MASERU — Finance Minister Timothy Thahane says there is no way the MKM saga can be resolved by side-stepping legal proceedings and staying a liquidation case before the courts.
MKM is facing liquidation after the company was shut down by the Central Bank of Lesotho (CBL) in 2007 for running financial business without a licence.
However, the liquidation case has been a “hot potato” in the High Court with one senior judge saying it was a sensitive issue that needed a political solution.
Recently it also emerged that cabinet had directed that MKM be allowed to pay its depositors and creditors after the company claimed it had the money to do so.
CBL governor Moeketsi Senaoana however shot down the directive saying liquidation was the only way to resolve the MKM issue.
About 400 000 depositors — nearly a quarter of Lesotho’s 1.8 million people — had their money locked up in MKM when it was shut down.
MKM has submitted a report to Thahane in which it claims it owes its depositors M165 million, not the M400 million that the international audit firm PricewaterhouseCoopers (PWC) says the company had collected from its depositors.
The CBL hired PWC to investigate MKM operations after the central bank accused the company of running illegal insurance and banking businesses through its investment schemes.
PWC said MKM was insolvent because its assets could only amount to M100 million yet it owed its depositors up to M400 million.
Thahane last week told the Sunday Express the CBL and MKM had to meet over the disputed figures.
He however said whatever the outcome of the meeting the liquidation case should continue in court.
“The issue is to reconcile figures between the two reports,” Thahane said.
“I will have to get the central bank and MKM together to compare figures so that we can reach some agreement.
“It is that agreement that will be presented in court because the case is still in court.”
The minister said Senaoana had advised him that the MKM case could only be resolved through liquidation.
Senaoana’s letter to Thahane had stoked speculation that cabinet and the CBL were sharply divided over how the MKM saga should be resolved.
“The central bank governor is the government’s advisor,” Thahane said.
“The governor was just responding by way of giving advice on how to go about the issue.
“He was not challenging any government directive because there was no directive in the first place.
“Cabinet was only discussing and during the discussion cabinet merely said if (Simon) Thebe-ea-Khale says he has money to pay his depositors why can’t he be allowed?”
Thebe-ea-Khale is MKM’s managing director.
“The central bank said there was no way MKM could pay unless it goes for liquidation,” Thahane said.
“The liquidation principle says all creditors should be treated equally.
“Basically that is what the governor has said in his letter to the minister.”
Thahane said it would not be wise to allow Thebe-ea-Khale to use his own records to pay out his depositors without considering the PWC report.
“If you take only Thebe-ea-Khale’s list he might leave out other depositors,” he said.
“If others are left out who will pay them?
“The one who might have given the directive would be liable for payment to those that would have been left out.
“Therefore, I will have to get the central bank and MKM together to reconcile their figures to reach an agreement which could be presented in court.”
Thahane could however not say when the central bank and MKM would meet to reconcile the figures.
He said reconciling the figures would not be hard.
“It will be an easy exercise because we will compare the list of people with the figures that appear in both reports,” Thahane said. “It is easy to agree.”
In the meantime, the liquidation case is still pending in the High Court with no indication when it would proceed.
High Court judges are however reluctant to handle the case.
A senior High Court judge who spoke to the Lesotho Times a fortnight ago said efforts by the CBL to liquidate MKM through the courts must be stayed and the government should be encouraged to bail out the company’s depositors.
The judge was not named, but he is one of the six judges who have handled the case since it started in started in November 2007.
He said he had always felt that “MKM was a political case and not a legal one”.
In just four months three judges have recused themselves from the MKM case.
Justice Tseliso Monaphathi quit the case in April saying one of the MKM directors had lent him the company’s car when his official Mercedes-Benz broke down.
He also said he had known the director for more than 20 years and at one time MKM had given his son a job when he was on vacation.
Justice Lisebo Chaka-Mokhooane, who took over the case from Justice Monaphathi, quit the case in June after alleging that someone had tried to influence her.
She said she had received a nocturnal visit from an emissary of MKM boss Simon Thebe-ea-Khale.
Justice David Lyons, an Australian judge seconded to Lesotho by the Commonwealth, who was seen as a neutral judge in the long-running MKM case, also recused himself late last month.
He is understood to have said he feared a backlash if he ruled that MKM should be liquidated.
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