Shareholders fight over ‘M60 million subsidy’

Shareholders fight over ‘M60 million subsidy’

Staff Reporter

MASERU – THE government’s decision to compensate textile factories for a scheme that expired in 2005 has triggered a fierce fight among shareholders of one of the firms that got the payment.

The government is paying about M180 million to about 10 companies that failed to sell or use their Duty Credit Certificates before they expired in 2012.

The payment, approved by the previous government, is seen as a subsidy to support the ailing textile industry in Lesotho.

Companies were supposed to use the subsidy for working capital and keep people in jobs.

But for one former shareholder of Lesotho Precious Garments that money was profit shareholders should have distributed among themselves.

Ching Fung Leu, a resident of South Africa, is now suing Lesotho Precious Garments over what he says is his share of the M60 million he claims the Lesotho government paid to the company for the certificates.

He says he is entitled to a third or M20 million of that M60 million. The case which has been in the Commercial Court for the past four months illustrates how some of the shareholders viewed the subsidy.

Ching sold his shares in Lesotho Precious Garments in April 2011 and signed a share withdrawal agreement. It is that agreement that he is now using in his court battle. He alleges that in the agreement the company agreed to pay him a third of the amount the government will pay to the company in lieu of the certificates.

In his affidavit seen by thepost Ching claims Lesotho Precious Garments received M60 045 610 from the government between “2015 to March 2016” for the certificates.

To justify his claim Ching attaches a list of payments he says came from the government.

“The Defendant was accordingly obliged to pay the plaintiff the sum of R20 015 203 upon receipt of the aforesaid payment from the Lesotho government,” Ching says.

He despite a letter of demand he wrote on March 10 this year Lesotho Precious Garments “fails, refuses and/or neglects to make payments”.

Ching also wants the court to order Lesotho Precious Garments to pay him a 15 percent per annum interest on the M20 million.

Lesotho Precious Garments is however disputing that it ever got such a payment from the government. It says, instead, the onus is on Ching to prove that there was such a payment.

thepost understands that at least 10 companies have received a total M108 million from the government in lieu of the certificates.

If Ching’s claim is true it would mean that Lesotho Precious Garments alone received 55 percent of the amount the government has paid to the textile factories so far.

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