MKM investors reject proposal

MKM investors reject proposal

MASERU – ABOUT 1 000 MKM creditors have resolved to fight a proposal by liquidators to repay them with shares in a new company that will be formed out of the remaining properties of the collapsed Ponzi scheme.  The creditors rejected the proposal at a meeting held at Manthabiseng Convention Centre yesterday.
Sekhonyana ‘Stix’ Mosenene, who claims to speak for the creditors, told thepost that the meeting also resolved to pursue the legal route to the “bitter end”.
Mosenene said the meeting was suggested by the High Court which said they should talk to other investors to hear their “opinions and recommendations”.
He said the support for the legal fight against the liquidators was “overwhelming”.

Mosenene said the creditors also want the court to reserve the sale of three MKM properties. The properties were sold for M115 million in May last year.
The former Agric Bank building, along Kingsway Road opposite Queen Elizabeth II Hospital, and in which FNB Lesotho is the main tenant, was bought for M58 million.
The buyer was Sekhametsi Investment Consortium, a venture capital company with interests in several businesses in the country.
The new and yet to be occupied building opposite Pioneer garage and next to Sparrows Bar was bought for M43 million by Executive Transport, a haulage company.
Executive Transport also paid M14 million for the dilapidated building opposite Selkol along Moshoeshoe Road.
The building used to house a Nissan Motors dealership.

Mosenene said the creditors believe that they will recoup their losses if the sale is reversed. He also said they want the Central Bank of Lesotho (CBL) to release the money it allegedly confiscated when it closed MKM in November 2007. Despite reviewing thousands of MKM documents held by MKM liquidators thepost has not come across any evidence to suggest that the CBL is holding MKM’s monies. The liquidators who have been verifying MKM’s assets say they know nothing about the alleged funds.

Mosenene said the creditors will also demand that Webber Newdigate, the law firm working with the liquidators, should keep its paws off MKM matters.
The liquidators are suggesting a rearrangement that will see the 10 000 investors whose claims against the company have been verified and quantified owning shares in the new company in exchange of what they are owed.

Together, the investors lost M128 million in what is Lesotho’s biggest pyramid scheme.
The creditors were supposed to have filed their claims with the MKM estate on June 29 in preparation for a July 23 meeting to discuss the rearrangement.
But Advocate Qhalehang Letsika, one of the liquidators, said they will issue a notice next week to postpone the creditors’ meeting.
Advocate Letsika said the impending lawsuit from some creditors was the main reason for the postponement.

“It is highly unlikely that the case coming to the court on July 20 will be finalised by July 23 so we have to push the date,” Advocate Letsika said.
The other reason for the postponement, he said, was the abrupt resignation of Advocate Salemane Phafane as chairman of the creditors’ meeting.
“The court has to appoint another chairperson so that might take some time.”
Advocate Phafane was preparing for the meeting when he was stung by false allegations that he was compromised because his wife was a member of the Investors’ Trust that supported MKM’s liquidation.

Advocate Phafane said although he had proven that these allegations were incorrect he found it impossible to continue as chairperson.
An unsigned statement published in a local weekly last week repeated the allegations against Phafane’s wife.
The statement carried a scanned copy of what was claimed to be evidence that Phafane’s wife, Matsuna Pontso Phafane, was a member of the Investors’ Trust.
It however appears that the document had nothing to do with the Investors Trust.

The document titled ‘Application form for MKM Bursary Scheme’ is on a Star Lion Funeral Centre letterhead, indicating that it was probably a normal investment like those made by hundreds of thousands of other Basotho.
Advocate Letsika said the creditors who want to reverse the sale of MKM properties are being misled because that is not possible.
“The auctioning of those three properties was done legally so there is no way the sale can be reversed,” Advocate Letsika said.

He said there is no way the High Court could withdraw the liquidators’ mandate because they were appointed lawfully by the same court.
“As for the funds they are claiming to be held by the Central Bank of Lesotho I can tell you that as a liquidator I don’t know of those funds. It’s the first time I am hearing about that,” he said.
“The truth is that this is just mudslinging that will not help the creditors. The majority of the creditors support the holding of the meeting to discuss the proposed arrangement.
As far as I can see those against the meeting are just a handful of creditors who are hurting the majority of the creditors.”

Advocate Letsika said the new case filed by some of the creditors will increase the liquidation costs of the MKM.
“They keep bringing cases against the liquidators but they argue that we are spending a lot of money on hiring lawyers and other experts. It is the estate that will pay to defend such cases and that only means they are taking from the same small pool that is left. These cases are self-defeating.”

He said what makes the MKM case complicated is “because no one was prosecuted for creating and running the Ponzi scheme”.
“It was clear from the onset that this was a Ponzi scheme. Were this another country those people who started, invested and benefited from MKM would have been prosecuted”.
Any attempt to reverse the sale of the properties is likely to be hotly contested by the buyers, some of whom have since started preparing the buildings for occupation.

Nkheli Liphoto

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