FINANCE minister Calle Schlettwein wants the government to urgently seek a court order declaring as illegal a N$570 million agreement between the Roads Contractor Company and a Chinese entity.
The state-owned RCC hoped to boost its finances and survival chances by partnering with Chinese company Jiangsu Nantong Sanjian (Pty) Ltd to avert bankruptcy since government had decided not to bail out the parastatal.
People familiar with the partnership said the agreement means the Chinese company will automatically qualify for roadworks contracts through RCC.
The partnership has now deepened divisions between the finance ministry and some other government officials. The RCC leadership has since last year accused the finance ministry and the public enterprises ministry of pushing for the closure of the parastatal, an accusation the two ministries have denied.
RCC officials claimed last year that the finance ministry had deliberately withheld funding from them in order to bring the company to its knees.
It appears the RCC board intentionally avoided consulting Schlettwein and public enterprises minister Leon Jooste because some directors suspected the two would block the transaction.
Schlettwein confirmed to yesterday that he believed the agreement between the RCC and the Chinese company was illegal.
“I do not have a problem with the partnership, but they signed the contract without following procedures. It is, therefore, an illegal agreement. We cannot support it,” he stressed.
According to him, the agreement, which promised the Chinese company projects, has not been budgeted for. He declined to comment further on the matter.
understands that Schlettwein wrote to attorney general Albert Kawana this month for a legal opinion on the legality of the agreement.
A person familiar with Schlettwein’s thinking said he asked Kawana to urgently ask the High Court to declare the agreement between the RCC and the Chinese company illegal.
According to officials, the finance minister was fuming that the RCC board agreed to effectively borrow over N$570 million without treasury approval. The RCC wants part of that money to pay off its debts, and remain active in the road construction sector.
RCC chairperson Fritz Jacobs told two weeks ago that the parastatal shortlisted two companies for partnership to avoid shutting down.
Although the finance ministry raised red flags about the agreement, he insisted that the arrangement was a “self-sustaining solution which will not rely on government guarantees”.
Without going into detail, Jacobs said the parastatal was looking at a profit margin of between 15% and 30%, “depending on the efficiency of the partner”.
He declined to comment yesterday on the exact details of their partnership, insisting that the works minister and the attorney general are dealing with the matter.
He, however, insisted that they acted within the law and Cabinet directives. Fritz said the lives of RCC members remain uncertain and that N$379 million worth of assets of RCC are at risk. He added that there is a need for a long lasting solution for the road company.
reported in August last year that the fate of the RCC would be decided by the courts after a Cabinet committee chaired by President Hage Geingob agreed to place the parastatal under judicial management.
The future of the RCC has become political, with some officials suspecting that some ministers are determined to close down the parastatal in order to open up opportunities for politically-connected private firms.
reported last year how several ministers cornered former works minister Alpheus !Naruseb to close down the RCC, which employed about 400 workers.
It is not clear whether works minister John Mutorwa will carry on !Naruseb’s fight to keep the RCC alive. He was not reachable for comment yesterday, but the works ministry has stood by the RCC this year since he took over and continues to insist that the parastatal has a future.
It is also not clear whether Geingob has changed his mind on closing the RCC, and whether he supports Schlettwein, one of his most trusted ministers.
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