Sunday 20 June 2021
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RCC still in limbo

… as financial woes haunt works ministry


By Ndapewoshali Shapwanale

Minister of Works and Transport John Mutorwa has said that they are in discussions with Bank Windhoek for an out of court settlement that will stop the Roads Contractor Company from losing its headquarters.
Bank Windhoek on 27 March this year wrote to Mutorwa to inform him that they have dragged RCC to court to recover N$103,6 million which the financially troubled parastatal owes the bank.
The parastatal is thus at risk of losing its headquarters situated in Ausspanplatz, over the debt. “We kindly refer to RCC’s obligations towards Bank Windhoek Ltd, various Notices of Demand, and multiple discussions and commitments made between your Ministry, RCC and ourselves from 2018 to date.
Regrettably, obligations and commitments were not honoured as agreed,” the letter addressed to Mutorwa read. The letter further informed the minister that summons was served on 12 March 2019 and that the action to recover the millions will also be coupled with further charges for interest, costs and legal fees. The court action comes despite the current RCC board chairperson Orben Sibeya last year saying RCC was honoring its obligations to its creditors, with the assistance of the government. RCC liabilities in September 2018 were reportedly around N$800 million compared to its assets being valued at N$190 million. The financial woes at the state-owned enterprise were so dire that they could not afford to service their salary bill that stood at N$7 million monthly. Mutorwa confirmed receiving the letter from Bank Windhoek and stated that the ministry and the parastatal were in discussions with the bank to look for possibilities of an out-of-court settlement on the matter, without the bank having to take the RCC headquarters from them.
“We are meeting on RCC now and following this meeting, we can decide on the way forward,” the minister told The Patriot on Wednesday.
Executive Director for the Ministry of Works and Transport, Willem Goeieman also told. The Patriot on Wednesday that they are currently dealing with the matter and that the ministry will only be able to comment on what is next for RCC, following the meeting. “We are dealing with it, we will find a way for the RCC not to lose the building” Goeieman said.

Where is RCC now?
Minister of Finance Calle Schlettwein said that the Government parastatal is a de facto company under severe financial constraints that is just lingering on.
While there were many talks about placing the state-owned enterprise under judicial management since 2017, this has not been the case yet.
Schlettwein however said that judicial management remains a consideration as they now have to make a decision.
“We now have to make a decision on what the future is for RCC. The judicial management is still a consideration and we are in the final stages of concluding what is next for RCC,” Schlettwein said.
Sibeya in September last year said that the parastatal at that time was at an advanced stage of finalising its rescue plan. Treasury at that time was instructed to pay the salaries of the employees because the Ministry of Works and Transport was in the process of finalising a Bill to place the RCC under judicial management.
This rescue plan was not the first for the cash-strapped parastatal.
The RCC board chaired by Fritz Jacobs at the time announced that they had found a Chinese entity called Jiangsu interested in making available N$570 million to the parastatal to assist it in fighting closure. The millions of dollars were being offered on a project participation basis in projects worth N$2 billion.  Those close to and in support of the proposed loan allegedly looked at it more as a joint-venture.
RCC under judicial management
The Cabinet Committee on Overall Policy and Priorities chaired by President Hage Geingob, in mid-2017 agreed to place the RCC under judicial management. This meant that a judicial manager would be appointed to run the entity with the purpose of reviving it and that neither the board nor shareholders would have any power. The judicial management decision came after a number of ministers including Schlettwein and Sacky Shanghala, who was Attorney General at the time, all recommended that RCC close its doors. Minister of Public Enterprises Leon Jooste has in the past been accused of pushing for the closure of the RCC.
Jooste this week told The Patriot that he never wanted RCC to close down and that the parastatal item was discussed at the Cabinet Committee on Treasury and then at the Cabinet Committee on Overall Policy and Priorities where a collective decision was taken to apply for Judicial Management.
“Our economic analysis simply showed that the RCC would not be able to trade itself out of insolvency and unless a significant capital injection can be made, that there will be no option but to liquidate it,” Jooste explained.
He added that his ministry too is aware of the Bank Windhoek letter and that they are looking at ways to prevent the parastatal from being taken to court and them losing their building “RCC is not honoring its debt because it has lost the ability to do so,” Jooste told The Patriot this week. The Patriot in 2016 quoted Schlettwein saying if RCC was inefficient and a drag on the budget, and their services more expensive than what government can get from the private sector – which government believed was the case – it would be rooted out.
The investigation into the RCC’s operations was part of a larger probe of all state owned enterprises to determine which should remain open and which should close. Although talks of judicial management started in 2017, Mutorwa did not want to comment on the current status quo of the entity.
What is certain is that the Bill has not been tabled and the parastatal could not be placed on judicial management. Attorney General Albert Kawana July last year advised Mutorwa to change aspects of the Bill.

Millions in salaries for idle workers
Government in August spent around N$70 million on idle RCC employees since the decision was taken to place it under judicial management in September 2017, The Patriot reported.
Treasury took over the parastatal’s duty to settle the monthly N$7 million wage bill when it was decided to be placed on judicial management.
Schlettwein told The Patriot this week that a budgetary provision was made for the Ministry of Works and Transport and that the line ministry is now carrying the salary burden of RCC until a decision is made regarding its future.

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