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Whither Lesotho Bank?

Caswell Tlali

MASERU — When will it end?
That is the question the Ministry of Finance and Development Planning is beginning to ask of the liquidation of the Lesotho Bank which had been dragging on for the past eight years.
Since September 2001, a team from KPMG and Harley & Morris has been chasing after Lesotho Bank’s debtors.
Many have paid and others have forfeited their houses and properties to settle their loans to the bank that voluntarily shut down in 1999.
But the government — the only shareholder in the bank — is becoming increasingly worried about the time that the liquidators have taken to finalise the matter, a source says.
And there are now hushed grumblings within the finance ministry about the delay.
Sources close to the matter told the Sunday Express that the ministry was now “planning to take active measures to get the liquidation completed or at least get a full report on what has been achieved so far”. 
The ministry wants to know when the liquidators will finish the process or whether the liquidators have been filing regular progress reports with the Master of High Court as required by the law.
Timothy Thahane’s ministry also wants to know the amount the liquidators have collected from debtors and how much of that amount has been paid to the government as the sole shareholder.
There are more crucial questions like how long it will take the liquidators to complete the job and how much commission has gone to them since 2001.
Harley & Morris this week refused to answer questions from the Sunday Express and refered all inquiries about the liquidation to KPMG.
When contacted for comment, KMPG said “we don’t talk to the press”.
However files at the Master of High Court, seen by this paper, give a glimpse of what has been happening in the bank for the eight years it has been under liquidation.
The first report seems to have been filed in December 2001 and the last report available in the files that this paper saw was made in May 2007.
There does not seem to be any other report thereafter or if there is then it yet to appear in the Master of High Court’s files.
The 2001 report lists the people that are owed.
It shows that four senior managers were owed M15.4 million by the bank.
There were also 118 employees that were claiming terminal benefits.
The amount the workers were claiming was not specified.
It also shows that the Lesotho Electricity Corporation (LEC) was claiming M19 million.
The report however says the liquidators had rejected a M8.9 million claim from a company called Lesotho Bank (1999) Limited.
Another creditor was a company called Expertype Secretarial Service which claimed M4.5 million but was not paid because the liquidators said they had no “previous knowledge of this matter, which allegedly arose in 1998”.
“The company did not lodge the necessary creditor affidavit and had never submitted any documentation in support of its claim,” the liquidators reported.
The liquidators said the deadline for submission was July 31 2001.
There was also an unspecified disputed mortgage loan balances for four customers.
Also, an amount of M218 806 account settlement was disputed.
When the liquidation process began a former manager,
Mahlomola Khabo, who had won an unfair dismissal case was battling in court for payment of M3 234 153.
The liquidators rejected his claim alleging that he had failed to provide an affidavit to support his application.
The bank was forced to settle out of court for a M26 349 957 pension fund for its 118 employees.
By the end of 2006 the liquidators reported that the total liabilities to creditors were only M227 560.
In 2007 the bank’s liabilities to creditors was zero, which means Lesotho Bank owed no one any money.
The liquidators’ report shows that millions were collected from various debtors since 2001.
For instance, the liquidators in 2001 collected M3 236 891 from the Lesotho Hotels Association (in liquidation) which had rented some of the bank’s buildings.
The amounts transferred to the government of Lesotho totalled M150 400 000.
The report says M15 341 852 claimed from Nedbank South Africa was disputed.
There was also M18 746 824 labelled as “doubtful debts”.
Other debts made up M195 081.
Part of the bank’s fixed assets were buildings worth M23 676 142 at market value in 2001.
Its cash and cash equivalents from the Lesotho Bank (1999) Limited, Nedbank Lesotho and Standard Bank Group totalled M43 541 228.
Other assets were M88 247 worth of the King’s silver jubilee commemorative coins.
The report on property disposals as at January 31 2006 shows that Mafike House which used to house the bank along Kingsway Road in Maseru was still being transferred to the government.
Mafike House’s selling price was M4 803 000.
The Hotel Victoria Complex, valued at M13 456 647, was given to the government, as was Kingsway Cinema, valued at M649 000.
Molimo Nthuse Lodge, in Maseru’s mountainous region, was handed to the government as well.
A residential house in Happy Villa, Maseru, was sold for M375 000.
Duplex flats along Kingsway, valued at M1 583 000, were being transferred to the government in 2005.
Two staff houses in Leribe were sold for M268 267.
The Lesotho Highlands Development Authority bought Katse Housing for M729 157.
The Hilcon site in Maseru was sold for M717 990.
The Caravan Park, Quthing Commercial and Mokhotlong Commercial Parks had not been sold because the liquidators were waiting for the government’s instruction regarding disposal.
Thahane said he was still waiting for a report from the Lesotho Bank liquidators regarding the liquidation process.
“There should be a public report on the liquidation because the process is taking too long,” Thahane told the Sunday Express.
“It is true that the liquidators were not given a timeframe for completion of the liquidation but we all understand that it should be done in a reasonable time.”
But it seems the liquidators had prepared for this delay.
As early as 2003 one of the liquidators was already indicating that the process might take longer.
Anthony McAlpine wrote in one report that although the government expected the process to be completed within a “reasonable finite period” there were other issues beyond their control that might delay the liquidation.
“We are aware that the government of Lesotho would like the liquidation process to be brought to a conclusion within a reasonable finite period,” wrote McAlpine in a January 24 2003 report.
“It must be appreciated, however, that the finalisation of many key issues remains outside the control of the liquidators and such issues may therefore delay completion of the liquidation process.”

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