MASERU — So, how much of the money you invested in MKM will you get back after the liquidation is completed?
That is the question that MKM investors want answered.
The perfect answer to that question will only come when the liquidation process has been finalised.
But even if the process is yet to start it is quite possible to use the figures made available in court papers to get an idea of how much depositors are likely to get.
According to the PricewaterhouseCoopers audit report only M100 million of the M400 million invested could be traced.
Assuming that nothing has changed since that report it means that depositors will only be able to share M100 million, which is only a quarter of what the 400 000 people invested.
In other words, for every loti you invested you can only get 25 lisente.
But before you start expecting something in your bank account there are many other factors you have to consider because a lot has changed since the company was shut down in 2007 and more things might change between now and the completion of the liquidation.
First, the value of the MKM’s assets – most of which were cars – has been eroded over the past four years.
Unlike a building, the value of a car does not appreciate with time.
So from the M100 million that investors were supposed to share you must remove a significant chunk to cater for the value the cars have lost.
Secondly, you must consider that while the value of buildings, another key asset on MKM’s books, generally appreciates these are not normal times.
The global recession that has hit the country since 2009 has affected the price of real estate around the world and Lesotho is no exception.
Yet even if we assume that the value of MKM’s buildings has managed to withstand the recession it is important to remember that they will be sold in an auction, where bidders decide how much they want to pay.
Because in an auction neither MKM nor the liquidators will have an upper hand it is highly unlikely that the buildings will fetch what they are really worth.
Thirdly, it is important to keep in mind that it will not be easy to trace all MKM assets.
In the four years since its closure the MKM might have lost some assets to either fraud or damage.
It is highly unlikely that the MKM still has the same number of cars it had in 2007.
There is also a strong possibility that some of its assets were spirited away by its directors and even employees.
The fourth factor is that because MKM was not professionally run the line between its assets and those of its directors, especially Simon Thebe-ea-Khale, has been blurred.
The liquidators will have a huge fight on their hands if they try to untangle that web and there is no guarantee that they will succeed in getting much from the directors.
All these factors will have a bearing on the amount of money that the MKM’s stranded investors will eventually share.
There are also other issues related to the liquidation process itself that might knock off a significant portion of what the investors will eventually share.
The investors will only be paid after MKM has settled its debts with banks, the tax man and other suppliers.
It is also important to remember that before the investors and creditors are paid the cost of the liquidation process would have to be settled first.
Investigators, lawyers, accountants, auditors and other supporting staff hired by the liquidators will have to be paid before the investors.
The liquidators themselves will also get a good share of the cake before they dish out the remainder to the 400 000 investors.
The truth of the matter is that the investors, the real owners of the money, will get very little from the liquidation process.
That is why it might not be a good idea to raise your hopes too high.
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