The Victoria Hotel heist

The Victoria Hotel heist

MASERU-THE Directorate on Corruption and Economic Offences (DCEO) is investigating a company that runs the Victoria Hotel for money laundering, corruption and other crimes.

The DCEO is also looking at how the company was granted the lease to operate the hotel and then failed to pay rentals to the government for 20 years.

Also dragged into the investigation is former Finance Minister Timothy Thahane who is alleged to have facilitated the granting of the lease without following procurement procedures.

The late principal secretary of the Ministry of Finance, ’Mamotšehare Mphutlane, is accused of the same.

At the centre of the alleged scandal is Sobita Investments (Pty) Ltd, the company that holds the lease to Victoria Hotel.
Sobita is owned by Thabiso Tlelai, a well-known Mosotho businessman based in South Africa.

This week the High Court granted an order allowing the DCEO to seize Sobita’s property and freeze its accounts.
This was after the anti-corruption unit had argued that it had reasons to believe that the properties and the monies in the accounts were proceeds of unlawful business operations, corruption and money-laundering.

In a 34-page affidavit, Tsotang Likotsi, the DCEO’s principal investigation officer, gives a detailed account of how the crimes were committed over 20 years.

He tells the story of how procurement regulations were allegedly twisted and avoided to grant the lease to Sobita. He says Sobita then operated Victoria Hotel for two decades without paying rent.

During that time, Likotsi says, Sobita then transferred nearly M40 million to several companies in South Africa in an alleged money laundering scheme. He says at the same time the company was also operating the hotel without a licence and continued to mislead the government that it had renovated and upgraded the hotel.

He alleges that at some point Sobita was struck off the company registry but continued to operate for 52 weeks while masquerading as a registered entity.

Likotsi’s investigation goes back to 2003 when the Ministry of Finance gave Sobita the lease to the hotel.
It is alleged that Thahane and Mphutlane were instrumental in granting the lease without following procurement procedures.

Likotsi said the Central Tender Board was not involved and the tender to manage the hotel was never advertised.
Likotsi says Thulo Mabatla, the ministry’s former procurement officer, had confirmed that “there was no procurement process handled by the (Central Tender Board) relating to the contract in his tenure from 2001 to 2007”.

Mabatla is said to have told the anti-graft body that he learned about this anomaly around 2010 when he was serving at the Contracts Management Unit.

Likotsi says the Finance Ministry “decided to adopt a different procurement method altogether which was not substantiated or supported by any legal instrument”.

He tells the court that the then Finance principal secretary, Motena Tšolo, told the DCEO that she conducted investigations and established that there were no minutes showing that procurement regulations were followed.
“She went further to check in all offices and further asked relevant offices and officers about the procurement of the contract but found nothing,” Likotsi says.

In July last year the DCEO asked Thahane to explain how the lease was granted. Specifically, they were asking him to account for the rentals. They also wanted him to confirm if ever they were paid, where and when.
In addition they wanted answers on who monitored and evaluated the refurbishments made at the hotel, who checked the books of accounts for the renovations and the cost of the renovations.

Likotsi says Thahane told them that he signed the sublease agreement with Sobita “following Cabinet approval”.
Likotsi however refutes this by pointing out that the cabinet had no authority to approve government contracts or their procurement.
“The act of Cabinet would still annihilate proper procurement systems,” he said.

Thahane said he was not involved in the implementation, supervision and audit of any agreements that he signed, including agreements with development partners.

Those agreements, he told the DCEO, were implemented and supervised by the official including the Accountant General or the principal secretaries.
But Likotsi says he does not believe this explanation because “if that was true, officials of the Ministry of Finance including the PS Tšolo in this case, would know of such”.

“Tšolo denies there is any such record. She further denies that there is any office under her supervision that has knowledge of this contract.”
“There is no record of any Cabinet decision which Thahane referred to which approved the contract of Victoria Hotel”.

He notes that Government Secretary Moahloli Mphaka “made it a point that the decision to grant a contract to Sobita was a ministerial matter reached by the Minister of Finance”.

This, Likotsi says, indicates that Thahane and Mphutlane “intentionally abused the functions of their offices in their capacity as the minister and PS respectively in violation of the laws”.

“As a result of procurement breach and corruption, Sobita benefitted unlawfully from the contract,” he says, adding: “It has acquired, possessed or used the property, being the proceeds from Victoria Hotel.”
“It would be naïve on their part not to know that as a result of their activities and actions, the hotel becomes the proceeds of crime.”

“They would also be naïve not to know that the offence of money laundering was involved and the hotel was used to launder money.”
He said it goes without saying that the government knew of the crimes and that the hotel was used as a conduit to commit crimes.

Likotsi alleges that Thahane said the hotel was renovated and upgraded “but he could not confirm the value of the renovations”.
Sobita, according to the DCEO, had said it spent over M12.2 million in the hotel renovations but failed to account when the ministry wanted information.

The other expense that Sobita claimed for the upgrading of the hotel was over M27.7 million.
The company however allegedly failed to provide details and cost of the renovations when asked by the Ministry of Finance.

Likotsi claims that Sobita owes the government over M15.3 million in rentals but was raking in millions in revenue.
For instance, over these years Sobita business accounts received over M7.7 million “in relation to Victoria Hotel”.

Over another three years it received M17.1 million.
Some of the monies were then transferred to South African companies “with the aim of concealing or disguising their illicit origin,” Likotsi says.

“The monies and proceeds received from the contract remain to be tainted in the hands of Sobita. The integration of the proceeds further disguises the true nature, origin, location, disposition, movement or ownership of the proceeds.”
The main recipient of the monies from Sobita was a company called Liciatron.

SAJTrust, Power Trust and Zelpy also received substantial amounts.
“Succinctly, Victoria Hotel was used or allowed to be used to commit an offence of money laundering.”

Likotsi claims that between December 2014 and April 2019 Sobita was operating illegally after it was struck off the company registry.
He also says from May 2019 to date it is operating illegally because it does not have a valid licence.

“It is clear that the property was used for criminal purposes, and to commit a series of offences over an extended period of time.”
“With this number of incidents established, the more easily the inference may be drawn that the property in question is indeed an instrument of an offence.”

“The repetitive nature of the criminal activities was not fortuitous and incidental to the purpose of the property. On the contrary, it was deliberate and planned.”

Likotsi says the government only acted in 2019 when the new PS Tšolo evicted Sobita from the hotel.
Advocate Mahlomola Manyokole, the DCEO’s director general, told the court that the investigation started in July last year after an anonymous tip off.

Advocate Manyokole said according the contract Sobita was to pay the government M60 000 in monthly rental over 10 years “but the Ministry of Finance said there was no payment for those 10 years and the further period”.

He said they are preparing a criminal case.

Nkheli Liphoto

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