THE Development Bank of Southern Africa (DBSA) has warned that incessant infighting among the shareholders in the Queen ‘Mamohato Memorial Hospital (QMMH), also known as Tšepong, could force it to demand the full settlement of the outstanding M385 million debt owed to it by the hospital’s owners.
The warning was made despite the shareholders making an M81 million payment last week to service the hospital’s massive debt.
The debt was incurred in 2008 after the government signed a contract with the Tšepong consortium to build and manage the hospital.
Netcare, a South African company, has a 40 percent stake in the Tšepong Consortium, which was given an 18-year contract in February 2009 to build, manage and operate the hospital on behalf of the government of Lesotho. Four other companies, namely, Afri’nnai Health of South Africa, Excel Health, Women Investments and D10 Investments (all from Lesotho), hold the remaining shares.
The government put up about M840 million for the project at its inception. DBSA also advanced a loan to the Tšepong consortium and the arrears have accrued to more than M400 million due to the consortium’s failure to service the debt since then.
The consortium only managed to pay M81 million on 8 October 2020 after receiving a three-day ultimatum to have paid the amount by that day or risk being forced to settle the full debt amounting to M385 282 534, 24.
Tšepong board secretary Michael Mohasi confirmed paying the M81 million.
“Yes, I can confirm that we have paid them. The (Tšepong) directors issued an instruction to our bank to pay DBSA,” Mr Mohasi told the Sunday Express.
But the M81 million payment might only provide temporary respite as DBSA is worried that Netcare’s ongoing feud with its partners in the Tšepong consortium could continue negatively affecting the viability of the project.
QMMH is mired in a serious financial crunch which Netcare entirely blames on the government’s alleged failure to pay its debts.
The other shareholders in the Consortium have however, accused Netcare of financial impropriety. They accuse Netcare of making unauthorised payments to itself, Botle Facilities Management and some unknown persons. Botle Facilities Management is responsible for all cleaning services at Tšepong. Netcare owns some shares in that company.
Earlier this year, Afri’nnai Health’s founding director Lehlohonolo Mosotho accused Netcare Group of siphoning millions of maloti from the company under “dubious and unexplained circumstances”.
Prof Mosotho accused Netcare of paying itself and Botle Facilities Management about M312 million without the approval of the board.
The ongoing fights among shareholders in Tšepong and the erratic loan repayments have got DBSA worried.
“As a result of the breaches by the borrower, the DBSA has therefore taken a decision to reserve its rights accordingly,” DBSA head of business support and recovery unit, Brice Berry, states in a letter to Tšepong last week.
“The DBSA is concerned that the continuing conflicts and defaults have negatively impacted the reputation of the project and have dire consequences for the health care services and general welfare of the people of Lesotho. These concerns are amplified in light of the global Covid-19 pandemic currently being faced.
“Upon the occurrence of an event of default, the DBSA will be entitled to accelerate the facility outstanding to the amount of R385 282 534, 24…,” Mr Berry states.
QMMH is also in trouble with the Lesotho Revenue Authority (LRA) over its failure to meet its tax obligations which are said to have ballooned to M34, 4 million.
The tax arrears are said to have accrued from October 2014 to August this year.
As a result, the hospital has now been referred to the LRA’s Debt Recovery Unit. In terms of the measures dubbed the third-party recovery plan, the LRA can instruct all QMMH debtors to pay their debts directly to the tax authority to enable it to recover the hospital’s tax arrears.
Alternatively, the LRA could sue Tšepong for the debt.