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MKM investors reject proposal

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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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City Council bosses up for fraud

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THREE senior Maseru City Council (MCC) bosses face charges of fraud, theft, corruption and money laundering.

Town clerk Molete Selete and consultant Molefe Nthabane appeared in the Maseru Magistrate’s Court yesterday.

City engineer Matsoso Tikoe did not appear as he was said to be out of the country. He will be arraigned when he returns.

They are charged together with Kenneth Leong, the project manager of SCIG-SMCG-TIM Joint Venture, the company that lost the M379 million Mpilo Boulevard contract in January.

The joint venture made up of two Chinese companies, Shanxi Construction Investment Group (SCIG) and Shanxi Mechanization Construction Group (SMCG), and local partner Tim Plant Hire (TIM), has also been charged.

Selete and Nthabane were released on bail of M5 000 and surety of M200 000 each. Leong was granted bail of M10 000 and surety of M400 000 or property of the same value.

The charges are a culmination of the Directorate on Corruption and Economic Offences (DCEO) investigation that has been going on for the past months or so.

The prosecution says Selete, Nthabane, Tikoe, and Leong acted in concert as they intentionally and unlawfully abused the functions of their offices by authorising an advance payment of M14 million to a joint-venture building the Mpilo Boulevard.

An advance payment guarantee is a commitment issued by a bank to pay a specified amount to one party of a contract on-demand as protection against the risk of the other party’s non-performance.

The prosecution says the payment was processed after the company had provided a dubious advance payment guarantee. It says the officials knew that the guarantee was fake and therefore unenforceable.

As revealed by thepost three weeks ago, SCIG and SMCG were responsible for providing the payment guarantee as lead partners in the joint venture.

The prosecution says the MCC was required by law to make advance payment after SCIG-SMCG-TIM Joint Venture submitted a guarantee as per the international standards on construction contracts.

It alleges that the MCC has now lost the M14 million paid to SCIG-SMCG-TIM Joint Venture because of the fake advanced guarantee.

thepost has seen minutes of meetings in which officials from the joint venture admitted to MCC officers that the advance payment guarantee was dubious.

SCIG-SMCG-TIM kept promising to provide a genuine guarantee but never did. Yet the MCC officials did not report the suspected fraud to the police or take any action against the company.

It was only in January this year that the MCC cancelled the contract on the basis that the company had failed to provide a genuine guarantee.

Despite receiving the advance payment SCIG and SMCG refused to pay TIM Joint Venture for the initial work.

SCIG and SMCG, the lead partners in the joint venture, are reportedly suing the MCC to restore the contract. Officials from TIM Plant Hire however say they are not aware of their partners’ lawsuit against the MCC.

Staff Reporter

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Scott fights for free lawyer

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DOUBLE-MURDER convict Lehlohonolo Scott is fighting the government to pay a lawyer to represent him in his appeal.
Scott, serving two life sentences for murdering Kamohelo Mohata and Moholobela Seetsa in 2012, says his efforts to get a state-sponsored lawyer have been repeatedly frustrated by the Registrar of the High Court, Advocate ’Mathato Sekoai.
He wants to appeal both conviction and sentence.
He has now filed an application in the High Court seeking an order to compel Advocate Sekoai to appoint a lawyer to represent him.
He tells the court that he is representing himself in that application because the Registrar has rejected his request to pay his legal fees or appoint a lawyer for him.
People who cannot fund their own legal costs can apply to the Registrar for what is called pro deo, legal representation paid for by the state.
Scott says Sekoai has told him to approach Legal Aid for assistance.
The Legal Aid office took a year to respond to him, verbally through correctional officers, saying it does not communicate directly with inmates.
The Legal Aid also said he doesn’t qualify to be their client.
“I was informed that one Mrs Papali, if I recall the name well, who is the Chief Legal Aid counsel, had said that Legal Aid does not communicate with inmates so she could not write back to me,” Scott says.
“Secondly, they represent people in minor cases. Thirdly, they represent indigent people of which she suggested I am not one of them.”
“Fourthly, there are no prospects of success in my case hence they won’t assist me.”
He says the Legal Aid’s fifth reason was that he has been in jail for a long time.
Scott is asking the High Court to set aside Sekoai’s decision and order her to facilitate pro deo services for him, saying her decision was “irregular, irrational, and unlawful”.
He argues that the Registrar’s role was to finance his case to finality, meaning up to the Court of Appeal.
The Registrar insists that the arrangement was to provide him a lawyer until his High Court trial ended.
Scott says his lawyer, Advocate Thulo Hoeane, who was paid by the state, had promised to file an appeal a day after his sentencing but he did not.
He argues that the Registrar did not hear him but arbitrarily decided to end pro deo.
Scott says he wrote to Acting Chief Justice ’Maseforo Mahase in 2018 soon after his conviction and sentencing seeking assistance but he never received any response.
Later, he wrote to Chief Justice Sakoane Sakoane in November 2020 and he received a response through Sekoai who rejected his request.
Scott tells the High Court that he managed to apply to the Court of Appeal on his own but the Registrar later told him, through correctional officers, that “the Court of Appeal does not permit ordinary people to approach it”.
He argues that “where justice or other public interest considerations demand, the courts have always departed from the rules without any problem”.
Staff Reporter

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Army ordered to pay up

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THE Ombudsman has asked parliament to intervene to force the Lesotho Defence Force (LDF) to compensate families of people killed by soldiers.
Advocate Tlotliso Polaki told parliament, in two damning reports on Monday, that the LDF is refusing to compensate the family of Lisebo Tang who was shot dead by soldiers near the former commander, Lieutenant General Tlali Kamoli’s home in 2014.

The LDF, she said, is also refusing to compensate the family of Molapo Molapo who was killed by a group of soldiers at his home in Peka, Ha-Leburu in 2022.

Advocate Polaki wrote the LDF in January last year saying it should pay Tang’s mother, Makhola Tang, M300 000 “as a reasonable and justifiable redress for loss of support”.

The Tang family claim investigation started in February 2022 and the LDF responded that it “had undertaken the responsibility for funeral expenses and other related costs”.

Advocate Polaki investigated whether the LDF could be held accountable for Tang’s death and whether his family should be compensated while the criminal case is pending.

She found that the soldiers were “acting within the scope of their employment to protect the army commander and his family” when they killed Tang.

Soldiers killed Tang in Lithabaneng while she was in a parked car with her boyfriend at what the army termed “a compromising spot” near the commander’s residence.

The three soldiers peppered the vehicle with a volley of shots, killing Tang and wounding the boyfriend.

Advocate Polaki found that the army arranged to pay for the funeral costs and to continue buying groceries and school needs for Tang’s daughter.

The LDF, however, kept this for only four years but abruptly stopped.

When asked why it stopped, the army said “there is a criminal case pending in court”.

The army also said it felt that it would be admitting guilt if it compensated the Tang’s family.

The Ombudsman said “a civil claim for pecuniary compensation lodged is not dependent on the criminal proceedings running at the same time”.

“The LDF created a legitimate but unreasonable expectation and commitments between themselves and the complainant which had no duration attached thereto and which showed a willingness to cooperate and work harmoniously together,” Advocate Polaki found.

“The LDF was correct in withdrawing such benefit in the absence of a clear policy guideline or order to continue to offer such benefit or advantage,” she said.

“However, she should have been consulted first as the decision was prejudicial to her interest.”

She said the army’s undertaking “fell short of a critical element of duration and reasonability”.

Tang was a breadwinner working at Pick ’n Pay Supermarket as a cleaner earning M2 000 a month.

Her daughter, the Ombudsman said, is now in grade six and her school fees alone had escalated to M3 200 per year.

She said an appropriate redress should be premised on her family’s loss of income and future loss of support based on her salary and the prejudice suffered by her mother and daughter.

She said M300 000 is “a reasonable and justifiable redress for loss of support”.

In Molapo’s case, Advocate Polaki told parliament that the LDF refused to implement her recommendations to compensate his two daughters.

The complainant is his father, Thabo Joel Molapo.

The Ombudsman told the army in August last year that it should pay the girls M423 805 “for the negligent death of their father”.

Advocate Polaki said despite that the criminal matter is before the court, “it is established that the Ombudsman can assert her jurisdiction and make determinations on the complaint”.

Molapo, 32, was brutally murdered by a soldier in Peka in December 2020.

Molapo had earlier fought with the soldier and disarmed him.

The soldier, the Ombudsman found, rushed to Mokota-koti army post to request backup to recover his rifle. When he returned with his colleagues, they found him hiding in his house. The soldier then shot Molapo.

The LDF, the Ombudsman said, conceded that the soldier killed Molapo while on duty and that he had been subjected to internal disciplinary processes.

“The LDF is bound by the consequences of the officer’s actions who was negligent and caused Molapo’s death,” she said.

She found that after Molapo was killed, army officers and the Minister of Defence visited his family and pledged to pay his children’s school fees. They also promised to hire one of his relatives who would “cater for the needs of the deceased’s children going forward”.

The LDF, she said, has now reneged on its promises saying its “recruitment policy and legal considerations did not allow for such decision to be implemented”.

Molapo’s father told the Ombudsman that the LDF said “the undertakings were not implementable and were made by the minister at the time just to console the family”.

All the payments in the two cases, the Ombudsman has asked parliament, should be made within three months.

Staff Reporter

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