‘LEC board faces mammoth task’
THE Minister of Energy and Meteorology, Mokoto Hloaele, has called on the Lesotho Electricity Company (LEC) board of directors to redouble their efforts in resolving the “grave challenges” that have hampered service delivery at the power utility.
Mr Hloaele made the call at the recent induction workshop for the LEC board at a hotel in Maseru.
The induction which covered several areas including that of corporate governance was held seven months after the appointment of the LEC board. The board comprises of Refiloe Matekane (chairperson), Thabo Nkhahle (Managing Director), Mphu Ramatlapeng, Molibeli Taele, Lefa Motlalane, ‘Maboiketlo Maliehe, Leshele Thasi, Thabelo Khalema, Boshepha Mapesela and Leketekete Ketso.
The LEC Board members were appointed in December 2017, following the expiry of the contracts of former board members in November 2017.
The induction workshop was held against the background of a recent internal audit which pointed to rampant fraud and corruption which has cost taxpayers at least M170 million.
Addressing the LEC board, Mr Hloaele said the power utility has “grave challenges,” that need to be addressed in order to improve service delivery to the public. He underscored the need for the board, management and employees to unite and work towards the realisation of a shared vision of meetings the needs of the LEC’s customers.
“It is government’s fervent expectation to see the LEC improve its operations to ensure that its domestic and commercial customers enjoy quality services,” Mr Hloaele said.
“As a company registered under the Companies Act, LEC is expected to conduct its business as per the provisions of the Act where the shareholders, board, executive and employees work together to drive the company in the right direction.”
The current LEC board inherited a serious mess from its predecessor when it got into office seven months ago in terms of staff ethical conduct and performance and service delivery.
The confidential LEC internal audit report for 2017, seen by the Sunday Express, paints a picture of a dysfunctional organisation where poor corporate governance practices have allowed employees to increasingly engage in fraudulent activities that range from small misdemeanours to huge fraud and corruption of as much as M170 million.
The embezzlement of M170 million is suspected to be the cause of the assassination of the LEC’s head of internal audit, Thibello Nteso, who was shot and killed early last year after he raised the alarm bells over the corruption at the parastatal.
The indiscipline and corruption of LEC staff has resulted in them connecting electricity illegally to consumers in exchange of bribes. Bribes are also demanded for various reasons.
Some LEC employees have been paid huge gratuities in excess of M500 000 despite that they do not qualify for such benefits while illegal payments of as much as M400 000 have been made to lawyers.
The thick report outlines a plethora of poor corporate governance practices including the signing of employment contracts by the human resources manager without the approval of the managing director as required.
Revenues are routinely pilfered from LEC coffers, because of lack of controls, putting its viability at risk.
“Revenue is the most crucial asset to ensure the survival of the LEC in the long term,” part of the internal audit report states, adding, “However, the current controls over revenue protection become a real cause for concern and calls for a strong message from the board to management to ensure business stability.
“In our opinion, the LEC is exposed in the way in which it handles its revenue until such time that appropriate and effective controls are put in place.
“The IAD has identified that there is significant misalignment between the strategic plan, corporate risk register and corporate plan and this hinders the effective delivery of the overall company strategy.
“The LEC has been in the spotlight for quite a while over rampant fraud which seems to be escalating. It is the management’s responsibility to prevent and detect fraud.”
The report also called for the appointment of external auditors to examine the affairs of LEC.
“The journey that the LEC has travelled since 2011/2012 has indicated that the entire organisation is engulfed in fraudulent activities, with the magnitude escalating.
“It has been observed through audits conducted in the period 2011/2012 to date that the internal control environment continues to weaken. This can be attributed to a very poor culture, no sense of responsibility and accountability resulting in non-observance of and overriding of controls. Based on this, the IAD is of the opinion that that the current state of affairs within the LEC cannot be dealt with through normal audits.
“The situation therefore warrants the engagement of external forensic experts who would do a thorough analysis and provide a holistic view of the root causes that resulted in this situation as it is evident that IAD initiatives only treat the symptoms,” the report further states.
In an interview with the Sunday Express on the sidelines of the induction workshop, Mr Hloaele expressed confidence in the capacity of the board to address the challenges faced by the LEC.
“We believe that these challenges can be addressed. Now that we appointed this board, we can only hope that they deliver as expected,” Mr Hloaele said.
On his part, the LEC Managing Director Mr Nkhahle said the LEC board members needed to be brought to up to speed in relation to the role they are expected to play, including understanding the vision and mission of the company as well as its challenges to enable them to make informed decisions.
The induction was conducted by a South African company, Lehaha Institute.