By Shinovene Immanuel | 20 May 2015
PRESIDENT Hage Geingob answers our questions regarding his involvement in African Sunrise Investment, a company he co−owns with Chinese money−man Jack Huang. Their company wants to build more than 400 apartments in Windhoek. Here is what Geingob says via State House press secretary Albertus Aochamub.
The Namibian (TN): Does the President still own 20% in African Sunrise Investment through the Dr Hage G Geingob Family Trust?
Albertus Aochamub (AA): The President does not own 20% in African Sunrise Investment. A separate legal entity, the Dr Hage Geingob Family Trust, owns 20% in African Sunrise Investment. The President is one of a number of family beneficiaries of this Trust. The President publicly declared this interest in his declaration of interests published on 20 May 2015.
As you are aware, the President commissioned an independent audit firm to review his assets and to provide him with, inter alia, an assessment and mitigation review of any real or perceived conflict of interest.
This review was initiated and personally paid for by the President to assist him with his public assets declaration. This review was motivated in the interest of transparency. The review advised that the African Sunrise Investment’s 20% be removed from the Geingob Family Trust to manage any perceived conflict of interest, and be placed in a Trust that is managed by unrelated third parties as a passive investment. The necessary legal instructions to finalise this process have been given, and the 20% is soon to be operated in a separate, independently managed Trust.
TN: Is the President aware that his company African Sunrise Investment is set to build 400 apartments, 24 villas, two mansions and a hotel?
AA: The President is not involved in the project and is therefore not aware of the above−mentioned plans, nor is he aware that final plans have been drafted.
TN: What is the total value of the planned new project at Klein Windhoek, and will the President still stay at his villa?
AA: Please distinguish between the land sold by the President and his former wife as a result of a divorce settlement, and the land on which the President currently resides, as the latter is not part of the above transaction.
TN: African Sunrise Investment wants an additional 29 hectares of land from the city of Windhoek. Is the President not worried that acquiring that land will give a perception that the President wants to amass more wealth through land deals, while the majority of citizens are struggling to acquire a small plot to call home?
AA: African Sunrise Investments is limited to the development of the land which was previously (jointly) owned by the President and his former spouse. This was a forced sale due to a divorce settlement order, and does not qualify as a speculative sale.
Please provide evidence that an additional 29 hectares has been applied for by African Sunrise Investment as the President is neither aware nor in support of such an additional land request, if such assertion is true.
TN: How will the President make sure that his business ally, Chinese millionaire Jack Huang, who has interests in a wide range of companies, does not unduly benefit from state−related deals?
AA: The property deal was a forced sale due to a divorce settlement, and was thus placed on the open market for sale. Many private and institutional investors were interested in this transaction due to its development potential. Mr Huang was one of the many interested parties and he successfully concluded the deal on a commercial basis, and not because of any corrupt relationship as implied by your question.
Whether the deal was with Mr Huang or with any of the other parties who were interested is inconsequential. It would be a stretch of the imagination to imply that this transaction, because of the indirect interest of the then−Prime Minister, Hage Geingob would successfully qualify the purchaser for undue benefit to state−related deals. In addition to the above, appropriate ring−fencing is in place to ensure that there is an arms−length relationship between the 20% shareholding owned by the Geingob Family Trust in African Sunrise Investment.
African Sunrise is limited to the development of the property partially sold. Further mitigation measures have been taken to remove the holding from the family trust and have it independently managed as an investment.
To be clear, the President is neither a director nor a shareholder in African Sunrise Investment. The President has placed it on record how he wishes to govern his relationship with all businesspeople. This was to discourage friends, family and strangers from the destructive habit of name−dropping, and to minimise the false perception fanned by certain media outlets that any type of relationship with the President is automatic qualification for preferential state procurement. While these types of insinuations may make for sensational headlines and front page articles, they are absurd and devoid of any truth.
TN: What motivated the President and his partners to build flats? Does the President have a plan on how the proposed hotel could not unduly benefit from state−related transactions?
AA: Please note that public office−bearers are not precluded from having investments. They are simply required to ensure that there is no conflict of interest, and that they disclose their assets and dealings to the public. The President incurred personal costs in order to ensure an assessment of the potential for a conflict of interest and voluntarily submitted [subjected] himself to the scrutiny of a public declaration of assets. In relation to undue benefits, please refer to the answer above, and please apply your mind to the fact that the President is not a partner to African Sunrise Investment or Mr Jack Huang. In the asset evaluation, the decision to retain the 20% shareholding was an investment decision due to the passive nature of property investment. The President is not aware that a hotel will be built on the property and if that is the case, how a hotel, whose ownership is undetermined, will unduly benefit from state−related transactions, is unclear.
TN: What does the President think about foreign ownership of land?
AA: The President understands the political basis of this question. We request that you please satisfy yourself with the timing of when this transaction was concluded, and also appreciate that this was not an outright sale since part of the land was retained for investment purposes.
TN: Information from the Deeds Office shows that Geingob and his ex−wife Loini sold 39 hectares to African Sunrise Investment, a company in which a Chinese national owns majority shares. Can the President kindly explain why those 39 hectares were sold for N$393 000, instead of the market value?
AA: There is no possibility that any of the above information is correct. Please check the veracity of that information prior to publication.
After those rounds of questions, The Namibian’s Shinovene Immanuel asked the President to clarify some of his answers. Here is what the President said yesterday through his spokesperson.
TN: Attached is the deed of sale, showing that President Geingob and his ex−wife Loini sold 39 hectares (enough to build 1300 houses on a 300 square metre plot) for N$393 000. How then does the President interpret that document from the deeds register? The market value of 39 hectares he sold to Sunrise could be anything over N$50 million. Is the President not concerned that only N$47 203 was paid for the transfer of this property to the Receiver of Revenue since the amount of the property was lower?
AA: In the President’s earlier answer in response to your question as to why it appears that the 39−hectare land was sold for N$393 000 ‘instead of its actual value’, the President, at the time, expressed doubt whether such information could be correct and asked you to check the veracity thereof. In the meantime, the President had an opportunity to consult the transaction advisers. He can now confirm that while the concerned land was acquired by the President and his ex−wife long before 2013, it was only transferred from the Windhoek Municipality to him and Mrs Geingos (his ex−wife) during November 2013 at an amount of N$393 363, which might have been a municipal valuation.
During or about August 2014, the President and his ex−wife, as contemplated in the divorce order, transferred the property to African Sunrise Investment (Pty) Ltd, which company at that time was still owned by the President’s Family Trust and Ms Loine Geingos Family Trust in equal shares.
As the beneficial ownership did not change, the retention of the N$393 363 municipal value (same amount having been the consideration used a few months before) was informed by the nature of the transaction.
It was after the property was transferred to African Sunrise Investment (Pty) Ltd (which at the time was owned, in equal shares, by the President’s Family Trust and the Loine Geingos Family Trust) that an entity controlled by Jack Huang acquired 30% from each of the two original shareholders of African Sunrise Investment (Pty) Ltd.
It was not known at the time of the transaction who the buyer would be as the property had been on the open market. The second transaction resulted in the current shareholder structure to be: Dr Hage Gottfried Geingob Family Trust 20%; The Loini Trust 20%; (and a CC) controlled by Jack Huang with 60%. The monetary consideration during November 2013 when the transfer of the property was effected from the City of Windhoek to the parties was in good faith still used by the conveyancers, given the short period between November 2013 and August 2014.
There was therefore no lowering of the value of the property as suggested in your question. As the transaction was in substance an internal transaction and the respective family trusts ended up owning shares in equal proportion, the President was given professional advice that the recent consideration, in the circumstances, would suffice. This is because in the final analysis, the transaction was not a sale.
TN: The President did not fully answer our question regarding the sale of land to foreign nationals. Can he please answer us. What is the President’s view on foreign nationals owning land in Namibia?
AA: There is no existing law which precludes property transactions with non−Namibians, nor do we contemplate a law which would change this position having retrospective application to a 2014 transaction. The President’s view is a matter of public record, and we recommend that you review his State of the Nation address of 2015.
TN: What is meant by ‘independently−managed’ trust? To what extent will the trustees report to the beneficiaries, for example, when highly−critical business decisions have to be made?
AA: The essence is that it will be a trust where the President will neither be a beneficiary, trustee nor interested party in that trust. It will be solely for investment purposes, and decisions will be taken by independent parties, including the decision to dispose of the investment without needing to consult beneficiaries. It would be the same as utilising an investment manager to manage an investment portfolio.
These are usually referred to as ‘Blind Trusts’, but as the latter has no legal basis in Namibian law and has numerous loopholes, legal instructions have been given to find the best mechanism to ensure an arms−length relationship between the 20% share and the President. This was a decision of the President long before any media queries on this transaction arose.
An audit and law firm are in the process of ensuring that all of the paperwork and administration of the President’s personal assets are in order and again, this was on the President’s own initiative and cost. This administrative review was triggered by the asset review. The President has already given in−principle agreement that if it is not possible to establish a defendable distance between him and African Sunrise as described above, a disposal may be considered.
TN: The President donated a house to a family in Katutura after they had lost their home, and the name Huang was associated with that when the handover was made. To what extent and what other businesses or charity work is the President involved in with Mr Huang?
AA: The President, in his previous answers, tirelessly corrected the notion that he is a business partner to Mr Huang in African Sunrise Investment. It was also clearly indicated that African Sunrise Investment is ring−fenced and limited to the development of the property sold by the President and his ex−wife.
Mr Huang is one of many businessmen who approached the then−Office of the Prime Minister to assist with charitable donations to needy Namibians. The spirit of giving is one that should neither be politicised nor scandalised. Please request details from Mr Huang about his charitable donations as the President is only aware of the scholarships to Namibians studying medicine in China.
There is no basis to suggest that a charitable donation is linked to qualifying for ‘undue benefits’ from the State as consistently implied in your last round of questions.