As angry investors take to the streets and demand the business’ liquidation to be stopped
Scores of “MKM Concerned Nationals” on Friday marched from Setsoto Stadium to LCS Grounds where they submitted a list of their grievances to Prime Minister Thomas Thabane.
The crowd sang and danced as it made its way across the city before petitioning the premier to stop the liquidation of Simon Thebe-ea-Khale’s MKM, in which they invested thousands of maloti before the company was shut down by the Central Bank of Lesotho (CBL) in 2007 for operating illegal banking and insurance businesses.
A CBL-commissioned investigation conducted by South Africa’s PricewaterhouseCoopers, also revealed of the M400 million invested by depositors, MKM— comprising MKM Marketing Ltd, Star Lion Group Ltd, Star Lion Insurance Ltd and Star Lion Gold Coin Investment (Pty) Ltd—could only account for M100 million in assets that included buildings and vehicles.
The CBL then applied for MKM’s liquidation in the High Court, citing the company was insolvent because its liabilities were much more than its assets. The application was granted on 18 May 2011, and upheld on 21 October 2011 by the Court of Appeal after the company had challenged the ruling.
The judgment paved the way for MKM’s liquidation, leaving the estimated 400 000 depositors who had expected to reap super profits from Thebe-ea-Khale’s Ponzi scheme—a fraudulent venture where the operator pays unrealistic returns to investors from capital paid by new depositors, rather than profit earned by the proprietor—stranded and unsure if they would ever recover their funds.
But while MKM’s six buildings in Maseru were set to go under the hammer at Lesotho Sun on 17 November 2014, the auction was disrupted by an angry mob which stormed the hotel and beat-up the coordinator of the sale, Stefan Carl Buys.
However, the auction went ahead in Ladybrand, South Africa, later that day, with five of the six properties being ‘sold’ while the other was withdrawn due to “legal complications”.
But in a new twist to the saga, the High Court on Wednesday last week cancelled the auction, effectively nullifying the 17 November sale, pending the finalisation of a new application 11 depositors had filed before the court the same morning.
Now the “MKM Concerned Nationals” want Dr Thabane to intervene by “withdrawing MKM cases from the courts, and deal with this issue in a dignified manner to benefit Basotho”.
The petition, which Dr Thabane received in person, reads: “Honourable Prime Minister Motsoahae Thabane; as members of the MKM, we are deeply concerned about the way MKM issues have been handled.
“It has been over seven years now since the MKM saga started, and we have sat back and watched helplessly as our power, our money and our assets were being abused by those in authority. Ntate, the MKM saga is very long and annoying. It seemed everyone in power interpreted this issue the way he or she liked, and ended up making wrong decisions about it. At the end, we are the ones who suffer the consequences.
“From you Ntate, in your capacity as the prime minister, we are asking for your intervention and to deal with this issue in a way that will bring a lasting solution. Many people now have psychological problems; they are ill; others are on wheelchairs; others died; our lives are now a mess. What hurts most is that while decisions were being made on MKM, we were being sidelined.
“People who claim they are doing this on our behalf, only seem to be pocketing our monies and enriching themselves in the process. Every month, rental monies are collected from MKM buildings and taken by provisional liquidators that we are told are in charge of the properties pending their sale.
“Honourable, in your capacity as prime minister in the coalition government, we, as MKM owners, investors and creditors, request that the liquidation of MKM be dismissed. Release the property to us. We will appoint our own Board of Directors to administer MKM issues for our benefit. And because the government is the complainant in this matter, we ask you to withdraw MKM cases from the courts.
“The courts, with their provisional liquidators, are not doing us any good. The liquidators are the only ones benefiting from this. We humbly request that this matter be treated with sensitivity and the urgency that it deserves. Have mercy for this nation.”
Dr Thabane, who looked pensive as the petition was being read to him, then briefly addressed the group.
“I appreciate that you came to me with your concerns about MKM, and as government, we are going to do something about it, soon. But I also want to assure you that Thebe is my personal friend, not the liquidators. I don’t even know them and where they come from.”
Meanwhile, before Dr Thabane came to receive the petition, Mr Thebe-ea-Khale had to field several uncomfortable questions from the demonstrators.
Asked what exactly went wrong that MKM ended-up in such a mess, the beleaguered MKM boss said: “What happened to MKM, from the beginning, was based on pure lies. Some people in authority lied about my company because they wanted to benefit from it. They went to the courts claiming that I owe 400 000 people monies and that when they assessed my company, they had found that all the assets I had only constituted M100 million. Those were all lies. We are where we are today because some people were smart enough to convince the courts with their lies.”