N$120 million loan scandal rocks DBN

By Hilary Mare

THE Development Bank of Namibia (DBN) has been shaken to the core by a loan scandal involving at least N$120 million, in which senior officials in the SME Credit Department allegedly approved tenders to companies fronted by their proxies.

Following an investigation triggered by the DBN board, the implicated and suspended employees so far include the head of credit risk, Vivian Groenewald, SME credit manager Stanley Gaoseb, senior SME credit manager John Jacobs, and SME manager Heinrich Tsauseb.

In the interim, Cindy Raw has been appointed as acting head of the credit risk department.

Confidente understands that the loans in question were approved for 21 SMEs subcontracted by Meerkat (a non-exclusive truck sourcing broker for Trade Port Namibia (Pty) Ltd) to supply trucks for the transport of manganese from Tshipi mine to Lüderitz en route to China.

Of the 30 SMEs who had applied for DBN funding to purchase trucks to service the tender, 21 had been approved on February 28 to supply about 43 trucks to Meerkat, and subsequently to Trade Port Namibia, the main transport contractor for Tshipi mine.

“Most of these SMEs that were given approvals are believed to be led by fronts (proxies) for those implicated in this scandal, including wives, girlfriends, friends and family, who were given approvals, yet they did not meet the requirements.

“There are also rumours that for each assisted application, those who pushed for approval asked to be given kickbacks in the region of N$250,000,” said an inside source who asked not to be named.

Confidente is informed that each of the 21 approved SME loans for this tender was for between N$4 million and N$5 million, stretching the total approved amount past the N$100 million mark. Funds have already been disbursed to some of the approved SMEs.

“What is worrisome is the fact that staff members who should be upholding the bank’s values were involved and have proxies in those businesses and as a result they were compromised, resulting in poor credit risk assessment,” the source revealed.

“The fact that they all knowingly collaborated and colluded raises concerns whether due process and procedures are indeed being followed at SME Centre and whether staff at that department are capable of running the affairs of the department without putting the bank at risk as has now emerged,” they said.

They further questioned how it was possible that despite the fact that there was no contract or appointment letter between Tshipi Mine and Trade Port Namibia and no contract between the latter and Meerkat (who subcontracted various SMEs that got DBN loans), approvals were still made.

Jaco Zondagh, national sales manager for Scania Namibia, where 20 of the approved SMEs were scheduled to purchase trucks, highlighted that Scania is cooperating with DBN in the investigation.

“We are assisting the DBN in their investigation and have given them our full commitment to transparency. We are further not aware of the scope or details of the investigation,” he said.

It is understood that 14 crucial files were removed this week from the DBN’s collateral department for investigation.

DBN chief executive officer Martin Inkumbi confirmed to Confidente that four employees were indeed suspended, pending an investigation into their alleged misconduct.

“The bank does investigate all complaints or allegations of misconduct it receives through its anonymous whistle-blower platform. Where deemed necessary to ensure an unhindered investigation, the bank may temporarily suspend an employee. No employee is guilty until wrongdoing has been proven. However, the bank is committed to probe all allegations of misconduct reported to it,” he said.

In a memo to DBN employees earlier in the week, he noted that the board on April 8 took a decision to suspend pending further investigation all members of staff implicated in misconduct.

Inkumbi said: “Please, understand that banking is a business of trust. It is imperative that DBN manage its affairs to maximise public confidence at all times. It is against this backdrop that the board has taken this decision. The bank will in due course announce measures to ensure that the suspensions of the abovementioned employees will not affect the bank’s ability to continue operating.”

He further cautioned that if employees are requested by DBN to assist in this or any other investigation of a breach of ethics, they should give their full cooperation to the investigator/s.

“Employees are requested to exercise restraint, not to speculate or add to rumours. Employees are also reminded to observe their confidentiality agreements with the bank and should not under any circumstances communicate externally. Reporting on fraud, corruption, nepotism and other breaches of ethics or misuse of the bank’s resources should use the confidential external channels, which protect whistle-blowers.”

For context, an agreement was reached in 2018 between Namport and Trade Port Namibia to export manganese ore via the Port of Lüderitz destined for China. Trade Port Namibia intends to export 30,000 tons a month and gradually ramp up to 80,000 tons monthly. The project would generate N$648 million per year in the Namibian economy and there would also be other support industries and services, such as stevedoring, cleaning services, security, retail, fuel supply and engineering.

Last year, Namport estimated that around 610 employment opportunities would be created in the initial stage of the manganese project.

The general manager of Meerkat, Willem Hugo, said the Namibian economy, his company and TradePort Namibia face severe implications if the trucks are not obtained within the required time, adding that the delivery of the trucks was supposed to have happened already.

“Approvals were done two months ago and if we do not get them the implications are huge. Firstly, my reputation with Trade Port is lost and instead of Namibia benefiting, these trucks may now be sourced from South Africa.

“For Trade Port Namibia they have deadlines that they need to meet to make delivery of 30,000 tonnes of manganese to the port for export, and if this does not happen it could spell disaster for them. Furthermore, 100 families that were supposed to benefit would also miss out...”

Stanley Gaoseb declined to comment, saying it would be premature and that he would do so at a later point in time because the investigation was still in the early stages. Similarly Vivian Groenewald said that according to the policy of the Bank we was not allowed to talk to the press.

In an effort to get hold of the other two, Confidente tried calling numerous times for two days, and left both sms and Whatsapp messages that remained unanswered. The landline numbers were not obtainable in the telephone directory and their phones remained off at the time of going to print.