Suppliers milked Agribusdev dry
MATHIAS HAUFIKU
· Late MD had connections with suppliers
· Company lost N$50 million through underselling
· Millions paid for goods never delivered
· Advice from internal experts ignored
WINDHOEK
A forensic report into the dealings of Agribusdev has claimed that suppliers received favourable treatment to conduct business with the company by using price-fixing tactics and well-placed officials pulling the strings from within to make things happen.
The report, seen by Namibian Sun, was compiled by forensic investigators from auditing firm Deloitte, and handed over to government.
Agribusdev, currently laden with debts in excess of N$75 million, is on the verge of shutting down following years of poor management, which subsequently crippled the finances of the company.
The situation is further compounded by revelations that, at one point, Agribusdev undersold its dates by N$50 million to a private firm who simply transported the dates across the border for onwards selling. There are also instances where millions were paid to a supplier for goods that were never delivered.
Several senior Agribusdev employees, including the company’s late managing director Petrus Uugwanga, have been implicated in a ‘favouritism scheme’ which singled out South African fertiliser supplier Kynoch and a local company that produces dates, SomNam Investments.
Agribusdev’s financial struggles have been further exacerbated by numerous allegations of poor financial controls, inexperienced board members and poor governance.
Kynoch ties
The emergence of the report comes after years of media reports questioning ties between Agribusdev and Kynoch.
The South African firm, according to the report, received supply contracts even when it was not the cheapest provider of inputs.
More so, despite “significant delivery issues, including late and under-delivery of inputs”, procurement from Kynoch still continued unabated.
“It seems the procurement process was manipulated to have them as the main supplier of inputs. Advice from the Agribusdev agronomy department was ignored in favour of Kynoch advice,” the report noted.
The probe also went to lengths to shine the light on Agribusdev’s former technical adviser, Riaan Fokkens, who also happened to be Kynoch’s local agent.
“Due to Mr Fokkens’ relationship with Kynoch as the Namibian agent and his influential position in the organisation, we can see a trend of an increase in procurement from Kynoch after his appointment as a technical advisor at Agribusdev.
The report also revealed how Agribusdev paid over N$5.6 million in 2019 for inputs invoiced by Kynoch that were allegedly never delivered.
Underpricing
Despite facing its own financial challenges, the probe found that Agribusdev was underselling its dates.
There were also serious concerns about inappropriate control of the sorting, grading and price determination processes adopted by the company.
SomNam Investment was awarded a dates and grapes contract by Agribusdev.
According to the report, Agribusdev employees informed investigators about an alleged close working relationship between Uugwanga and SomNam, and that the late managing director benefitted personally in the sale of dates by undercutting Orange River Irrigation Project (ORIP) dates’ prices and selling them at market value in South Africa to Karsten Farms.
The investigators, however, “could not substantiate this relationship as there is no documentary evidence to prove collusion”.
At the time, in 2019, investigators obtained the market prices of dates from the Namibia Agronomic Board (NAB) and noted that the SomNam prices were significantly lower.
ORIP sold dates worth N$ 9 593 461.92 to SomNam as at 26 April 2019, according to sale summaries.
“We recomputed the potential revenue based on the market-related prices supplied by the NAB and compared the results to the actual sales made. We noted a potential loss of N$12 818 092.42 from date sales in the 2019/2020 season based on this assessment,” the probe found.
It added: “We noted that SomNam had been purchasing ORIP dates for three seasons prior to 2019, which could translate to potential losses above N$50 000 000 over four years.”
One-man show
Investigators allegedly requested but were not provided with sales data of the other seasons SomNam purchased ORIP dates.
“Mr Abdul, the SomNam director, unanimously performed all the sorting, grading and price determination. He would refute any challenges made by ORIP staff on his grading of the dates which affected pricing.
“He effectively controlled the whole process from growing to marketing of the dates,” the report read.
SomNam, according to the report, only transported the dates across the border to Karsten Farms in South Africa and sold them at market-related prices without any value addition.
This article is the first in a series of investigations into the operations of Agribusdev since its inception in November 2011.
· Late MD had connections with suppliers
· Company lost N$50 million through underselling
· Millions paid for goods never delivered
· Advice from internal experts ignored
WINDHOEK
A forensic report into the dealings of Agribusdev has claimed that suppliers received favourable treatment to conduct business with the company by using price-fixing tactics and well-placed officials pulling the strings from within to make things happen.
The report, seen by Namibian Sun, was compiled by forensic investigators from auditing firm Deloitte, and handed over to government.
Agribusdev, currently laden with debts in excess of N$75 million, is on the verge of shutting down following years of poor management, which subsequently crippled the finances of the company.
The situation is further compounded by revelations that, at one point, Agribusdev undersold its dates by N$50 million to a private firm who simply transported the dates across the border for onwards selling. There are also instances where millions were paid to a supplier for goods that were never delivered.
Several senior Agribusdev employees, including the company’s late managing director Petrus Uugwanga, have been implicated in a ‘favouritism scheme’ which singled out South African fertiliser supplier Kynoch and a local company that produces dates, SomNam Investments.
Agribusdev’s financial struggles have been further exacerbated by numerous allegations of poor financial controls, inexperienced board members and poor governance.
Kynoch ties
The emergence of the report comes after years of media reports questioning ties between Agribusdev and Kynoch.
The South African firm, according to the report, received supply contracts even when it was not the cheapest provider of inputs.
More so, despite “significant delivery issues, including late and under-delivery of inputs”, procurement from Kynoch still continued unabated.
“It seems the procurement process was manipulated to have them as the main supplier of inputs. Advice from the Agribusdev agronomy department was ignored in favour of Kynoch advice,” the report noted.
The probe also went to lengths to shine the light on Agribusdev’s former technical adviser, Riaan Fokkens, who also happened to be Kynoch’s local agent.
“Due to Mr Fokkens’ relationship with Kynoch as the Namibian agent and his influential position in the organisation, we can see a trend of an increase in procurement from Kynoch after his appointment as a technical advisor at Agribusdev.
The report also revealed how Agribusdev paid over N$5.6 million in 2019 for inputs invoiced by Kynoch that were allegedly never delivered.
Underpricing
Despite facing its own financial challenges, the probe found that Agribusdev was underselling its dates.
There were also serious concerns about inappropriate control of the sorting, grading and price determination processes adopted by the company.
SomNam Investment was awarded a dates and grapes contract by Agribusdev.
According to the report, Agribusdev employees informed investigators about an alleged close working relationship between Uugwanga and SomNam, and that the late managing director benefitted personally in the sale of dates by undercutting Orange River Irrigation Project (ORIP) dates’ prices and selling them at market value in South Africa to Karsten Farms.
The investigators, however, “could not substantiate this relationship as there is no documentary evidence to prove collusion”.
At the time, in 2019, investigators obtained the market prices of dates from the Namibia Agronomic Board (NAB) and noted that the SomNam prices were significantly lower.
ORIP sold dates worth N$ 9 593 461.92 to SomNam as at 26 April 2019, according to sale summaries.
“We recomputed the potential revenue based on the market-related prices supplied by the NAB and compared the results to the actual sales made. We noted a potential loss of N$12 818 092.42 from date sales in the 2019/2020 season based on this assessment,” the probe found.
It added: “We noted that SomNam had been purchasing ORIP dates for three seasons prior to 2019, which could translate to potential losses above N$50 000 000 over four years.”
One-man show
Investigators allegedly requested but were not provided with sales data of the other seasons SomNam purchased ORIP dates.
“Mr Abdul, the SomNam director, unanimously performed all the sorting, grading and price determination. He would refute any challenges made by ORIP staff on his grading of the dates which affected pricing.
“He effectively controlled the whole process from growing to marketing of the dates,” the report read.
SomNam, according to the report, only transported the dates across the border to Karsten Farms in South Africa and sold them at market-related prices without any value addition.
This article is the first in a series of investigations into the operations of Agribusdev since its inception in November 2011.
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