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MKM case stalled by dirty tricks

Tefo Tefo

MASERU — Dirty tricks this week scuttled court proceedings that were meant to decide the fate of the troubled MKM which was closed down for running a pyramid scheme.

This means over 300 000 depositors have to wait a little longer to know whether or not they will recover the monies they invested in Simon Thebe-ea-khale’s Ponzi scheme.

South African judge Justice John ‘Musi, hired to handle the case after local judges recused themselves, was supposed to start hearing the liquidation case on Monday.

Instead, he ended up dealing with new applications brought by trustees linked to MKM.

The hearing could not proceed on Monday because a former MKM manager, Tšeliso Manyeli, and nine other people made an urgent application seeking to be enjoined in the case.

When the case resumed on Wednesday, Justice ‘Musi dismissed Manyeli’s application and said the reasons for his decision would be revealed later.

But the drama had only started.

On Thursday the court had to deal with an interim court order brought by 2020200 Trust Fund, another entity related to MKM.

The 2020200 Trust Fund had obtained an order on November 19 seeking to stop the hearing.

The interim order said the liquidation case should not be heard because MKM needed time to persuade more “investors to sign cessions and agreements, and make a list of those investors and the amounts owed to each”.

It also said the 2020200 Trust Fund should be given a 90-day grace period to gather investors’ support and compile its list so MKM can pay them.

The temporary order was granted by High Court judge Justice ‘Maseshophe Hlajoane.

The interim court order was supposed to be argued on December 6 but lawyers representing the Central Bank of Lesotho filed an application seeking the issue to be addressed this past Thursday.

Justice ‘Musi agreed and he ordered that the argument would be heard on Friday because it was already late.

But before agreeing to hear arguments on Friday, Justice ‘Musi noticed something curious about Justice Hlajoane’s interim order. 

He noticed that while the 2020200 Trust Fund’s notice of motion indicated that the application would be moved on November 19 at 2:30pm, the respondents were only served at 3pm.

Apparently the last respondent was only served at 4pm.

By that time the interim order had already been issued.

Justice ‘Musi said he would investigate the authenticity of the order which he said had some discrepancies.

“I think I will have to call my sister Hlajoane J’s judge’s clerk to give evidence on what actually transpired on Friday,” Justice ‘Musi said.

The Sunday Express can reveal that Justice Hlajoane’s clerk has since written an affidavit detailing what transpired on that day.

The lawyer representing the 2020200 Trust Fund, Advocate Ranale Thoahlane, then told the court that he would not be available on Friday because he had another case in the Labour Appeal Court.

When the judge rejected his excuse, Thoahlane backed down and promised that he would make an arrangement to come on Friday.

Come Friday, Thoahlane was nowhere to be found.

The court was later told that he had called in sick. 

That meant the case had to be postponed to December 6 as the interim court order had initially suggested. 

When the court reconvenes on December 6, the central bank’s lawyers will challenge the authenticity of the interim court order.

Another argument will also be on the merits of the application which 2020200 Trust Fund used to obtain the temporary order.

The central bank’s lawyers will argue that the application is not only weak on merits but also lacks urgency.

The Sunday Express saw the heads of argument that Advocate Chris Edeling, the central bank’s lawyer, is going to use to challenge 2020200 Trust Fund’s application.

“Applicants appear to be a front for Thebe-ea-khale, simply repeating his stale old attitudes based on wishful thinking,” Edeling says.

The 2020200 Trust Fund’s trustees include Advocate Makhetha Motšoari, MKM director Mothofeela Ramakatsa, Thaba-Bosiu principal chief Khoabane Theko and one ‘Majane Poea.

If the order is confirmed it means that the liquidation case against MKM will not proceed.

Nearly 300 000 Basotho have their monies locked up in MKM after it was shut down by the central bank in November 2007.

An audit revealed that of the M400 million that MKM took from depositors only M100 million could be recovered.

This means that if MKM is liquidated depositors are likely to get only 25 lisente for every loti they invested.

Yet the figure could be much less than that if the administrative costs of the liquidation are included.

The liquidators will also get their commission from the amount raised in the sale of MKM’s total assets.

Also, any court case that is brought by a depositor against the company will have to be defended using the investors’ funds.

The Court of Appeal and the High Court have already ruled that there was nothing wrong with the central bank’s decision to close MKM because it was operating banking and insurance businesses without licences.

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