THE Court of Appeal’s judgment on Friday has finally ended MKM’s court battle against liquidation.
The court ruled that the High Court was correct in deciding that MKM’s companies should be liquidated.
Yet it will be foolhardy for anyone to think that the battle is over.
The battle, we believe, has only just started.
There will be more bruising fights ahead, especially for the liquidators who will be given the unenviable task of tracing MKM’s assets.
It is now well-known that MKM can only account for the M100 million of the more than M400 million it received from nearly 500 000 investors.
The challenge for the liquidators now is to discover what happened to the other M300 million or so.
Getting Simon Thebe-ea-Khale and his fellow directors to account for this money will not be easy.
Because it was never run professionally from the start, MKM’s books are a mess. Its records are also in shambles.
There was a general disregard of good corporate governance principles that allowed a lot of cannibalism between MKM’s companies.
That is why it will be difficult to distinguish what each company owns and who are its creditors.
We already know that some of MKM’s assets like cars, buildings and land are in Thebe-ea-Khale’s name.
It will take a serious fight to get him to relinquish those assets.
Then there is the wealth that Thebe-ea-Khale amassed using investors’ funds.
There is no doubt that he will fight the liquidators tooth and nail to hang on to those ill-gotten riches.
He has already shown that if there is anything he doesn’t lack it is the will to fight.
Tracing the investors on the basis of MKM’s scant and inadequate records will be another challenge.
Many of them have probably died while some have lost documents to prove that they invested in MKM.
Our biggest worry is what might have happened to the MKM assets between November 2007 and now.
We will not be instilling fear among investors if we were to postulate that some of MKM’s assets could have been spirited away. The directors had ample time to achieve this.
First, it is important to remember that when the central bank closed MKM in 2007 Thebe-ea-Khale and his associates knew that their pyramid scheme had been discovered although they argued otherwise.
Secondly, it is also possible that even months before the central bank came with the axe the pyramid scheme was already collapsing under its own weight: the number of new investors was dwindling while the maturities to be paid out were galloping.
So even if the central bank had not moved in MKM was still going to collapse.
It is for these two reasons that we believe that some of MKM’s assets might have been looted over the past four years.
The liquidators must leave no stone unturned in the search for these assets.
They owe it to the MKM investors to find everything that was bought with their monies.
We feel for the investors because previous liquidations have taught us that the process of gathering and tracing the assets might take years.
It is going to be a long wait but they must be patient for MKM’s liquidation will not be an easy one.
Yet if there is anything we have learnt from the MKM saga it is that the central bank slept on the job and let down the people of this country.
We would not be in this mess if the central bank was vigilant enough to realise that MKM was a monster in the making.
By the time the bank decided to act MKM had captured nearly half a billion Maloti from 500 000 people.
The central bank must therefore take part of the blame for this mess.
It failed in its role as the watchdog of the financial sector’s stability and integrity.
The real victims of that ineptness, as we already know, are the depositors.
It is our hope that such mistakes will not be repeated.
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