Old news but THE NAMIBIAN - NEWS | 2015-03-26
Katti's HRT in trouble
Shinovene Immanuel
THE Brazilian gas and oil company, HRT, whose Namibian subsidiary is co-owned by businessman Knowledge Katti is in the final stages of retrenching workers in Windhoek ahead of closure.
HRT, which will soon rebrand to PetroRio, is the second largest Namibian exploration licence holder with 10 oil blocks off the Namibian coast.
Petroleum Commissioner Immanuel Mulunga yesterday confirmed they are aware of internal problems HRT is facing in Brazil.
“We are being told unofficially that they are no longer interested in pursuing their exploration efforts in Namibia and we know that they are winding up their business in this country. We will be approaching them shortly for clarification on the way forward.
Mulunga said some of HRT's blocks have expired and they have not indicated their willingness to renew them.
The company has a history of roping in businessmen and politicians close to State power. As such, in Namibia it roped in exploration middleman Katti and home affairs minister Pendukeni Iivula-Ithana through their company Kunene Energy.
In 2008, Kunene Energy was sold to the Canadian-listed UNX Energy Corp and three years later, HRT snapped up UNX Energy Corp for US$781 million (N$5,1 billion) in a shares-only deal. Even though Iivula-Ithana declared to parliament that she owned part of Kunene Energy in 2009, she told The Namibian yesterday that she ceased ownership years ago but could not remember exactly when.
Iivula-Ithana also said she did not know how much the company she owned with Katti was sold for since she was just a minority shareholder.
Hopes of finding oil in Namibia were, however, dashed after HRT had drilled three wells between 2012 and 2013, which failed to yield any commercially viable oil.
This came after short-lived joy when Katti went public with news of oil discovery at a function attended by the then Prime Minister Hage Geingob and many senior government ministers at State House in 2013.
Another Namibian linked to HRT is prominent Windhoek lawyer Elias Shikongo, who has served as a director since 2012.
Shikongo also chaired powerful HRT bodies such as the compliance and risk committee and was also part of the audit committee.
Yesterday Shikongo declined to comment, saying the company might answer next week after holding its meeting.
Questions sent to Katti were not answered while Davis was not reachable.
Minister of mines and energy Obeth Kandjoze yesterday confirmed that he knows that HRT was laying off workers, adding that he would be surprised if there are any activities going on at the office.
He said HRT communicated the reasons for reducing its staff in Namibia to the government but could not provide further details since he is yet to be fully updated.
The Namibian understands that HRT employed less than 10 people - geologists, a driver, accountants and human resources staff - who have all been retrenched.
The company has offices at Mutual Platz in the city centre. Martin Davis, the director of HRT Africa responsible for the administration is one of the few people who are still at the Windhoek office.
Detailed questions sent to HRT public relations department in Brazil on Tuesday were not answered by yesterday.
The news of the closure comes a few months after a prominent Brazilian stock exchange website, Capital Aberto, revealed that some HRT board members in Brazil paid themselves handsome bonuses when they resigned from the company. According to the report, two directors who left their positions, pocketed around US$9,4 million each.
“Months later, a review of the calculations done by the company's compensation committee indicated that the executives had received more than they were entitled to,” Capital Aberto said.
In the report published in March 2014, Capital Aberto also investigated HRT's trouble which involved continuous board infights, which had resulted in lawsuits.
“Another peculiarity with regards to the HRT board is that two of the current four members are involved in litigation against the company. In both cases, the reason is a controversial package that includes indemnity amounting to millions of dollars for directors who were fired or who quit after changes to the board of directors,” Capital Aberto reported.
Another in-depth report compiled by an investment research website named seekingalpha.com in January this year titled 'HRT Participaes And Oleo E Gas Participacoes - lessons learned from the disasters' said that instead of selling off some assets, the directors paid huge bonuses to themselves first.
The report further said HRT raised US$1,5 billion on the first day of trading on the Brazilian stock exchange in 2010, partly using oil blocks in Namibia, and went on to lose all that money within the next four years.
In 2011, the company threw a red carpet event when it launched in Namibia. It was a glitz and glamour event that saw exotic samba dancers from Brazil providing entertainment to guests.
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