, and as such the seed capital is part of the cost of valuation.
The argument provided by the AG was that Namdia was established to obtain better value for diamonds, and as such, the seed capital formed part of the cost of valuation.
The finance ministry was also approached at the time and the conclusion was that it was not within the mandate of the DVF to provide seed capital to fund Namdia.
While a submission provided by then mines minister Obeth Kandjoze to Cabinet indicated that the seed capital from the DVF was a loan, on Namdia's books it was recorded as equity.
Kandjoze refused to entertain questions sent to him on the matter.
WINDHOEK
The role of former attorney-general (AG) Sacky Shanghala and the utilisation of the Diamond Valuation Fund (DVF) to provide seed capital for the formation of Namibia Desert Diamonds (Namdia) has been brought into question.
Shanghala was the AG at the formation of Namdia and was only reshuffled later in February 2018 to head the justice ministry.
Namdia in its infancy was allocated N$50 million as seed capital, of which N$20 million was allocated in start-up capital while N$30 million was its initial operational expenditure.
The money was meant to be a loan but it was never returned to the fund.
“In a Cabinet Submission from MME dated 8 July 2016 it is stated that these funds will be treated as a loan. In a later Cabinet Submission from MME, dated 17 October 2016, it is stated that the loan will be paid back 'in the form of social contributions towards the Harambee Prosperity Plan'. In the financial statements of Namdia, these funds are disclosed as equity,” the report states.
Namdia CEO Kennedy Hamutenya told Namibian Sun upon enquiry that the money was still listed as equity on its balance sheet.
The company, he said, was able to pay back the loan in the form of a dividend to government of N$50 million, Hamutenya said.
The use of the DVF to fund Namdia was motivated by Shanghala's office. An official report from the public enterprise ministry seen by Namibian Sun questioned the use of the fund to capitalise Namdia.
The purpose of the diamond fund was to defray the costs of evaluation of any unpolished diamond pursuant to the provisions of the Diamond Act and to defray the expenses incurred in administering the said Fund as per its enabling Act.
“Questions were raised whether it is acceptable that the DVF be used for such purposes and how the funds are subsequently treated,” the report said. The report also questioned whether it was acceptable that the fund make loans and that Treasury approval should have been sought.
“The Act is silent on that. In the absence of clarity in terms of the Act, one would expect a loan to be repaid,” the report said.
Shanghala gave an opinion that seed capital qualifies to be funded from the DVF.
His opinion is essentially based on the argument that Namdia was established to obtain better value for diamonds, and as such the seed capital is part of the cost of valuation.
The argument provided by the AG was that Namdia was established to obtain better value for diamonds, and as such, the seed capital formed part of the cost of valuation.
The finance ministry was also approached at the time and the conclusion was that it was not within the mandate of the DVF to provide seed capital to fund Namdia.
While a submission provided by then mines minister Obeth Kandjoze to Cabinet indicated that the seed capital from the DVF was a loan, on Namdia's books it was recorded as equity.
Kandjoze refused to entertain questions sent to him on the matter.
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