LEC fails to account for M568m

 

—In yet another expose of gross mismanagement at the utility

Mohloai Mpesi

IN yet another dumbfounding episode of humungous mismanagement in the public sector, the country’s main power utility, the Lesotho Electricity Company (LEC), cannot account for a whopping M568 million.

The parliamentary Public Accounts Committee (PAC) heard on Thursday that an audit of the LEC by Auditor-General, Mathabo Makenete, for the financial year ending March 2023, had uncovered the M568 million scam.

The LEC had failed to produce any supporting documents to back the M568 million worth of revenue and expenditure transactions, forcing Ms Makenete’s office to issue a disclaimer on its accounts.

A disclaimer is the worst category of an opinion that an auditor can render to any entity. It means the auditor is unable to form an opinion on the fairness of the financial statements due to lack of sufficient and appropriate audit evidence.

This often occurs when the company’s records are incomplete or unreliable, or in the case of the LEC, when they are totally absent, constricting the auditor from performing the necessary audit procedures.

The PAC was told on Thursday that the Auditor-General’s office had repeatedly asked for the supporting documents from LEC management to no avail.  The LEC had promised to produce the documents but never did.

That had forced Ms Makenete to seek the help of the PAC, resulting in Thursday’s session at which the LEC was again caught in sixes and sevens.

Fuming MPs then demanded action on the LEC. It was high time the police and the Directorate on Corruption and Economic Offences (DCEO) swooped on the power utility to arrest the thieving managers responsible for all the maladministration at arguably the country’s most strategic public utility, said Basotho Patriotic Party (BPP) leader Tefo Mapesela.

The PAC had called the LEC officials to respond to the Auditor-General’s damning report as well as provide the documents she had asked for. They still failed, forcing the PAC to ask them to reappear before it again this week.

According to Ms Makenete’s alarming report, she was unable to validate the financial statements due to a lack of supporting documentation, leading her to issue the disclaimer.

PAC chairperson and HOPE party leader, ‘Machabana Lemphane-Letsie, railed against the LEC implying it had become a national embarrassment.

She was flanked by her National Assembly colleagues including Mr Mapesela, Basotho National Party (BNP) leader Machesetsa Mofomobe, Basotho Action Party (BAP) leader, Professor Nqosa Mahao, main opposition Democratic Congress (DC) lawmakers Thabiso Lekitla and Mootsi Lehata, as well as All Basotho Convention (ABC) and Lesotho Congress for Democracy (LCD) proportional representation (PR) parliamentarians, Montoeli Masoetsa and Mamello Phooko respectively.

Deputy Auditor-General, Paul Letlela, told the PAC that significant discrepancies existed in the LEC’s financial records.

“The records and financial statements do not correspond,” Mr Letlela said. “There were large unsupported journal entries without evidence of what was being corrected, which is unacceptable in any financial environment.”

Of particular concern was the breakdown of the M568 million, described by Mr Letlela as journal entries that appeared as negative balances without proper authorization.

“It is not clear what happened to the M568 million because the transactions were not authorised…,” Mr Letlela added. “This indicates a systemic failure to maintain adequate financial controls.”

“The management was unable to explain these transactions and provide documents when demanded,” Mr Letlela said, highlighting the failure of LEC to authenticate its financial transactions.

Acting Managing Director Ntsie Maphathe and deputy chairperson, Batalatsang Kanetsi, said the huge volumes of journal entries could have hindered proper oversight. Their failure to provide credible answers incensed the PAC members, who asked them to return with verifiable records this week.

The Sunday Express interviewed Mr Letlela after the PAC proceedings. The Deputy Auditor-General expressed concerns over the lack of supporting documentation for transactions, including receipts and invoices, as well as the absence of authorized journal entries. Money was transferred between accounts without explanation, he said.

Mr Letlela also highlighted the issue of junior staff making unsupported changes to the accounting records without the required authorization from the head of finance.

“This lack of oversight led the Auditor-General to issue a disclaimer…, as there was no evidence to support the additions, deductions, and overall changes to the financial statements,” Mr Letlela said.

Mr Letlela expressed concern that the parlous state of the LEC’s accounts could result in the loss or misuse of funds as the management was unable to provide the necessary documentation to support transactions.

Ms Lemphane-Letsie  explained that the Auditor-General had approached the PAC for help after repeatedly failing to obtain the documents she was seeking from the LEC to do her work.

Thursday’s meeting had thus been a culmination of her cries for help.

Ms Lemphane-Letsie said the Auditor General’s report confirmed the entrenched rot at the LEC. The utility had failed to put its house in order.

She said the committee could not just walk along with the LEC’s promises to fix things in future. It wanted accountability now.

Mr Mapesela said it was high time all the people responsible for the mismanagement and rot at the LEC were arrested and held accountable.

The LEC needed to explain why it could record such a huge figure of transactions without supporting documentation.

Substantial amounts of public money were being pilfered when the economy was in the doldrums.

It was high time, the DCEO and the police rose to the occasion and did their work. Mr Mapesela warned that if the responsible people were not arrested, “this issue will continue to be discussed year after year”.

He stressed the need to support the Office of the Auditor-General, failing which it risked being regarded as a “toothless dog”.

In response to the criticism, LEC’s Acting Head of Finance, Lintle Thamae, attempted to defend the company, claiming that unauthorized journals were a result of their financial systems being outdated and disconnected.

But Deputy Auditor-General Letlela stood his ground, stating:  “We cannot rely on unauthorized documents……When oversight diminishes, junior officers can alter records as they see fit.”

Ms Lemphane-Letsie demanded the LEC produce all prior documents asked for by the Auditor General and present them before the PAC this week.

The LEC has for long been plagued by allegations of mismanagement. It remains in turmoil after its Managing Director, Mohlomi Seitlheko, and the entire executive management team were suspended on 12 March 2025 for an initial period of three months.

Other suspended executives are: Corporate Secretary Attorney Khotso Nthontho, Head of Corporate Services Moipone Mashale, Head of Strategy and Growth Limpho Mokhesi, Head of Information Technology Sakhele Mapetja, Head of Finance ‘Makabelo Matsoso, Head of Customer Experience Lebohang Mohasoa, Head of Legal, Risk and Compliance Selebalo Ntepe, Head of Internal Audit Thato Matsoso and Head of Operations Serolo Tikoe.

They were suspended pending a promised forensic investigation into suspected maladministration at the parastatal.

The forensic probe has nonetheless not yet been started while the three month period of suspension for the executives will lapse shortly. The LEC is yet to explain what will happen to the suspended executives in light of the delay of the forensic audit.

Many of the allegations of corruption and maladministration at the LEC predate Mr Seitlheko’s appointment.  He was appointed in March 2024.