THE government has resolved to have an official representative in the ongoing discussions aimed at finding lasting solutions to MKM saga and ensure that investors are paid the millions of maloti they lost when the Central Bank of Lesotho (CBL) closed MKM in 2007.
This was revealed by the Government Secretary, Moahloli Mphaka, who said the role of the government’s representative in the MKM issue would be “to always give government a report through the office of the Government Secretary”.
MKM Group of Companies was shut down in November 2007 by the CBL after it emerged the company was operating banking and insurance businesses in violation of the Financial Institution Act 1999 and Insurance Act 1976, respectively.
A CBL-commissioned investigation conducted by South African firm, PricewaterhouseCoopers, also revealed that of the M400 million invested by depositors, MKM — comprising MKM Marketing Ltd, Star Lion Group Ltd, Star Lion Insurance Ltd and Star Lion Gold Coin Investment (Pty) Ltd — could only account for M100 million in assets that included buildings and vehicles.
However, the Group director of MKM, Simon Thebe-ea-Khale recently insisted that his company only owed its creditors M64 million and not the M400 million as stated in the PricewaterhouseCoopers report.
Mr Thebe-ea-Khale said the funds from the liquidation of his company would have been better spent in paying off creditors rather than what he described as fraudulent payments that had been made over the years by the liquidators.
Two months ago, the MKM investors petitioned Prime Minister Thomas Thabane’s governing coalition and opposition parties to demand that the CBL pay them the millions of maloti they lost when the apex bank closed MKM in 2007.
The investors also sent similar petitions to the CBL Governor Retšelisitsoe Matlanyane, the Speaker of Parliament Sephiri Monyane and the Senate President ‘Mamonaheng Mokitimi.
Mr Mphaka recently responded to the investors’ petition, saying the government would have a representative as it was keen to see the long-drawn out MKM saga concluded.
In the letter, Mr Mphaka said government was fully aware of the court battle against the liquidation of the MKM Companies which commenced in the 2007 and that the state further acknowledged that there was ongoing court case between ‘Matumiso Tšehla and others and Qhalehang Letsika and others (CCA/0023/18).
“The application seeks an arrangement where the creditors abandon the right to insist that all the MKM Companies assets be released and that the liquidation process continues.
“It is further noted that there is a court order granted by the (High) court on the 20th of July 2018 which states that the creditors shall appoint a new chairman who shall invite the attorney and two representatives of the applicants to attend the meetings of creditors, where the creditors shall speak and express their views and report to the court,” Mr Mphaka wrote.
He further said a new company that would be formed will be controlled by the creditors and it would seek to reclaim all MKM assets and make repayments of the monies that were invested in MKM.
“The nation is given assurance that the government will be a watchdog throughout the entire process until the matter is finalised. The government will have a representative in the entire process and the same person will always give government a report through the office of the Government Secretary,” Mr Mphaka said.
In their June 2018 petition, the investors demanded that the CBL pay them their monies by the end of this month.
On her part, CBL Governor Matlanyane recently told the media that the apex bank was not in possession of the MKM monies and MKM issues were dealt with by the provisional liquidators who were appointed by the courts of law.
“As things stand, the CBL has nothing to do with the MKM issues and involving ourselves at this stage would violate the decisions of the courts. The CBL has never been in possession of the MKM monies or assets. At the time the MKM was closed down and the court proceedings took place, the MKM collected rentals until the provisional liquidators were appointed and took over from there,” Dr Matlanyane said.