The Chinese firm that entered into a deal to bankroll Roads Contractor Company(RCC) to the tune of N$579 million says it has been unfairly criticised, further claiming that Namibia “has missed a golden opportunity to attract new foreign direct investment”.
China Nantong Sanjian yesterday issued a statement in a bid to explain its role in the contract that has since been declared null and void by the Namibian government because RCC failed to follow due procedures.
The Ministry of Works and Transport said it was not aware of the contract and by extension also not aware of negotiations between RCC and Sanjian. This led to increasing pressure on now-departed RCC board chair Fritz Jacobs and his team. The board members eventually resigned after government cancelled the deal.
Sanjian said its cooperation with RCC was a pure business deal without any political strings attached.
“We were approached by the RCC as one among many other companies from which it requested technical partnership and financing proposals at the beginning. We understood that the objective of the RCC board was exclusively to save the company which was in financial distress from bankruptcy and closure as it would have led to the loss of over 400 Namibian jobs,” said the Chinese firm.
According to the agreement, said Sanjian, RCC did not need to provide any sovereign guarantee.
Sanjian also said the agreement did not exclude RCC from having its own projects nor to be in partnership with others.
“The matter could have been handled more professionally and responsibly than it was made out to be the biggest wrong, which it was not. If there were uncertainties or provisions not clear in the agreement we could have sit around the table and relook these things with the objective of solving in the best interest of the two companies and the workers,” reads the statement.
Sanjian also said “we are not responsible for the internal processes which the RCC had to comply with to obtain approval from government to implement the agreement.
That was their responsibility as it was our responsibility to obtain the financing and the necessary technical capacity for the best of RCC.”
Admitting to having profits in mind, Sanjian said: “Since this is a commercial activity, we were aiming at making profits through the cooperation. However, what was mentioned in some of the media coverage that we will receive N$2 billion for a loan of N$579 million is incorrect.
Taking into account that we have to put additional capital into the development of any project apart from the credit loan of N$579 million to the RCC, reasonably we can estimate profit from this cooperation as less than N$580 million. On the other hand, the risk is not insignificant when you look at the financial and technical investment we need to inject in this project,” the statement further reads.
Sanjian said RCC would have held a 53% shareholding stake in all projects the companies partnered in.
“It is regrettable that Namibia has missed a golden opportunity to attract new FDI which our company planned to avail to the RCC, but because of unnecessary institutional infighting, misrepresentation of facts and bias[this was not the case],” Sanjian said regrettably.
It added: “We cannot force the hand which had decided to decline the investment albeit based on a wrong understanding of the actual facts”
RCC is currently under judicial management.
RCC’s current debts hover in the region of N$800 million. The company is in so much financial trouble it cannot afford to foot the N$7 million salary bill of its employees. Workers are currently being paid by Treasury.
The Chinese firm is involved in the property development sector.
RCC has in the past landed in hot water for outsourcing work to Chinese firms.
How the deal collapsed
The deal between the two had been struck in April without prior approval of the Minister of Works and Transport (MWT).
The cash-strapped RCC partnered with the Chinese firm in a bid to secure funding to keep its operations running.
Mutorwa said Jacobs claimed that RCC got a legal opinion on the agreement from its own legal team that sanctioned the deal.
When questioned to produce the legal opinion, Mutorwa revealed, Jacobs could not provide the requested documentation.
The decision to cancel the agreement was sealed at a meeting between Prime Minister Saara Kuugongelwa-Amadhila, Attorney General Dr. Albert Kawana, finance minister Calle Schlettwein and public enterprises minister Leon Jooste.
“RCC has been notified to formally inform Nantong about the decision and the RCC board have been formally directed not to implement or take any steps in accordance with the agreement,” he said.
A cabinet committee has since resolved that works and transport ministry permanent secretary Willem Goeiemann should be disciplined.
The committee recommended that Cabinet secretary George Simataa institute disciplinary action against the works PS in terms of his conduct/involvement with regard to the contract between RCC and the Chinese firm.