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Textile firms in race to sell off assets

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MASERU– THE crisis in the textile sector has triggered a stampede by foreign-owned companies to sell off their assets as they get ready to leave Lesotho.
An investigation by thepost has revealed that at least three textile companies have been trying to sell their factory buildings and other assets for the past six months.

The buildings being offered to investors are those built by the companies on 99-year leases from the Lesotho National Development Corporation (LNDC).
Nien Hsing, the biggest textile company in Lesotho by both production and staff, is allegedly looking for buyers for its C &Y Garments factory it closed in 2021.
thepost can reveal that Nien Hsing has valued C &Y Garments, based in the Ha Tikoe Industrial area, at about M200 million.

The buildings and other immovable properties are valued at about M160 million, according to insiders familiar with C &Y’s financials.

Immovable properties, which are predominantly sewing machines, are valued at about M35 million. Industry insiders are however sceptical that those assets are worth that much.
They are also doubtful there could be many investors who might be enticed to cough up those amounts for a company in a sector in crisis.
At least two investors told thepost that they backed out of negotiations after seeing the valuation and hearing Nien Hsing’s payment terms.

“The buildings are not in the best shape and the immovable property has lost so much value that it needs to be replaced,” said one of the investors.
Potential buyers are also spooked by the lease agreements for the land occupied by the buildings.

thepost has seen a lease, which is the industry standard for factories built by companies, which says the land should be used for the “manufacture of clothing and no other purposes in the absence of a written consent from the sub-lessor”.

So while some investors might be interested in the land, they are not certain they will be allowed to demolish factory buildings and build something else.
The investors warn that even if it’s possible to change the land-use clause of the leases the government might be concerned about the optics of allowing a factory that employed a few thousands to be replaced by say a mall creating a few dozen jobs.

“That will be tantamount to building a shop on the graves of thousands of textile jobs,” said one of the investors.
Although the government still believes the textile sector could be saved from what seems to be an impending implosion, existing and potential investors are not convinced.

They said given the crisis in the textile sector, it is highly unlikely that investors might be willing to buy companies such as C &Y and others on the market with plans to revive their operations.
This, they said, is because the sector has been in the doldrums for years and there doesn’t seem to be a cogent government strategy to resuscitate it.
The sector has been losing both jobs and investment over the past three years.

The Independent Democratic Unions of Lesotho (IDUL), a trade union, estimates that 12 000 factory workers have lost their jobs in the past 12 months.
Other unions say the number could be higher and some factory owners privately say more job cuts are on the way unless their order books improve.
The disinvestment in the sector has been unrelenting.
Glory Textiles collapsed three years ago.

C &Y shut its doors in 2021 as did two other factories in Maputsoe last year. Many are contemplating either closing altogether or cutting more jobs.
Textile factory owners blame the Covid-19 pandemic, the slowdown in the global economy, escalating energy prices and the Russia-Ukraine war for their woes.
The uncertainty over the renewal of AGOA which expires next year has also scared them and those that might want to come in.

Yet even if AGOA is renewed, its duty concessions might not give Lesotho companies much advantage against companies in other countries. Lesotho is competing with companies in countries that are closer to ports, offer huge incentives and have built strong synergies in their textiles.

On the other hand, production costs in Lesotho have galloped.
Lesotho no longer enjoys the advantage of low wages since the previous government railroaded the M2 020 minimum wage in 2020. That increase burdened textile companies with huge wage costs and severance pay obligations they say are unsustainable.

At the same time, the companies have had to contend with a surge in power and transport costs. Those overheads have soared as incentives for textile companies have dried up.
The Duty Credit Certificates (DCC), through which companies used to generate some revenues, have been stopped and are unlikely to return despite continued lobbying from the textile owners.

The perennial inefficiencies at the border still hamper their import of raw materials and export of goods, delaying their production and deliveries to customers.
Because the chances of selling off their assets and leaving to other private investment destinations are limited, textile companies are now lobbying the government for incentives. Unions too are pushing for government interventions.

May Rakhatane, the secretary general of IDUL, says they are proposing that the government buys and revives the closed companies.
“We don’t believe the explanations that the companies are giving for closing down their factories. That is why we are suggesting that the government takes over the companies,” May said this week.

The lease agreements give the government the first option to buy factory buildings and improvements when the owner wants out.
But given the eye-watering valuations, it might cost the government billions to buy the factories.

Such prices are also likely to entice other factory owners to cash in and leave because of the low margins and the problems in the sector make it more lucrative to sell instead of continuing with the struggle for survival.

Yet a change in ownership will not resolve the fundamental problems in the sector. Lesotho will still lack competitive advantages against other countries. After buying the factories the government will also have to spend more to replace the largely obsolete machines, most of which are said to be decades old.

Also, there is no guarantee that the order books will be full anytime soon.
The global economic challenges that the current owners are moaning about might be here for long.
And although the nationalisation of the textile firms might be a tempting proposition for unions, the history of state-owned companies is replete with carcasses of failed companies.

Staff Reporter

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Doctor tampers with corpse

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THE Mokhotlong Government Hospital has agreed to pay M200 000 as compensation to the husband of a deceased patient after a doctor unlawfully tampered with the corpse.

There is a deed of settlement between the hospital and Jacob Palime, the deceased woman’s husband.

Jacob Palime rushed to the High Court in Tšifa-li-Mali last year after the hospital failed to explain why the doctor had tampered with his wife’s corpse at a private mortuary behind his back.

His wife’s body had been taken to the Lesotho Funeral Services.
Palime lives in Phahameng in Mokhotlong.

In his court papers, Palime was demanding M500 000 in compensation from the hospital “for unlawful invasion, intrusion and interference with” his rituals and rights over his dead wife.

He informed the court that his wife died in September 2020 at Mokhotlong Hospital.

“All requisite documentation pertaining to her release to Lesotho Funeral Services were effected and ultimately the deceased was accordingly transferred to the mortuary,” Palime said.

The court heard that Palime’s family was subsequently informed about the wife’s death.

The family however learnt that one doctor, acting in his professional capacity, went to the mortuary the next day and tampered with the corpse.

The doctor subsequently conducted certain tests on the corpse without the knowledge of family members.

Palime said their attempts to get an explanation from the hospital as to the purpose of the tests and the name of the doctor had failed to yield results.

“It remained questionable and therefore incomprehensible as to what actually was the purpose or rationale behind conducting such anonymous and secret tests,” he said.

Palime told the court that the whole thing left him “in an unsettled state of mind for a long time”.

He said his family, which has its traditions and culture rooted in the respect for their departed loved ones, regards and considers Mokhotlong Hospital’s conduct as an unlawful invasion, intrusion and interference with his rituals and rights over his deceased spouse.

“This is more-so because the hospital had all the opportunity to have conducted any or such alleged tests immediately upon demise of the deceased while still within its area of jurisdiction and not after her release to the mortuary,” he said.

Palime said despite incessant demands, the hospital has failed, refused, ignored and neglected to cooperate with him “to amicably solve this unwarranted state of affairs”.

Palime told the court that there were no claims against the Lesotho Funeral Service as they had cooperated and compensated him for wrongly allowing the doctor to perform tests on the corpse without knowledge or presence of one of the family members.

’Malimpho Majoro

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Villagers whipped as police seize guns

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Dozens of villagers in Ha-Rammeleke in Khubelu, Mokhotlong, were on Monday night rounded up and beaten with sticks and whips by the police during an operation to seize illegal guns.

The villagers told thepost that they heard one man crying out for help saying his wife was sick. And when they rushed to his house, they found the police waiting for them.

The police had stormed the man’s house and ordered him to “cry for help” to lure men from the village.

The men and women were then frog-marched outside the village where the police assaulted the men with sticks, whips, and kicked them.

One man said when he arrived at the house, he found other villagers who were now surrounded by armed police.

“At first I thought they were soldiers but later picked up that they were SOU (Special Operations Unit) members,” he said.

He said they were subjected to severe torture.

“They beat us with sticks at the same time demanding guns from us,” he said.

The police and soldiers also raided other nearby villages in Khubelu area but in Ha-Rammeleke villagers say they identified only police from the Special Operations Unit (SOU).

Several villagers who spoke to thepost asked for anonymity for fear of retribution.

This was the second time within a month that the security forces have raided the villages in search of illegal guns after a spate of gory murders in the areas.

The murders are perpetrated by famo music gangs who are fighting over illegal gold mining in South Africa.

The first raid was on Wednesday preceding Good Friday.

Villagers say a group of armed soldiers stormed the place in the wee hours collecting almost every one to the chief’s place.

“We were woken-up by young soldiers who drove us to the chief’s place,” one resident of Ha-Rammeleke said.

When they arrived at the chief’s home all hell broke loose.

A woman told thepost that they were split into two groups of women and men.

Later, women were further split into two groups of the elderly and younger ones.

She said the security officers assaulted the men while ordering the elderly women to ululate.

Young women were ordered to run around the place like they were exercising.

She said the men were pushed into a small hut where they were subjected to further torture.

A man who was among the victims said the army said they should produce the guns and help them identify the illegal miners.

He said this happened after one man in their village was fatally shot by five unknown men in broad daylight.

He said the men who killed the fellow villager had their faces covered with balaclavas and they could not see who they were.

 

The villagers chased them but they could not get close to them because they were armed with guns.

“We were armed with stones while those men were armed with guns,” he said.

“They fired a volley of bullets at us and we retreated,” he said.

The murdered man was later collected by the police.

The army spokesman, Lieutenant Colonel Sakeng Lekola, confirmed that soldiers stormed Khubelu area in response to the rampant lawlessness of unlicensed guns.

Lt Col Lekola said their presence in the area followed two incidents of shootings where one man was fatally shot and a child sustained serious gunshot wounds.

“There were reports everywhere, even on the radios, that things were out of hand in Khubelu,” he said.

He said in just a day they managed to collect six guns that were in wrong hands together with more than 100 rounds (bullets) in an operation dubbed Deuteronomy 17.

These bullets included 23 rounds of Galil rifle.

Lt Col Lekola maintained that their operation was successful because they managed to collect guns from wrong hands.

He said they are doing this in line with the African Union principle of ‘silencing the guns’.

He said it is an undeniable fact that statistics of people killed with guns is disturbing.

“We appeal to these people to produce these unlicensed guns,” Lt Col Lekola said.

Lt Col Lekola said they could not just watch Basotho helplessly as they suffered.

He said some people are seen just flaunting their guns.

“They fear no one,” he said.

Police spokesman, Senior Superintendent Kabelo Halahala, said he was aware of the operation in Mokhotlong but did not have further details.

Majara Molupe

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Magistrate saves WILSA boss

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A Maseru magistrate, Nthabiseng Moopisa, this week stayed the criminal prosecution of Advocate ’Mamosa Mohlabula who is accused of tax evasion, money laundering and corruption.

In her application Advocate Mohlabula, who is the director of Women and Law in Southern Africa (WILSA), said the Director of Public Prosecution (DPP) should not charge her pending finalisation of her tax evasion case.

Advocate Mohlabula is out on bail after she was formally charged with tax evasion in July last year.

She told Magistrate Moopisa that the DPP, Advocate Hlalefang Motinyane, was wrong to have agreed with the Director General of the Directorate on Corruption and Economic Offences (DCEO) to bring charges against her.

“In my viewpoint, the DCEO cannot be heard to charge me in relation to matters already seized with this Honourable Court,” she said in an affidavit.

She also said there is a pending civil case in the High Court in which the DCEO’s abuse of power is referenced, saying the precise way the case is handled will depend “on the way an alleged offence comes to the light”.

“Before that pending case is finalised, DCEO has no jurisdiction to detail me to court over isolated phenomenon of tax evasion and or over grievances of former employees of WILSA,” she said.

Advocate Mohlabula was charged together with the WILSA’s chief accounting officer.

She argued that it was WILSA that was being investigated, not individuals, further saying that was “a significant safeguard that the DCEO was impartial from an objective viewpoint”.

“To exclude any legitimate doubt in this respect the DCEO returned the items it seized from WILSA,” she said.

“This was a realistic and practical step towards administering justice and to avoid premature embarrassment to the management of WILSA.”

She said the Board of Trustees of WILSA were sent briefing notes which in certain respects reflected that the DCEO returned the properties of WILSA without warning them that they were suspects.

“In any event, we proceeded to fashion our arguments before the High Court. There was, and could be, no evidence to back up the decision of the DCEO to apply for the search warrant,” she said.

Advocate Mohlabula said before they took the matter to the High Court, she cooperated with the DCEO and it conducted an inquiry into the alleged crimes.

“Now that the matter is pending before the High Court, there is no more reason for the DCEO to remand me before the pending cases are finalised,” she said.

Staff Reporter

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