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Chaos amid accusations

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MASERU – PRIME Minister Moeketsi Majoro allegedly ignored a legal warning that Lesotho’s assets were about to be seized to settle Frazer Solar’s M855 million claim.

The revelations are in stark contrast to what Majoro and the government claimed last week when it was announced that Frazer Solar was about to seize Lesotho’s assets for breaching a solar contract signed in September 2018.

Majoro told a press conference, last week, that the government was still investigating the issue. The government said the same in a statement that urged Basotho and international partners to remain claim.
However, Frazer Solar this week insisted that the government knew about the claim and the impending seizures.

The company says Majoro was “personally notified – one month in advance – of the seizure of water royalties and chose not to oppose the seizure”.
It says it told Majoro about the impending seizure of the water royalties that Lesotho receives from South Africa under the Lesotho Highlands Water Project on April 21 this year. Those royalties, confiscated this month, could be about M1 billion annually.

The company has also appropriated Lesotho’s assets in Mauritius and the United Kingdom. It is now going for assets in the United States.
It would appear that the warning to Majoro in April was one of the more than two dozen the government ignored over two years while Frazer Solar was suing for damages. The company claims the Lesotho government was notified of legal proceedings on 25 occasions over 25 months.

That means the government had ample time and opportunity to challenge the proceedings before the assets were confiscated.
Arbitrator Vincent Maleka’s report supports this claim and shows that the government was aware of every stage of Frazer Solar’s case.
The government started receiving letters and notices relating to the case in March 2019, beginning with a letter of demand from Frazer Solar. That letter detailed how Lesotho had breached the September 2018 contract and the company’s claim.

The letter was addressed to Tsolo, who was Minister in the Prime Minister’s Office at that time and had signed the contract, but he didn’t respond.
On July 29, 2019, Frazer Solar notified the government that it was terminating the contract and a day later it informed Tsolo that it was declaring an arbitration. Again, the government received the letter but did not respond. The letter said the arbitration was to be held in South Africa as per the terms of the contract.

On August 7 the company requested the President of the Johannesburg Bar Council to appoint an arbitrator. A copy of the request (email and hard copy) was sent to the government. A day later Maleka, a senior lawyer, was appointed arbitrator and the government was informed again.

On August 22 Frazer Solar notified the government that Maleka had scheduled the first arbitration meeting for September 22. Seven days before that meeting the company sent the government a procedural order detailing the Tribunal’s timetable, the arbitrator’s confirmation that he will be available and the minutes of the preliminary meeting.

Frazer Solar submitted its claim and witness statements on October 7. It served the government which, however, did not take any action.
The tribunal held a procedural call on November 25 but the government did not participate despite being informed. The government received minutes of that meeting two days later.

When the hearing started on December 2 Maleka noted that the government had not submitted any explanation why it did not attend.
He repeated the same in his award in which he noted that the government had received “due notice of time, date and place of the hearing and there was no sufficient cause shown to explain its failure to attend the arbitration proceedings”.

Frazer Solar was awarded the claim on January 28, 2020, and the government received a copy but still failed to respond. Armed with the arbitrator’s ruling, Frazer Solar then approached the South Gauteng High Court for an enforcement order. It also sought a similar order in the Business and Property Court of England and Wales.

The UK court issued the enforcement order in September 2020. The South African court granted an order confirming the enforcement order on April 29 this year. The government has both orders, including the one issued by the Supreme Court of Mauritius on May 19 this year.
The government is also yet to respond to another case recently filed in the United States court.

Having failed to participate in the arbitration and allowed three court cases to go unchallenged, the Lesotho government might have a tough time undoing the damage.
In the meantime, its assets have been seized and Frazer Solar is already receiving the payments.

So far Lesotho has lost its royalties for the water transfer to South Africa. Frazer Solar is also collecting the electricity revenue that Eskom owes to Lesotho in connection with the LHWP.
Lesotho’s five percent stake in the West Indian Ocean Cable Company (WIOCC), a Mauritius based company, has also been confiscated. Two properties in the United Kingdom are also likely to be seized.

Timeline:

  • August 2017: Frazer meet Tsolo
  • October 2017: Tsolo writes invites KfW to fund the €100 million project
  • November 2017: Tsolo signs MOU with Frazer Solar
  • December 2017: KfW write to Majoro proposing to provide funding
  • March 2018: KfW writes to Tsolo proposing to fund the project. Tsolo requests KfW to provide a breakdown of the interest rates, duration of the loan and guarantees.
  • August 2018: Tsolo tells Frazer that the government had agreed to proceed with the project.
  • September 2018: Tsolo signs the supply contract with Frazer, committing the government to a €100 million (M1.6 billion) project
  • March 2019: Frazer Solar’s lawyers sent a letter of demand to Tsolo and the Prime Minister’s office
  • July 2019: Frazer Solar terminates the contract and declares arbitration
  • August 2019: Frazer Solar requests an arbitrator from the Johannesburg Bar Council
  • August 22: Frazer Solar notifies the government that an arbitrator has been appointed and the first meeting is scheduled for September 22
  • September 16: A procedural is sent to the government detailing the Tribunal’s timetable, the arbitrator’s confirmation that he will be available and the minutes of the preliminary meeting
  • September 22: The meeting happens without Lesotho representatives
  • October 7: Frazer Solar submits claim and witness statements
  • November 25: The tribunal held a procedural call on but the government did not participate
  • December 2: Maleka notes that the government had not submitted any explanation why it did not attend.
  • January 2020: Frazer Solar is awarded the claim
  • September 2020: Frazer Solar is granted an enforcement order in the United Kingdom
  • April 2021: Frazer Solar is granted an enforcement order in South Africa. Lesotho’s water royalties and what is owed by Eskom are seized
  • May 2022: Frazer Solar is granted an enforcement order in Mauritius and Lesotho’s shares in WIOCC are confiscated
  • May 17: News of the seizure makes make international headlines
  • May 19: Prime Minister Majoro and the government issue a statement saying they are investigating the issue 

Staff Reporter

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Mahao, PS in big fight

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PRIME Minister Sam Matekane this week summoned the Basotho Action Party (BAP) executive committee in a bid to defuse simmering tensions within the party.
This comes amid fears that Professor Nqosa Mahao’s fallout with his principal secretary at the Ministry of Energy, Tankiso Phapano, could threaten the unity in the BAP and the government’s stability.

thepost can reveal that Mahao has hinted that he would resign if Matekane doesn’t fire or reassign Phapano.

But there are strong indications that Mahao doesn’t enjoy the backing of his executive committee and MPs in his fight with Phapano.

Inside sources this week told thepost that some members of the BAP’s executive committee and MPs are openly siding with Phapano and have been secretly lobbying Matekane to reshuffle Mahao from the Ministry of Energy to Sports.

A source said Mahao is aware of these manoeuvres, including a clandestine meeting in Maputsoe, and has said he would rather resign than be the subject of a humiliating reshuffle instigated by people he leads.

The source of the bad blood between Mahao and Phapano is not clear but it is understood that they have disagreed over tenders and the ministry’s direction.

The source said Matekane was first briefed of the running battles at the ministry some three weeks ago just as matters were coming to a head.

It is the second briefing which revealed a complete breakdown in the relationship that triggered Matekane’s meeting with the BAP’s executive committee and MPs on Monday.

Three people who were in that meeting said Matekane told the BAP officials to deal with the crisis before it affected the ministry and threatened the coalition government’s stability.

The BAP’s executive committee, including MPs and Mahao, then had a marathon meeting to discuss ways to make peace between Mahao and Phapano.

A source who was in that meeting said “it was clear to Mahao that the majority of the committee and the MPs were on Phapano’s side”.

“Mahao quickly realised that he did not have the backing of the majority and took a conciliatory approach. It was clear that the committee would rather have him resign than get Phapano removed from the ministry,” the source said.

“In the past Mahao had flatly refused to reconcile with Phapano because of seniority. But this time he appeared to be open to a meeting to discuss reconciliation.”

Both Mahao and Phapano told thepost last night that their relationship was still cordial. ‘“We are still in good books with Phapano until further notice,” Mahao said.

“However, we cannot predict the future.”

Mahao denied ever discussing Phapano’s dismissal or transfer with Matekane.

Phapano also insisted that he was working well with Mahao.

“We are still on good terms,” Phapano said, adding that the allegation that they were fighting was “baseless”.

The fallout between Mahao and Phapano has been quick and spectacular.

The two had been almost inseparable months before Mahao agreed to join the coalition government.

Phapano would use his car to drive Mahao around. They would attend party meetings together. Some party insiders saw Phapano as Mahao’s right-hand man and adviser.

Mahao allegedly strongly pushed for Phapano to be appointed as his principal secretary when he became energy minister.

But sources said Mahao started having second thoughts days after recommending Phapano and tried to get his appointment reversed but it was too late.

A source says within weeks Mahao was telling cabinet colleagues that Phapano had captured the ministry and he was unable to function as the minister.

“He started pushing to oust Phapano within days because they were already clashing. It’s been war from the first days,” said the source.

Staff Reporter

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How chicken import ban hit vendors

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MALESHOANE Pakela used to work at small backyard chicken farms where she was paid with chicken heads, necks, legs, and offals that she would roast and sell to factory workers at the Thetsane Industrial Area.

Her job was to clean and pack chicken.
The profit wasn’t much but just enough for the 37-year-old widow to feed and keep her four children in school.

“It also covered her monthly rental of M150 for a room in Ha-Tsolo Sekoting.

Her life was however shattered last October when the government imposed a ban on chicken imports from South Africa following an outbreak of bird flu.
Without day-old chicks the farms quickly shut down, cutting Pakela’s supply of heads, necks, legs, and offals.
Within a few days, her family was starving.

Pakela had been struggling even for months before the ban. The closure of the factories and retrenchments of thousands of workers has severely hit her sales. She was behind on her rent and could barely feed her children.

The partial lifting of the chicken ban has not helped Pakela because her former employers still cannot import day-old chicks or live birds.
Pakela and a family were kicked out of their rented room in November when their arrears were about M1 000.
She has found another room nearby.

A ‘Good Samaritan’ has allowed her to use a room for free until she can afford the rent. But Pakela says she still feels obliged to pay something because she understands that things are hard for everyone.

“Here the rent is still M150 but the landlord accepts every amount that I give her,” Pakela says.
There are days when her children go to bed hungry.

“I have told them (children) that if I have nothing they should accept (the status).”

She now survives on handouts from neighbours and other well-wishers. Pakela’s poverty is apparent.

Barefoot and holding her small child in a seshoeshoe dress, Pakela says her two children usually go to school without eating.
The other child has dropped out of school because she doesn’t have shoes.

’Mako Lepolesa, 44, who has been running a chesanyama (meat grill) at the Maseru West Industrial Estate since 2018. The father of three says his clients are mainly taxi drivers and factory workers.

Chicken was her main product until last October when the ban was imposed. It wasn’t long before his business started wobbling.

“I thought it would be just a short-lived problem (chicken import ban) but it passed on this year,” he says, adding that it might take months for his business to recover.
Moshe Ramashamole, 42, who also owns a chesanyama in the Maseru West Industrial Estate, tried to remain in business by sourcing chicken from local farmers.

It was a stopgap measure that however lasted a few weeks because the farmers also ran out of stock. He resorted to bad chicken but they were double the price of a full chicken before the ban.
Yet Ramashamole thought he could make it work by increasing the price of his plate from M35 to M55. The customers however resisted the new price and Ramashamole had to take the losses.

The poultry ban did not affect street vendors like Pakela alone.
Former Minister of Communications, Khotso Letsatsi, is one of those poultry farmers struggling following the chicken ban.

He ventured into poultry in January last year. It was an audacious venture that included a M100 000 investment in a shelter and other equipment.
He started with a batch of 300 chicks and had reached 1 000 by the time the ban was imposed.

“The business was lucrative,” Letsatsi says.

“I had to employ two people permanently to assist me on a full-time basis,” he says.

When it was time to slaughter the chickens, Letsatsi says he had to employ seven casual labourers.
Since the ban was imposed he had released all his workers.

“I do not know where they are now. Maybe they are starving,” he says of the workers he released.

Letsatsi doesn’t know how he will revive his business.
The Director of Marketing in the Ministry of Agriculture and Food Security (MAFS), Lekhooe Makhate, says the ban has been devastating to farmers and businesses.

“Some big businesses are going to declare less tax to the government because there was no business,” Makhate says.

He says Lesotho spends M2.1 billion on the importation of chicken and its products from South Africa every year.
But that amount usually soars to M4 billion depending on the market forces of demand and supply.

Makhate says the M2.1 billion goes to South Africa where the chicken and its products are imported.

At the height of the scarcity of chickens in the country, Makhate says people were supposed to make initiatives to travel to villages to search for chickens.

“There is not enough production of chickens in the country,” he says.
“Economically speaking we rely on South Africa. We have to be self-reliant.”

Majara Molupe

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Letseng fends off threat to sue

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LETŠENG Diamond says it is under no obligation to advertise jobs for Basotho to provide certain services “where it has the capacity to undertake the same services”.
Letšeng Diamond boss, Motooane Thinyane, was responding to a threat to sue by a little-known political party called Yearn for Economic Sustainability (YES).

Matekane’s company, the Matekane Mining Investment Company (MMIC), had been providing blasting, haulage and drilling services at Letšeng mine since 2005.
The deal with the MMIC was terminated in December last year with the mining company saying it was improper because Matekane had now become a politician.

Letšeng Diamonds announced that it had reached an agreement with the MMIC to acquire its mining equipment at the mine and offered employment to its current employees in line with operational requirements.

“This will enable Letšeng to continue with its mining activities,” the company said in its statement.

This infuriated opposition parties that argued that the mine should have called interested Basotho companies to bid for the contract, saying it is provided for in the Minerals Act of 2005.

The leader of Yearn for Economic Sustainability (YES), Molefi Ntšonyana, wrote the mine last week threatening to sue for allegedly failing to follow section 11 of the Act.
Ntšonyana argued that the Act “does not grant the Letšeng Diamond 100 percent to mine with its good own equipment” but it should engage Basotho companies like it did with the MMIC.

Ntšonyana said Letšeng Diamond and the MMIC made the agreement to acquire the MMIC equipment so that the mine could continue with its mining activities “without any advertisement to seek qualified Basotho to provide such services”.

Ntšonyana said the agreement unilaterally denied Basotho a chance to tender for such services and ignored the fact that the government of Lesotho on behalf of Basotho own 30 percent in the Letšeng Diamond.

“It is advisable to reconsider your decision,” Ntšonyana said, adding that they would also write to the mining board requesting the resolution they made regarding this matter of insourcing mining activities.

He said the company should adhere to section 11 of the Mines and Minerals Act of 2005 and within 14 working days the matter should be reconsidered, “failing which we will have no choice but to drag the company to the courts of law”.

In his response, Thinyane said Ntšonyana must “revisit the section in question in full for its correct interpretation”.

“Letšeng Diamond is under no obligation to advertise to seek qualified Basotho to provide services where it is willing and has the capacity to undertake the same services,” Thinyane said.

He said the decision relating to the agreement referred to has been through the necessary governance structures and is therefore procedural.
Thinyane said Letšeng is a corporate citizen that is fully compliant with the laws of Lesotho.

Majara Molupe

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