Mapesela speaks  on dividend saga

Mapesela speaks on dividend saga

MASERU – FORMER Trade Minister Tefo Mapesela this week told the Public Accounts Committee (PAC) how he tried to block the Lesotho Flour Mills from extending the management contract of a United States company.
Mapesela, who is now defence Minister, said he had ordered that Seaboard Overseas Trading Group’s contract to manage Lesotho Flour Mills should not be renewed until a thorough review has been conducted.

He told the PAC yesterday that before he was reshuffled in February he had instructed that the contract should not be extended.
He said he was surprised when he discovered that the contract was for a further 10 years.
The new contract, he said, is still skewed in Seaboard Overseas’favour.
The government, which owns 49 percent of Lesotho Flour Mills, remains at the mercy of the Seaboard Overseas.

The Lesotho Flour Mills was established in 1979 and privatised in 1998, when the multinational agro-processor Seaboard Overseas Trading Group and a sister company bought a controlling stake for about US$10-million (about M140 million), while a 49 percent stake remained with the government.
Seaboard is running milling facilities in South America, the Caribbeans and Africa.
Mapesela showed that agreements signed in 1998 are written in a manner that is clearly skewed in favour of Seaboard interests against those of Lesotho.
For years the Lesotho Flour Mills has failed to pay dividends to the government while pleading poverty and blaming viability problems.
Yet the company has religiously paid millions of maloti in management fees to Seaboard.

Since the deal that privatised the milling company was signed Seaboard has been paid over M40 million in management fees.
Now the PAC has had enough.
The government is also clamouring for a return on its investment.
That management contract has been the subject of contention in the Lesotho Flour Mills board, with directors appointed by the government complaining that the deal favours Seaboard.

The directors in the past said Seaboard continued to get the management fees while the government is starved of dividends.
This means that even if the company does not make a profit Seaboard will still make its money from the management fees.

The management fees are paid in full even when the company has performed dismally.
Because of the management fees, Seaboard is technically paying itself dividends while the government gets nothing.
But the noises from the government’s representatives on the board could not amount to much because they are non-executive directors.
Seaboard’s representatives hold the executive powers.
The directors who kept pushing against the Seaboard contract were fired, or were replaced when their tenure ended or resigned.

Yesterday the PAC chairman Selibe Mochoboroane complained bitterly about the contract.
Mochoboroane said they have evidence from the Principal Secretary of the Ministry of Finance that shows that the contract between the government and the Lesotho flour mills is not clear.
He said the contract ended in December 2018 but, as Mapesela showed, was renewed soon after the cabinet reshuffle.
And instead of making a new clear contract, the contract was just renewed.
Mochoboroane said unlike before when the contract was to be signed by the Principal Secretaries the contract was signed by cabinet ministers.
“During the interviews we did not get corresponding documents but we were just told that the Ministers of Trade, Agriculture and Finance signed the contract,” he said.

The Trade Minister who replaced Mapesela is Habofanoe Lehana, Agriculture Minister is Mahala Molapo while Finance Minister is Dr Moeketsi Majoro.
He complained that Seaboard has powers to hire chief executive officer.
Mapesela said although they are in the board the company is the one which dictates terms.
He said the other issue is transfer pricing.
“They pay a lot of money to their companies in South Africa so they transfer funds,” Mapesela added.

He said they have agreed that they will review management contract of Seaboard so that they do not hire a CEO of their choice.
“We were to table it to cabinet but I was moved from that ministry,” Mapesela said.
He said he was expecting ministers to table the issues and now he is surprised that their contract is renewed.
“They did it in my absence and without cabinet blessings,” Mapesela said.

Mapesela further said it is not only Lesotho Flour Mills that has queries in the country but there are other companies facing a similar challenge.
The MP for Matsieng constituency, Matšepo Ramakoae, said their concern is that Lesotho Flour Mills has not been paying dividends to the government.
“But we know very well that they are making profits, we were surprised that their contract was renewed,” she said.

Nkheli Liphoto

 

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