TransNamib, Cabinet clash over hotel stake
Cabinet and the TransNamib board are a country mile apart on a court ruling that the company should sell its stake in a Swakopmund hotel for N$5 million.
24 March 2021 | Local News
TransNamib Holdings has ignored a directive from Cabinet, which sought to stop the rail agency from appealing a September 2020 court ruling that ordered the company to sell its 50% shares in Swakopmund Hotel and Entertainment Centre to its partner for N$5 million.
The hotel is valued at N$350 million.
TransNamib and Stocks and Stocks Leisure Namibia are equal shareholders in the joint venture, which has liabilities to the tune of N$111 million and an asset base totalling N$65 million.
TransNamib’s CEO Johny Smit on Sunday confirmed that an appeal was filed last month.
While Stocks and Stocks is accusing TransNamib of failing to honour its financial obligations towards the business, the rail agency said its partner has not managed the business soundly, further claiming that it has not received dividends since the establishment of the hotel 26 years ago.
Official correspondence between public enterprises minister Leon Jooste and TransNamib’s board chairperson, advocate Sigrid Tjijorokisa, shows that the minister went as far as lobbying Cabinet for support to block any appeal plans. This is despite the board being of the view that not appealing “is not in the best interest of the company”.
On 23 November 2020, Jooste wrote to Tjijorokisa that TransNamib should not appeal the court ruling and that it should abide by the outcome.
“A solution to this matter has been unduly delayed for an unacceptable prolonged period and these delays have compromised the ability of the entity to operate optimally while the livelihoods of the employees over recent months have also been negatively impacted due to the impasse,” he wrote.
The board, through Tjijorokisa, responded six days later that the outcome should be appealed because “the judgment was prejudicial”.
The board also said internal remedies such as arbitration were not exhausted and that there were issues that had not been not dealt with during the urgent application.
After the board refused to bow to his directives, Jooste elevated the matter and managed to successfully lobby the Cabinet Committee on Overall Policy and Priorities (CCOPP) to intervene. The committee is chaired by President Hage Geingob.
“The CCOPP directs the minister of public enterprise to instruct TransNamib to abide to the High Court ruling and abandon the appeal to the court order, in favor of Stocks and Stocks,” Jooste wrote in another letter to the board dated 11 December 2020.
According to that letter, the CCOPP also authorised the minister to direct Stocks and Stocks to re-employ the hotel’s 178 employees as a matter of urgency and to settle outstanding salaries backdated from March 2020.
On 23 December 2020, the board responded that despite the Cabinet directive, the company would not abandon the appeal process because “failing to lodge an appeal in relation to this matter would amount to a breach of our fiduciary responsibilities”.
“We believe there are serious anomalies that need to be addressed. We believe this is an asset that should yield profits or that alternatively should be disposed of at a market-related price once a full valuation has taken place and a quantification into the true amount of the indebtedness to Stocks and Stocks has taken place,” Tjijorokisa wrote.
“The structural issues we are dealing with did not arise overnight.”
Jooste said the matter should be finalised in the interest of the workers, but the board, however, does not buy into his sudden change of heart, she wrote.
“It is surprising that they now seek to use the issue of staff as an aggravating factor, this whilst staff employed directly by them receive more favourable benefits and continue to be paid,” Tjijorokisa said.
“The above reasons are supported by the board. It is our submission to your honourable office to support TransNamib to appeal.”
After this prolonged tit for tat, the minister yesterday said he discussed the matter with the board to gain an understanding of their position.
“Following the consultations, I returned to Cabinet to request permission for us to seek an alternative solution and we are currently conceptualising that,” he said.