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New twist in MKM saga

Tefo Tefo

MASERU — The liquidation of MKM might have started but the battle is far from over.
The company’s directors have made it clear that they will fight to the bitter end.
They have since appealed against Acting Judge Justice John Musi’s May 18 judgment which ordered that the company be liquidated so its 400 000 investors can be paid their dues.
The Court of Appeal will only hear that case during a session in October but in the meantime the MKM directors want the liquidation process halted.
On June 16 Justice Musi rejected their attempt to stop the liquidation process pending the outcome of MKM’s appeal against the May 18 judgment in the Court of Appeal.
But now the MKM directors have taken the battle to another level.
This time they want the Court of Appeal to sit by Friday this week to hear their urgent appeal against Justice Musi’s decision to reject their application to delay the liquidation until October.
MKM is using rule 18 of the Court of Appeal Rules 2006 which allows urgent applications to be heard before the normal sitting of the Court of Appeal.
The application to the Court of Appeal was made on June 22.
MKM’s lawyers have since notified the Central Bank of Lesotho (CBL), the liquidators, the Master of the High Court, the Attorney General and trustees representing some investors that its appeal will be heard on Friday.
“Kindly take notice that an application will be made before this Honourable Court (Court of Appeal), on behalf of the Applicants/Appellants on the 8th day of July, 2011, at 9:30am or so soon as the matter may be heard for an order,” MKM says in its notice of motion.
“That the execution of the judgment of the court a quo, delivered on the 18th day of June 2011, per Musi, A J be stayed pending the determination of the appeal against the said judgment in C of A (CIV) No. 24/2011 pending before this Honourable Court.”
MKM says it wants the liquidation process delayed because it has prospects of success in the appeal against Justice Musi’s judgment which ordered that MKM should be liquidated.
Their argument is that Justice Musi erred when he rejected their application for stay of execution.
In his affidavit MKM’s managing director Simon Thebe-ea-Khale (pictured below) says the Court of Appeal must not allow the provisional liquidators to proceed with the liquidation process because they are also the subject matter in the pending case before the Court of Appeal.
He states that the High Court had no jurisdiction to appoint the provisional liquidators.
The correct procedure, Thebe-ea-Khale claims, is that Justice Musi was supposed to direct the Master of High Court to appoint the provisional liquidators.
He argues that the Master of High Court should have appointed the liquidators after submissions from creditors and contributors in terms of section 186 of the Companies Act.
Justice Musi, in his May judgment, appointed Chavonnes Badenhorst from St Clair Cooper in Bloemfontein and Daniel Gerhardus Roberts from Webber Newdigate as joint provisional liquidators.
Thebe-ea-Khale is also challenging the appointment of Roberts as one of the liquidators on grounds that he was involved in court proceedings that led to MKM’s liquidation.
“I also wish to aver that Mr Roberts cannot be appointed as liquidator regard being had to the fact that, among others, he was a representative of the first and second respondents (the Commissioner of Insurances and Trustees of the Investors Trust respectively) during the liquidation proceedings.”
“He cannot therefore be a liquidator of his own clients.”
“In such situation it cannot be seen that he will not be bias towards his clients against the members and contributors of the companies under liquidation,” Thebe-ea-Khale says.
He says the Court of Appeal should intervene urgently because the liquidators have already started demanding rentals from tenants occupying Agric Bank Building, a property owned by MKM.
“For the information of this Honourable Court the liquidators have through their agent, Du Preez Liebetrau & Co, already demanded payment of the rentals to their agent in their letter to the tenants of the third applicant/appellant (Star Lion Group LTD) dated 21st June, 2011 and have threatened to cancel their tenancy,” he said.
In that letter Du Preez Liebetrau & Co says rental for July should be paid to their offices by July 7 “unless you can provide evidence that other contractual terms apply”.
If MKM’s urgent application succeeds on Friday it means the liquidators will not be able to proceed with the liquidation process until October when the Court of Appeal makes a ruling on whether or not Justice Musi was correct to order the liquidation.
The CBL closed MKM in November 2007 for operating banking and insurance businesses without licences.
An audit report by PricewaterhouseCoopers, a South African audit firm commissioned by CBL to investigate MKM’s operations, revealed that the company could only account for M100 million of the M300 million it received from depositors.
The Court of Appeal and High Court have already ruled that MKM was an illegal operation.
About 400 000 people, nearly a quarter of the country’s 1.8 million people, lost their monies when the company was shut down.
Nearly four years on the people are still waiting for MKM to repay them.

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