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Bank appointments put Thabane in spot

Caswell Tlali

MASERU — Finance Minister Timothy Thahane could have violated the Central Bank of Lesotho Act by appointing two acting deputy governors to sit on the bank’s board of directors, the Sunday Express can reveal. Because of those appointments the board’s resolutions are now at the risk of being rendered invalid because they can be challenged on the basis of the constitution of the board. Thahane’s decision to appoint Retšelisitsoe Matlanyane as the acting governor after the death of Governor Moeketsi Senaoana in March has also come under scrutiny. Senior central bank sources told the Sunday Express that there is a general feeling that the minister should not have made the appointment because he has no authority to do so under the law that governs the central bank. Thahane last month appointed ’Mathabo Makenete and Masilo Makhetha as acting deputy governors. This was despite the fact that the law limits his appointing authority to non-executive members of the board. According to the law only the king has the power to appoint the governor and two deputies.

The law clearly says the finance minister, in case of “a temporary absence or incapacity of a director other than the governor or the deputy governors . . . may appoint a substitute to serve until the board determines that such state has ceased”. The law further says a senior deputy governor can only serve as the acting governor if the governor is absent or temporarily incapable.Where there is a permanent absence or incapacity of the governor, deputy governor or any member of the board of directors, the Act says “another person shall be appointed at the earliest opportunity to fill the vacancy”. The position of the second deputy governor, in which Makhetha is acting, has been vacant since June last year. It can only be filled when King Letsie III decides to make an appointment. Two positions of governor and first deputy governor have been vacant since March this year when Senaoana died and Matlanyane was appointed acting governor. The Sunday Express understands that the central bank was in corporate governance crisis when Thahane urgently filled the positions of governor and two deputies with acting officials.Sources say the steps he took have not solved problems. The central bank’s board of directors does not meet a quorum and squeezing “improperly” appointed members will only render its decisions illegal.The Act says the bank’s board consists of eight members, five non-executive, executive governor and deputies. The quorum is made up of five members including the governor or a deputy.Crisis hit the board when Senaoana died in March because it would only form a quorum when Matlanyane, who was then the first deputy, was present. This meant that the board would not call any meeting when Matlanyane was attending forums outside the country.

At the time, the board was already limping because one of the non-executive members M Fako had resigned in June 2010.

As if that was not enough, the tenure of Moroesi Tau-Thabane as a non-executive board member had expired in July this year.

There are only three board members left, JQ Lesitha, P Mangoaela and M Posholi.A senior official at the central bank who spoke on condition of anonymity said the board is unable to reach major decisions lest any interested person challenges their legality in the courts.

“It is easy to legally annul any resolution that will be made by this board,” the official said.

“We do not have a board when the three executive members are illegally appointed and another three in good standing do not form a quorum,” he said. The official said the bank’s head of corporate affairs and legal adviser, Motlatsi Malope, tried in vain to push for the formal appointment of executive board members and filling of gaps left by non-executive members.Malope’s job is to ensure that procedures are followed and regulations are complied with. “Malope has always reasoned that failure to confirm Matlanyane and her two deputies as substantive governors will paralyse the management,” the source said.“It is a well known fact that the board has for a long time not been able to hold meetings as required by the law because it did not meet the quorum.” The board is responsible for the bank’s performance and policy direction. It determines strategic direction and monitors executive management in the implementation as well the execution of its strategies. The board approves publication of annual reports, monthly economic review, quarterly economic review and monetary policy statements. It meets bi-monthly to review strategy, operational performance, capital expenditure, internal controls and other material aspects of business. Malope declined to comment saying he had no mandate to talk to the media.

The bank’s information officer Thato Mohasoa said the issue of governor and deputies’ appointment is the prerogative of the government and “therefore it is the government that can comment”. Thahane said those who think he has violated the law are free to take him to court.

“There is nothing unusual about appointing people to act in the absence of substantive position holders,” Thahane said.

“I have not broken any law. I challenge the people who say I have broken the law to take me to court.” He said even in government when the king is away a King Regent will act “and the same thing applies when the Prime Minister is absent”.

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