- as Lesotho launches SA court application to reverse £50 million damages award,
- Frazer Solar intensifies its own legal applications to seize Lesotho’s assets.
THE government has petitioned the Gauteng High Court to stop the seizure of its water royalties and other assets in South Africa to pay off part of the £50 million (M856 million) damages it owes German company, Frazer Solar.
The same court had in April this year, granted Frazer Solar’s application to garnish the royalties due to Lesotho in terms of the bi-national Lesotho Highlands Water Project (LHWP).
This after Lesotho had failed to pay the £50 million damages awarded in January 2020 by South African arbitrator, Vincent Maleka, for the government’s alleged breach of a M1, 7 billion 2018 contract aimed at providing Lesotho with 40 000 solar water heating systems, 20 megawatts of solar power capacity, 1 million LED lights and 350 000 solar lanterns over four years.
Buoyed by the Gauteng High Court judgment, Frazer Solar also moved to seize the Lesotho government assets in other countries. These include the government’s shares in a Mauritian company, West Indian Ocean Cable Company (WIOCC).
The looming seizure of the assets finally jolted the government into action and a fortnight ago, it dispatched an inter-ministerial delegation for talks with South Africa to stop Frazer Solar from laying its hands on the water royalties and any other Lesotho assets in South Africa.
The government followed up on the talks by assembling a team of lawyers from four different law firms in South Africa to collectively formulate an application for the stay of execution of the Gauteng High Court judgement garnishing the water royalties.
In a weekend statement, Prime Minister Moeketsi Majoro’s press attaché, Buta Moseme, said the lawyers had on Friday filed an application for a stay of execution of the High Court order.
“The nation will recall that on 26 May 2021, the government of the Kingdom of Lesotho received notification that the High Court of South Africa had confirmed a default arbitral award in favour of Frazer Solar and ordered that the company could enforce attachment of Lesotho’s assets pursuant to that award,” Mr Moseme said in his weekend statement.
“The government immediately swung into action, authorising the Attorney General to do everything to prevent any enforcement action by Frazer Solar and to protect all assets belonging to the Kingdom of Lesotho.
“The government then appointed four law firms in South Africa to work collectively to formulate an application for stay of execution in the same High Court in South Africa that turned the arbitral award into an order of court…
“Today, 18 June 2021, our lawyers filed an application for stay in the High Court of South Africa. As is customary, it is expected that this filing should halt any further action by Frazer Solar until the courts have dealt with the application for stay.
“In its application, the government disputes that there is a binding supply agreement with Frazer Solar that can be enforced and Frazer Solar fully knows this. Because of the sensitive nature of this case, Government has been sparse in providing detailed information so as to avoid exposing its defence strategies. As the case goes public, more detailed information will be provided,” Mr Moseme said.
But Frazer Solar is not taking any of this lying down. Mr Moseme’s statement suggests that a bruising legal fight lies ahead between the two parties.
He states that Frazer Solar has commenced legal processes of its own in different jurisdictions aimed at enforcing its damages award worldwide.
“As of today (18 June 2021), Frazer Solar has applied for enforcement of the arbitral award in South Africa, Mauritius, United States of America and the United Kingdom.
“We further understand that in South Africa, Frazer Solar has applied to attach Lesotho’s assets or revenue with the Trans-Caledon Tunnel Authority; the Lesotho Electricity Company accounts with South Africa’s power utility, Eskom; Lesotho’s shareholding in the West Indian Ocean Undersea Cable Company headquartered in Mauritius and the Lesotho Highlands Water Project accounts held in South Africa,” Mr Moseme said.
Gauteng Deputy Sheriff Khensani Ngobeni moved to garnish the royalties last month. This after the Gauteng High Court on 29 April 2021 granted Frazer Solar’s application to be compensated from the Lesotho government’s water royalties. The solar company had argued that the Lesotho government had repeatedly failed to honour a January 2020 default judgement by Advocate Maleka to pay damages for the alleged breach of the 2018 deal.
Without naming them, Mr Moseme also said the individual entities targeted by Frazer Solar had also launched their own applications against the German solar company.
“In addition to the government lodging an application for stay, individual agencies targeted by Frazer Solar have filed their own contestations separately.
“In addition, the government has received support from the Africa Legal Support Facility of the African Development Bank, which deployed a team of legal experts within one week of request and has been offering assistance since then,” Mr Moseme said.
He said the legal processes were part of a broader initiative to stop Frazer Solar in its tracks and protect Lesotho’s assets from seizure to pay damages for a deal the government says was not legally binding in the first place.
Dr Majoro was finance minister at the time of the deal. He had refused to sign the financing agreement for the project aimed at providing Lesotho with solar power over four years. Then Minister in the Prime Minister’s office, Temeki Tšolo, had already signed the main supply agreement before Dr Majoro’s refusal to sign the financing agreement to facilitate the implementation of the project. For this reason, the government believes the deal was not binding as there was no financing agreement.
“In addition, the government dispatched a ministerial delegation to South Africa recently to engage the authorities on this matter which affects both countries on several fronts. The authorities in Germany have also been appraised of these developments and Lesotho has requested their assistance.”
Mr Moseme said the government had also established a commission of inquiry to “help Basotho to learn and understand what transpired up to the point an order to seize Lesotho’s assets was issued in South Africa”.
The commission comprises of High Court Judge Molefi Makara (chairperson), former Foreign Affairs and International Relations Minister Mohlabi Tsekoa and lawyer, Advocate Sekake Malebanye.
Mr Moseme said the commission is expected to complete its task next month.
“Lesotho’s law enforcement agencies have also initiated investigations on the matter,” Mr Moseneke said without elaborating.
This was probably in reference to the Directorate on Corruption and Economic Offences (DCEO) launching its own investigations into the controversial solar power deal a fortnight ago.
According to authoritative government sources, Mr Tšolo, who has previously denied signing the deal on behalf of the government, was called in two weeks ago by DCEO investigators to shed light on the deal.
DCEO spokesperson ‘Matlhokomelo Senoko last week confirmed there were ongoing investigations in connection with the matter. She however, refused to give details.