Majoro rejects measly M400k dividend

Majoro rejects measly M400k dividend

MASERU – FINANCE Minister, Dr Moeketsi Majoro, says he turned down a provisional proposal by Lesotho Flour Mills to declare a measly dividend of M400 000 to the government late last year.
Dr Majoro told the Parliament’s Public Accounts Committee (PAC) that he was shocked that the company wanted to pay such a paltry amount when it had made M37 million in profits in recent years.
He said last year, the Lesotho Flour Mills had generated profits but did not declare dividends to the government.
“They wrote a provisional dividends proposal letter lately and I turned them down,” he said.
“You will remember that media have stated that they made M35 million but surprisingly they wanted to give out M400 000 as dividends,” Dr Majoro said.

“In 2017 they also made a staggering M35 million profit but they have also failed to declare dividends,” he said.
He insisted that the company had come up with an elaborate scheme to evade paying dividends.
“They say as long as they have bank loans they will not declare dividends until full settlement is done,” the minister said.
He said they suspect there is transfer pricing.
“These are big companies that can be able to seek expertise that will do accounts in such a way that funds cannot be traced,” he said.

The Lesotho government holds 49 percent stake in the company with the United States-based company, Seaboard Overseas Trading Group owning 50 percent and the remaining one percent held by a Durban-based firm.
The Lesotho Flour Mills was established in 1979 and privatised in 1998, when Seaboard and a sister company bought a controlling stake for about US$10 million (about M140 million).
Seaboard is running milling facilities in South America, the Caribbean and Africa.
The PAC called Majoro to explain the government’s position in the dealings with Lesotho Flour Mills after the Defence Minister Tefo Mapesela complained about the government’s vulnerability in an agreement signed with Seaboard.

Mapesela said 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.

Majoro told the PAC that negotiations with Seaboard are scheduled for this month.
“It is well known that for a period of those 20 years the company has not been paying dividends to the government,” he said.
He said even when the company has made some profits, plans were made to help the Lesotho Flour Mills to escape paying the dividends.
Majoro said their business with Seaboard is explained by shareholders’ agreement.
“The agreement does not expire and the business will exist until the company collapses,” he said.

Majoro said there is also a management agreement that was to expire in 10 years but “I have heard that nothing was done and the agreement was automatically renewed for another 10 years”.
He said they have agreed as ministers involved that they should tell Seaboard that they are no longer happy with management contract.
“We are in business for dividends, so the fact that the business has run for 20 years without dividends is not satisfactory. So all the agreements have to be reviewed and renewed,” he said.

Nkheli Liphoto

 

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