The frugal millionaire who swindled the poor

The frugal millionaire who swindled the poor

MASERU – MKM founder, Simon Thebe-ea-Khale, lived a frugal life at a time when millions of maloti were rolling into his pockets as he helped himself to the monies from investors into his Ponzi scheme. Documents perused by thepost show that at one time Thebe-ea-Khale was probably one of the richest men in Lesotho, by way of properties. There were more than 60 properties and nearly 200 vehicles registered in his name. Records show that between 2001 and 2007 when the Central Bank of Lesotho (CBL) eventually shut down MKM Thebe-ea-Khale had gone on a spending spree that saw him amassing a huge property portfolio.

He has a plot in almost every town in the country. The number of properties he acquired is extremely incongruent to his salary at that time. Investigators hired by the CBL found that Thebe-ea-Khale had little regard for proper corporate governance. For instance, there was little distinction between what belonged to MKM and what Thebe-ea-Khale himself owned. The bulk of Thebe-ea-Khale’s properties were most likely acquired by depositors’ funds.  The buying spree seems to have started in 2001, the year the CBL discovered that MKM was operating insurance businesses without a licence.

In that year Thebe-ea-Khale bought three properties worth a quarter of a million maloti. There was a massive spike in his appetite for property in 2003 when he bought a building in Maputsoe for M3.7 million. He followed that up with another building that cost M270 000. Three buildings worth about M700 000 were transferred into his name in 2004. As the money rolled in Thebe-ea-Khale upped the ante. In 2005 Thebe-ea-Khale was snapping up buildings and plots at a rate of almost two per month. He splurged M2.7 million on 18 properties between March and November 2005.

That trend continued in 2007 when he spent M2.6 million on another 18 properties. His investment of choice seems to have been plots which he hoped to develop later. There was no plot too small or too big for him, with his purchases ranging from M4 000 to more than a million. In seven years Thebe-ea-Khale had invested M10 million on 48 properties. It does not seem evident that Thebe-ea-Khale did any proper evaluation before buying them. To understand his empire the investigators obtained Deeds and Leases and consulted officials from the then Lands Survey and Physical Planning (“LSPP”) department.

In addition to the 48 properties there were 20 other properties registered under Thebe-ea-Khale’s name. Most of the properties – worth nearly M7 million – were plots. The investigators also discovered that Thebe-ea-Khale controlled six companies in South Africa which owned several vehicles and properties in that country. Thebe-ea-Khale himself had a property in Ladybrand which he bought for half a million. Locally, he had nearly 200 cars registered in his name. Some of those vehicles were being used by the MKM companies. The investigator’s report said in a court hearing in July: “Thebe-ea-Khale testified that he bought these vehicles using his own funds and that they were not held on behalf of the company”.

In an earlier hearing he had told the court an additional 37 vehicles registered in his name where not his. “He said that these are company vehicles and they are registered in his name by agreement with the company and that they were paid for by the company,” the report said. Thebe-ea-Khale told the court he was earning about M500 000 per year: M360 000 in salary, M100 000 from a cattle farm and “substantially less than” M100 000 from crops.

The investigators were stunned that a man of such modest means could have acquired property worth more than M17 million. “If he had no monthly expenses it would have taken him 34 years to have accumulated these assets,” the investigators’ said in their report, adding that the only possible explanation for his spectacular wealth was that he was using investors’ funds to acquire those assets. Thebe-ea-Khale’s bank account had only M31 000 when it was frozen.

Staff Reporter

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