Bongiwe Zihlangu
MASERU — The ombudsman has not spared Standard Lesotho Bank, saying the financial institution could have contributed to the mess in the disbursement of the block farming scheme loans.
Standard Lesotho Bank’s role in the scheme was to distribute loans and keep the farmers’ accounts.
The loans were guaranteed by the government.
The scheme has been rocked by allegations of corruption, high default rates by farmers and mismanagement.
There are allegations that the funds could have been either looted or misused.
The ombudsman’s report released on Friday says the bank’s actions could have contributed to this mess.
The report holds the bank accountable for deliberately excluding farmers from being part of the plans made and decisions it made although they would in the long run impact on them (farmers) directly.
It describes the bank’s attitude as “alien to a partnership situation”.
“Farmers’ preferences or the inconvenience they were likely to suffer were not discussed with them at all,” the report says.
This attitude, the report charges, led to farmers feeling as though they were not equal partners and that they did not “co-own the programme”.
This in itself, the report says, was detrimental to the success of the programme.
It claims that communication between the bank and farmers was “very poor” resulting in farmers feeling they were merely taking instructions from “those other partners”.
“As an example, farmers could not buy inputs from any other supplier than that identified by (the Ministry of Agriculture and Food Security); the signing of the facility letter was not a matter of choice,” the report says.
“Again documents from the bank to the farmers were written in English, the language farmers were not familiar with.
“Documents recording a contract between parties must be in a language all parties understand.
“In a contract minds of the parties must meet, otherwise there is no contract, in the eyes of the law.”
The report further makes the damning allegation that signatories to facility letters were coerced “into signing the document”.
The bank is also accused of violating farmers’ right to confidentiality by making “farmers’ bank statements accessible” to the agriculture ministry.
The report also alleges that the bank allowed scheme leaders in the 2007/08 cropping season to sign for their district loans on behalf of “farmers to whom the loans were being made”.
“But the bank failed to prove to the ombudsman’s panel that such leaders had the authority (power of attorney) from borrowers to operate accounts on their behalf,” the report says.
It notes that the bank and the borrower did not appear to have been on the same wavelength on the “vital matters on which the agreement rested”.
“From the evidence heard, farmers did not know that the loans were seasonal, that they became payable at the end of the season in which they were made.”
The report claims the farmers’ understanding was that the loans were due and payable only at the end of a three-year period.
It said the bank bungled when it failed to disclose the interest chargeable on the loans to the farmers.
The bank is also accused of making arrangements with Lesotho Flour Mills (LFM) without the farmers’ consent to “intercept proceeds of the sale from the farmers’ harvest”.
“Firstly, in the absence of instruction from the seller (farmer) to the buyer (LFM), the latter had absolutely no power to divert the proceeds to third person being the bank in this instance,” the report says.
“LFM breached every rule in the contract that was between it and the seller.
“The bank also is not absolved of this criminal transaction because it is party to it.”