Namibia: Distillery Deal Drains State of N$18m

STATE funds amounting to N$17,7 million have been lost through a distillery project exporting expensive wines to overseas markets tied to the Namibia Development Corporation (NDC).

The government, through the NDC, entered a five-year agreement with the Naute Kristall Cellar and Distillery on a 50-50 ownership to engage in the distilling, manufacturing, marketing, distribution and export of non-alcoholic and alcoholic beverages and fruit.

Naute Kristall Cellar and Distillery is owned by Michael Weder and his wife, Katrin Weder. The business is situated at the NDC Naute Agriculture Project in the //Kharas region.

Documents leaked to The Namibian show a long list of expenses the government paid for and how the Naute Kristall Cellar and Distillery failed to reimburse it.

The shareholders' agreement, seen by The Namibian, shows the government's responsibility included putting up infrastructure, buying equipment needed for the project, and paying day-to-day bills and salaries.

It states the NDC would provide restaurant and retail facilities, as well as suitable accommodation for senior staff members.

It would also supply the company with at least 80 tonnes of fruit annually for processing.

The Naute Kristall Cellar and Distillery was responsible for providing expertise and managing the company, keeping appropriate and accurate financial records, establishing and maintaining a separate bank account for the company, and applying for relevant licences.

The deal was to run from November 2014 to November 2019.

The two parties also struck a lease agreement for the property, which the Naute Kristall Cellar and Distillery was expected to rent from the NDC.

The Namibian has been informed the distillery never paid rent up to the expiry of the agreement late last year.

Sources in //Kharas told the newspaper the Weders have been personally benefiting from the business without giving the NDC anything - despite being a 50% shareholder.

"They exported 600 boxes to the United States, each containing six bottles, at an average price of N$350 per bottle. The couple has no truck loading bay, so they take the boxes to a pack house to load on trucks.

"The farm folks packed and wrapped the loads on their behalf - that is how I got to know about the 600 boxes. The NDC pumped money in for everything used here. From bottles, packaging material to glasses," the source said and added the Weders' home was also built by the NDC.

"They get free grapes and dates from the Namibia Industrial Development Agency (Nida). Their house and those of their workers were built by the NDC just behind the distillery," the source added.

Documents reveal the state paid N$17,7 million to the Naute Kristall Cellar and Distillery through various instalments between March 2013 and November 2018.

Pieter de Wet, former acting chief executive officer at the NDC, told The Namibian the government will only benefit from the agreement after five years.

"The current board and the new CEO must attend to it from here. I am on retirement now and I am not there to scrutinise matters. If something is wrong, they must take it on legally. But what I know is the government will only benefit after five years," De Wet said.

Apart from being the acting CEO, De Wet was also one of the four directors of the project. Other board members are Michael Weder, Katrin Weder and Samuel Maasdorp.

The Namibia Development Corporation (NDC) merged with the Offshore Development Corporation (ODC) in 2018 to form Nida.

Nida has since taken on both their regulatory and operational mandates.

The Nida board chair, Frans Kwala, told The Namibian the board had asked Weder to repay government funds invested in the project.

Kwala said because Weder had refused to repay the money, legal action would soon be taken.

Weder told The Namibian no profits have been made during the five years and no dividends were declared.

"The MoU provided for a five-year grace period which would commence on the commissioning of plant and equipment. While the NDC would make the infrastructure available at no cost during this pilot phase, Naute Kristall would lease the facility from the NDC upon the expiry of the five-year period.

"In short, the pilot phase commenced on 1 April 2016 and will end on 31 March 2021 whereafter the lease provisions come into operation," Weder explained.

He said he was not expected to pay rent as the lease agreement in his possession categorically states no amount.

The board also wants De Wet to account for the loss of funds.

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