BUTHA-BUTHE – The government paid M600 million in the last financial year to Bidvest Bank Limited and recently followed this up with another M73 million in penalties after prematurely terminating the controversial vehicle fleet service contract it signed with the South African company last year, according to Alliance of Democrats (AD) leader Monyane Moleleki
Mr Moleleki, who was until recently part of Prime Minister Pakalitha Mosisili’s seven party coalition, says the government also agreed to purchase 159 used-cars from Bidvest for M37 million as part of the termination agreement, with another 124 set to be acquired for M28 million after the premature end of the contract.
Last month, Finance Minister Tlohang Sekhamane announced the cancellation of the controversial vehicle fleet services contract with effect from 1 April 2017.
Mr Sekhamane had admitted that the South African financial institution had milked government of millions of maloti and said the bills were spiraling to a point where it was difficult to pay them off.
The government initially awarded Bidvest a six-month contract to run the government fleet from 1 October 2015 to 31 March 2016 after the expiry of the government’s fleet management contract with Avis.
The government had promised to exclude Bidvest from any new tender to find a new fleet management firm to replace Avis.
However, the government cancelled the tender process, preferring instead to enter a new long-term contract with Bidvest, which had not bid for the tender as earlier agreed in light of its enjoyment of the six month contract.
Then Finance minister Dr ’Mamphono Khaketla had said while announcing the deal in June last year that the government would buy 600 vehicles and hire another 600 from ordinary Basotho, with Bidvest only managing the fleet.
She also said the government had decided to cancel the tender process because it did not have enough money to continue with the option of hiring vehicles.
However, a joint venture company, Lebelonyane, shortlisted for the tender took the government to court seeking an order to stop the government from engaging Bidvest.
The 48-month contract entered into by the government stipulated that Bidvest Bank Limited would provide “possession, use and enjoyment of the vehicles for the contract period” with the government only having the option to buy the fleet at the end of its contract.
The arrangement contradicted claims by several ministers that the government was buying 600 of the vehicles for its direct full ownership from the onset with the remainder being leased from Basotho.
However, the Bidvest contract clearly stipulated that the government would not “acquire any ownership rights of any nature whatsoever” of the vehicles despite being registered as “owner”.
The controversial fleet contract was one of the root causes of the split in the Prime Minister Pakalitha Mosisili-led Democratic Congress (DC) in November 2016.
A faction loyal to then DC deputy leader Monyane Moleleki accused loyalists of Dr Mosisili in the party of corruptly influencing the awarding of the deal in Bidvest’s favour.
Their ire was mainly directed at Dr Khaketla, whom they accused of disregarding due process in awarding the tender to Bidvest at the expense of joint venture company — Lebelonyane — that had been recommended for the contract.
Dr Khaketla, who was later reshuffled to the Foreign Affairs portfolio, has vehemently denied allegations of corruption and even sued some of her accusers for M6 million, after they accused her of earning a M4 million bribe in the Bidvest morass.
Mr Moleleki and his faction eventually left the DC to found the Alliance of Democrats in December 2016 after failing to oust Dr Mosisili from the helm of the party.
In announcing the cancellation of the Bidvest deal, Mr Sekhamane did not state the amounts owed and already paid to Bidvest.
He indicated that the government would adopt a new policy of hiring Basotho-owned vehicles with the contracts not exceeding 12 months.
The minister also said the vehicles must have mileage of not more than 30 000 kilometres, under a motor service plan and insured under a comprehensive insurance for the duration of the 12-month contract.
However, addressing thousands of party supporters at a rally in Ha-Marakabei village in the Butha-Buthe district on Sunday, Mr Moleleki said the Bidvest deal was the costliest since independence in 1966 because the government had not spent as much money for transport services in one financial year before.
The rally was meant to drum up support for the party ahead of the 3 June 2017 elections in the four electoral constituencies of Mechachane No.1, Hololo No.2, Motete No.3 and Butha-Buthe No.4.
“Since our independence in 1966, the government has not spent M200 million for transport in one financial year,” Mr Moleleki said.
“With the Bidvest contract, the government has exceeded M600 million in transport alone in one financial year because of corruption.”
“Ntate Mosisili’s government has finally cancelled its contract with Bidvest long after we warned them. Ntate Sekhamane has finally admitted that Bidvest was milking money from Lesotho,” Mr Moleleki said.
Mr Moleleki said Bidvest had penalised the government for prematurely terminating the contract, adding: “The government of Lesotho has already paid M73 million for cancellation of the contract.
“And on top of that, the government is bound to buy 159 used vehicles from Bidvest at the cost of M37 million. Don’t be surprised to hear that another 124 vehicles have been bought from the same company at the cost M28 million.”
The AD leader said most of the vehicles bought by the government from Bidvest were “too old” to be placed on warranty or guarantee.
The Lesotho Times repeatedly sought in vain to obtain comments from Mr Sekhamane and Bidvest this week.
Meanwhile, economist Kanono Thabane yesterday told the Lesotho Times that if true, the M73 million payment by the government to Bidvest affected the credibility of the national budget.
“The credibility of the national budget for Lesotho has been under a lot scrutiny lately,” said Mr Thabane who is also the programme director at the Lesotho Council Non-governmental Organisations (LCN).
“A credible budget is the first requirement of effective public financial management. The Public Expenditure and Financial Accountability (PEFA) Report for Lesotho over the past decade has shown that the major challenge to Lesotho’s fiscal policy is the weak credibility of the budget,” Mr Thabane said.
“In simple language it means that, throughout the fiscal year, the government should not implement what it did not plan for during the budget speech.
“We should implement everything that was approved in the budget speech and nothing else. If we implement it at a higher cost or have other new and unplanned for activities, then the credibility of the budget will fall.”
He added that if the government paid that much to terminate the contract, “that shows serious deviation from planned aggregate expenditure and deterioration of government credibility”.
“Thus there is a need for stronger punitive leadership from the Ministry of Finance in the areas of public finance management in Lesotho. Again, this does not withstand the opportunity cost of the funds being paid to the company.”
Mr Thabane said over the years, Lesotho had witnessed increasing fiscal demands in the form of student fees, post-drought livelihood restoration, and basic infrastructure to facilitate economic activity and job creation.
“Thus the Ministry of Finance needs to demonstrate composed leadership in the translation of political aspirations and developments needs into policies, actions and budgetary policies; provision of robust systems of budget classification; minimising deviation between appropriation and expenditures; and conversion of expenditure into public goods,” he said.
Mr Thabane said the issue of capital flight was one of the challenges affecting private sector development in Lesotho.
“There is therefore a need for stronger leadership in the Ministry of Finance to drive the expenditure rationalisation programme with the aim of achieving fiscal prudence,” he said.
Former Development Planning Minister and economist, Moeketsi Majoro said the M73 million Mr Moleleki has alleged is not a very large sum considering that the four-year contract with Bidvest Bank would have cost Lesotho billions of maloti.
“But when contrasted with the fact that many of our people go to sleep daily without eating, and wake up the next morning without knowing where their next meal is coming from, it is suddenly a very large waste of taxpayer resources,” he said.
“It is also a very large wasteful expenditure given that Lesotho cannot provide all the AIDS drugs it needs or pay for the full costs of students at the National University of Lesotho. Why would the government, in its prioritisation of public sector needs, not have the moral aptitude to realise that expensive cars for ministers and civil servants can never be more important than these few examples.”
Dr Majoro, who is the All Basotho Convention (ABC) candidate for Thetsane constituency for the coming snap elections, said he had previously indicated in his public remarks that there were “worrisome indicators” that the contract with Bidvest Bank, “which is not authorised in South Africa to enter into non-banking business”, is corrupt.
“I have strong suspicions that the people involved in making this decision were enticed with personal gain to act in the interests of Bidvest and against national interest. They could have put Avis into order, as government previously did with Imperial Fleet Services, but they appear to have been so eager to enter into an agreement with Bidvest that has turned to be a raw deal for Lesotho and Basotho,” he said.