This post has already been read 17611 times!
By Museminari Damas Marcel
To salvage his reputation, and save RPF and legitimize Crystal Ventures as a reputable business entreprise, Kagame ought to abdicate his position as party Chairman before the presidential campaigns this June 2017.
Recently, President Paul Kagame and the RPF have been in the firing line by international media alleging that Crystal Ventures its investment arm could become “an efficient tool for looting the country.” (The Economist, March 2, 2017). Without stating all the facts, the fears in the media may be well founded.
While we all agree that Crystal Ventures limited (CVL) formerly TriStar, was born out of a war chest that was put to good use, we should also note that its primary purpose was to get our country back. Once we had our country, we needed to separate it from the State and let it become a private equity, which could have supporting roles as political party fund or companies acting in that capacity. The trick as the Economist sums up, is to know when to make a clean break.
As it is now, it is difficult to differentiate between the RPF as a party and the state and the macro-economy and the RPF business Empire.
Recently, Inyange Industries was about to be sold (51% stake for USD 36M) to Brookside Dairy, a Kenyan company that belongs to the Kenyatta family. So who do you suspect went looking for that market? A good word from President Kagame might have been necessary.
Although the deal fell through, we see two heads of State engaging in private business- most probably at a summit of heads of State- over and above crucial public business. Only for the Kenyattas it is clear-cut. Brookside Dairy is a family business and is run by Muhooho Kenyatta, to make profit. On the other hand, CVL is run by RPF to perpetuate itself in power. That pursuit of power unfortunately has recently become synonymous with Paul Kagame.
In this pursuit, Kagame seems to have veered from the political economic models of Asian Tigers South Korea and Singapore and instead jumped on the bandwagon of the Arab North (kingdoms and emirates). Bye -bye democracy. Welcome King Paul Kagame I.?
President Paul Kagame, in another interview in the Wall Street Journal is quoted saying that CVL is a fair player in a level playing field.
But this is not what the Auditor Generals reports reveal. CVL has actually been involved in dubious Public Private Partnership (PPPs) investments with public entities like RSSB, involving hundreds of millions of USD.
For example, in regard to RSSB, the Auditor General asserts that it has been turned into a basket fund for companies with dubious portfolios. The 2014-15 report notes inter alia that ‘investment of equity in 16 companies in Rwanda and abroad were done “without proper analysis by the investment committee, and review and approval by the board of directors.”
Moreover, the companies where RSSB invested equity totaling Rwf 82 billion (more than USD $100 million at time of investment) “had not paid any dividend from the time of initial acquisition or establishment,” according to the Auditor General.
Currently, we can put a finger on East African Granite Industries, the Kigali Convention Centre in Rwanda, and Safaricom Kenya in Kenya, as well as a much talked about but not well-known pharmaceutical firm in the United States. In the first two and the fourth examples, RSSB is co-investing with CVL Limited, a known company of President Paul Kagame’s majority party, the RPF.
On Safaricom a Kenyan telco, RSSB panicked as it lost millions of dollars after shares dropped in the first two years. Although the shares have since rallied, it was reckless buying, akin to money-laundering of sorts. We can only suspect that RPF and CVL acting with impunity pushed this deal to authorize the risking of public pension funds. The likely scenario was that if the Safaricom became profitable CVL would buy out RSSB in an ‘avoid- the- risk- but- win- the -profits strategy.
But the report also states that this poor financial management and non-performing investments worth Rwf 90.5 billion (USD $110.3 million) pervade the state of affairs at RSSB. Furthermore, RSSB has failed to heed financial advice from the OAG by a measure of 77 per cent – the worst offender in this cluster. The Auditor General warns that there is “erosion of investment value, hence threatening sustainability of the pension fund.”
The current altercation between the medical association and medical providers on one hand and RSSB on the other was waiting to happen. Thus, the Auditor General had warned of “unreliable accounts records,” and “arbitrary allocation across schemes,” creating a scenario where one scheme may suffer as a result of misallocation.” The membership schemes also suffer from fraudulent registration of members, and even ghost workers on payrolls.
Since RSSB represents a large chunk of public equity with investment in banks, telcos and real estate, the report sets off an alarm to the blatant financial mismanagement of this entity and the aloof attitude by its management lends credence to suspicions that financial mismanagement is rife – even systemic – in the public sector. No thanks to RPF and CVL’ s PPPs, we are in this mess at RSSB.
RSSB is only an example of the modus operandi of RPF and CVL but other government institutions follow the same trajectory in relation to CVL.
For a government that rides the wave of efficiency, zero tolerance to corruption, one needs to take a harder look at the root causes of the apparent mess in public finance. But it is glaringly clear, that the boldness in flouting the rules by RSSB managers and other Government Business Entities (GBEs) and projects can now be understood in a new light namely; political godfathers and political dominance.
Unfortunately, this state of affairs has only one godfather, one party and one company namely Kagame, RPF and CVL.
‘The RPF and CVL have long acted like the proverbial foolish boy who wants to drain all the sea water into a hole by the seaside. It won’t work and anyway, the water will always find its way back into the sea once the retention of the hole can no longer hold.
President Paul Kagame who is also Chairman of the RPF and therefore overall boss of CVL is afraid to relinquish any of these offices. He must therefore answer to all criticisms ensuing from those offices, including any underhand or shady deals as those highlighted above.
Kagame should be relieved of RPF party Chairmanship
I have almost always voted for RPF but this year I am unlikely to vote – unless the presidential candidate Paul Kagame is relieved of the party chairmanship. RPF members should also demand for a replacement who is not a puppet, but one who has real financial and political power to govern the party judiciously. We can no longer have a President who makes the policies and still insist on trading on the floor of the Rwanda Stock Exchange, fix rates at RSSB and nominate its head and still head CVL that co-invests with it in major business ventures.
The people of Rwanda elect and pay their President to do their business and not to give him an unfair advantage in his private business. If he is not satisfied with his pay and perks and cannot change it, he should resign to follow his heart’s desire in private business.
Now there is every reason to investigate if the modus operandi of the RPF and its business empire is not at the very heart of huge income disparities- now the highest in the EAC- and biting poverty in the country.
With President Kagame as head of the RPF business empire, pulling strings all the way into the central bank, how can we even begin to speak about a fair business environment? If the banks opened up on their debt portfolio, how much would CVL owe? What if CVL defaulted? Whom would we hang? If another person were Chairman, at least we would be sure whom to hang. Now in such an eventuality, we could only lose trust in the presidency. Such an erosion of trust could be catastrophic for Rwanda.
About the writer: Museminari Damas Marcel is a veteran journalist and political commentator. He can be reached at email@example.com; twitter @chungsinrwanda and facebook at Damas Muyango
This post has already been read 17611 times!