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NHE comes clean

Thu, 22 August 2013 00:20
by
News Flash

PRESS STATEMENT ISSUED BY THE BOARD AND MANAGEMENT OF THE NATIONAL HOUSING ENTERPRISE DURING A MEDIA CONFERENCE HELD ON 21 AUGUST 2013

Ladies and gentlemen, media practitioners present good afternoon.
Let me first of all warmly welcome all of you to this media conference that the Board of Directors and Management of NHE decided to hold today, 21 August 2013 with the purpose of setting the records  straight in reaction to serious allegations that were levelled against NHE, its principals and all its employees that appeared in some of the local media houses for the past two weeks.
My name is Jason Nandago, Chairman of the Board of Directors of NHE. Present here are my colleagues members of the Board of Directors (Mr Ebson Uanguta, and Dr Andrew Niikondo), The CEO of NHE, Mr Hailulu, management cadre, shop stewards and staff members of NHE.
I also recognise the presence of the senior police officers from the Windhoek City Policy amidst us – Senior Superintendent Gerry Shikesho and Superintendent Eliaser Iyambo.
In a nutshell, the allegations made against NHE are of a serious nature and put the reputation, credibility and integrity of the company and its principals in disrepute. I now ask the CEO to present the press statement to the media in response to such allegations made.
By the CEO
Allegation on N$10 000 Theft
There is no truth whatsoever in the allegation made. The N$10 000 authorised by the CEO, Mr Hailulu was used by the City Policy to carry out an investigation. This follows a tip NHE received that there was a certain member of the public who was allegedly collaborating with one official of NHE in defrauding people money under the disguise that the victims will get houses from NHE. The person was caught by the policy and the money was fully accounted for and returned to NHE office the following day.
Allegation on Africa Cup of Nations
Mr. Hailulu in his capacity as the CEO of NHE was invited by the Managing Director of Standard Bank, Mr Pumzi, amongst CEOs of other companies in Namibia who do business with the bank to attend the opening of the African Cup of Nations Games held in Johannesburg, South Africa in January 2013. Standard Bank is the corporate banker of NHE for many years and in addition the bank and NHE have a partnership agreement signed four years ago which allows Standard Bank to co-finance the clients of NHE. All travelling and accommodation expenses were therefore covered by Standard Bank Namibia.
We have informed the MD of Standard Bank that NHE is having a press conference to clear this allegation among others, and has confirmed his readiness to entertain any further enquiries from the media on this matter should the need arise.

Allegation on NHE and Mr Nandago Property Sale Deal
In short, NHE has never ever bought a property from Mr Jason Nandago in Walvisbay as alleged. We challenge those making this allegation to prove that such transaction took place. NHE only bought a piece of land in Walvisbay consisting of 22 plots from Jom Rennovations CC company in 2010.
Allegation on Trips and S&T Expenses
All trips undertaken by Mr Hailulu were in conformity with his official functions and responsibilities as the CEO of NHE were approved by the Board Chairperson in line with the company policy requirement and procedures. The S&T paid to Mr Hailulu in carrying out the said trips were also approved as per the Government S&T policy which was adopted by NHE Board of Directors more than ten years ago. The Government S&T policy works on 3 pre-approved rates approved by Cabinet that are applicable to every city in every country and depending on a position of the person travelling. The S&T given to Mr Hailulu was in accordance to rate 1 which means the company did not have to pay for hotel accommodation expenses as this had to be paid by himself.

To shed lights on the official relevance and importance of the trips undertaken by Mr Hailulu, we start with the most recent ones:
Trip to Malaysia and Singapore (July 21-28, 2013)
 Mr Hailulu, together with four other members of the National Housing Technical Committee undertook a trip to Singapore and Malaysia  between July 21 – 28, 2013 as part of the implementation of the Mass Housing Development Initiative of His Excellency, President Pohamba following the adoption of the Blueprint on mass housing development approved by Cabinet in July 2013. The National Housing Technical Committee chaired by Mr Hailulu was thus mandated by the Government to undertake study visits to four countries (Singapore, Malaysia, Brazil and South Africa) in order to draw lessons from those countries that have successfully implemented mass housing development programs and thereby help inform implementation modalities of the Namibian housing development program.
Trip to Lusaka, Zambia (June 12 – 15, 2013)
Mr Hailulu travelled to Lusaka, Zambia to attend the SADC-Development Finance Institutions Subcommittee meeting held and attended annually by the CEOs of more than 40 development finance institutions from the SADC region. NHE, Development Bank of Namibia, Agribank and the new SME Bank are all paying members of this DFI network organisation which undertakes relevant training programs for the officials of all member organisations among others. SADC-DFI was established by SADC Ministers of Finances through a SADC protocol and is responsible for coordinating the role of development finance institutions in the whole of SADC region with respect to executing their development financing roles and functions as per their national mandates.
The CEOs of the other three Namibian DFIs also attended the same meeting in Lusaka together with Mr Hailulu.

Trip to the US (April 6-13, 2013)
Mr Hailulu was invited, together with other SOE CEOs, to form part of the Prime Minister’s delegation to the US to attend the International Forum of the Americas-Palm Beach Strategic Forum held in Miami, Florida as well as to attend the Namibian Investment Promotion Event held in New York.
Mr Hailulu was also asked by Honourable Namoloh, Minister of Regional and Local Government, Housing and Rural Development to visit a company called MIC Industries based in Washington that had invited him to see the alternative building technology that they are promoting for possible  use in Namibia.
Trip to Kenya (April 14 -21, 2013)
Mr Hailulu was invited to form part of the delegation of the Ministry of Regional and Local Government, Housing and Rural Development to attend the 4th Session of the Governing Council of the UN Habitat held in Nairobi between April 15 – 19, 2013. Namibia being a member of the Unis also a member of the UN-Habitat, a Specialised Agency for the United Nations responsible for housing and other habitat issues globally.
Trip to the Bahamas (November 8 – 11)
Mr Hailulu and Mr U Kaumbi attended a fully fledged one week Global Leadership Summit, and not a motivational speech as alleged held in Nassau, Bahamas. The summit was addressed, as the program shows, by prominent leadership trainers from all over the world. These kinds of summits and conferences are needless to say, a form of training and are relevant for leadership and management skills enhancements for corporate executives.
The reference that was made that the same program took place in Windhoek a month before the summit was held is not comparing apples with apples. The event that took place in Windhoek on September 1st 2011 between 08H00 – 17H00 was a one day event, addressed by Dr. Monroe only and was not a Summit and thus cannot by any measure be equated to the summit referred to above.
In any case, the trip undertaken by the two officials was dully approved in line with company policy.
N$ 2 million spent on retrenchment court case
It is undeniable that a significant amount of money has been spent in defending the company in a legal battle that ensued following the retrenchment of some employees in 2006.
The Board of Directors resolved and thus directed the CEO, Mr Hailulu to defend the company in this matter.
In the first analysis, it is the retrenched employees who went to court first to challenge the company, meaning that NHE was forced by this situation to also defend itself and its interest. If the retrenched employees did not go to court and accepted the retrenchment package offered, which was accepted by 22 of the 31 retrenched personnel, then the company would not have spent a single cent on the court case anyway.
Allegation on Fraud
As part of the Auditor’s Report to the Board, the external auditors as a general industry practice, report on possible areas of fraud. This is intended to alert management to strengthen controls on areas that auditors feel are prone to fraud. This is a normal reporting item and does not means that fraud exists within NHE. The Auditors Report for 2012 clearly states that no fraud was discovered during their audit of  2012 financial year because if the external auditors found any fraud, the likelihood is that they have issued a qualified statement.

Financial position of the company
The balance sheet of the company is very healthy. There is no sign to indicate that NHE is not a going concern. Its debt/equity ratio as at 30 June 2012 was 30% which is by far below minimum of 50% industry threshold indicating that the company is able to mobilise more financial resources should need arise.  
Its retained income of N$172 million is equivalent 34% of the total equity of N$497 million indicating that the company has the ability to build up its profitability while at the same time focussing on affordability as key consideration when pricing its products.  
Long term liabilities (borrowings) represents only 5.9% of the total asset base of the company further strengthening the going concern status of the company.  The company funds it projects by using short term borrowing (bridging financing) and banks end-user financing strategies thereby reducing the risk associated with long term borrowings.  




House delivery
The audited figures below illustrate the housing delivery trend since Mr Hailulu took over as CEO in September 2005.
 It is evident that the company has drastically increased its investment portfolios in housing and has also for the first time got involved in servicing land in mass to necessitate speedy housing delivery in the country. Investment in housing has increased from a mere N$16 million to N$188 million since 2005.
The strategy management took in 2006 for NHE to get  involved in land servicing directly was imperative one, given that land servicing is normally a function of the government/local authorities, hence NHE’s resources are over-stretched because of the investment the company has to make in municipal service infrastructure. If local authorities had enough serviced land to give to NHE to build houses straight, then the housing stock produced by NHE would have been significantly higher.
NHE was able to invest the hundreds of millions, without government financial support/subsidy until the company received N$25 million from the Government in 2011 for the first time. With the increased government grant provided for in the current MTEF as well as the implementation of the mass housing development program, NHE is expected to increase the housing stock it will produce in the future and thereby work towards meeting the housing demand in the country.
 Houses               Erven    Total properties              Investment (N$ million)
2005/6                152                      0                          152                      16.4
2006/7                129                      337                      466                      21.9
2007/8                186                      374                      560                      44.9
2008/9                239                      725                      964                      81.2
2009/10              434                      532                      966                      124.6
2010/11              270                      134                      404                      67.6
2011/12              494                      584                      1078                    188.3

Allegation on Witch Hunt
There is no witch hunt pursued by the CEO or by management against anyone at NHE as alleged. Just like any other corporate, the company has rules and a code of conduct that were approved by the Board in 2002 among which such codes prevent employees from disclosing company confidential information without the CEO’s approval. The information leaked to the media that resulted in the calling of this press conference was done by someone with malicious intent to tarnish the image of NHE and all of us at this institution.
Therefore, I must put it on record that management will enforce these rules without any fear and favour. NHE also reserves its right to take legal against anyone who collaborated in this ill scheme.

By the Board Chairperson
N$249 000 Performance Bonus
It is hereby confirmed that the Board awarded Mr Hailulu a performance bonus of 23% of his total annual package equivalent to N$249 000 for the year 2012/2013.
The following were the main factors the Board considered in determine such performance bonus:
The strategy instituted by the CEO to ensure sustainability has been serving the company very well so far. NHE successfully mobilized funding to the tune of over N$250 million in comparison to funding mobilized in the previous year i.e N$188. These funds were mainly mobilized through partnerships with private sector entities in the form of bridging and end-user financing and from Government (N$30 million);

With the funds so mobilized, NHE was able to service 584 plots and to build 494 houses in comparison to 134 plots serviced and 270 houses built in the previous year respectively;

As per the market survey done recently, the housing products of NHE remained competitively priced (35% to 40% ) vis-à-vis the market:

Covering of Legal Fees – Mr Hailulu versus ACC and Others
The Board of Directors took a resolution on November 2011 to reimburse Mr Hailulu 95% in terms of the legal fees he had to pay in the court case matter against the ACC and the Unions (Nafinu and NUNW).
The rationale used by the Board to arrive at this decision was the following:
In the first instances, the allegations and hence the arrest of Mr Hailulu by the ACC arose from the restructuring and retrenchment exercise which he implemented in line with the Service Level Agreement  that was entered into between him and the board in 2005 when he assumed the duty as the CEO of NHE as well as on the instruction of the Board of Directors of 2006  to restructure the company in order to achieve the deliverables states in the said Service Level Agreement. Hence, the Board concluded that it was unfair for the CEO to be left struggling to cover such costs without the Board coming to the table in this matter.
In taking such a position, the Board was thus satisfied that it is because of the mandate and the role that the CEO was given that this court case related expenses arose. It always clear to the Board that if Mr Hailulu was not the CEO of NHE and was not mandated by the Board to effect the changes in the organisation leading to retrenchment of those who ended up going to the ACC with allegations leading to his arrest, Mr Hailulu will not be in the situation he found himself in this respect.
The nation must also satisfy itself that the heads of ACC, NAFINU and NUNW at a time who were also sued in their private capacities had covered their related legal fees as well. Whatever conclusion one draws having looked at such a situation, it remains the discretion of the decision makers in such organisations to decide how to handle that matter, just like the Board of NHE has used its discretion to handle this matter.

END OF STATEMENT -