Keiso Mohloboli
THE Lesotho Electricity Company (LEC) has, for close to a decade, been a haven for rampant frauds and corruption which have not only hindered effective service delivery but cost taxpayers tens of millions of maloti.
This is revealed by the LEC’s Internal Audit Department (IAD) in its latest report for 2017 which details the rot that has taken root at the parastatal. The report calls upon the new LEC board to send a strong message to the parastatal’s management that any forms of malfeasance would no longer be tolerated at the state owned utility tasked with the generation and distribution of power in Lesotho.
The new board is led by Refiloe Matekane, a former principal secretary of police in the first Thomas Thabane government which ruled from 2012 to 2015. Mr Matekane seems to have his work cut out and he seemed to admit as such in an interview yesterday.
Mr Matekane said he had inherited a mess at the LEC and would do all in his power to restore the parastatal to prudence and financial viability for the benefit of the country.
The confidential internal audit report, seen by the Lesotho Times this week, paints a picture of a dysfunctional organisation where poor corporate governance practices have allowed employees to increasingly engage in fraudulent activities that range from small misdemeanours to huge frauds and corruption of as much as M170 million.
The embezzlement of M170 million is suspected to be the cause of the assassination of the LEC’s head of internal audit, Thibello Nteso, who was shot and killed early last year after he raised the alarm bells over the corruption at the parastatal.
The indiscipline and corruption of LEC staff has resulted in them connecting electricity illegally to consumers in exchange of bribes. Bribes are also demanded for various reasons.
Some LEC employees have been paid huge gratuities in excess of M500 000 despite that they do not qualify for such benefits while illegal payments of as much as M400 000 have been made to lawyers.
The thick report outlines a plethora of poor corporate governance practices including the signing of employment contracts by the human resources manager without the approval of the managing director as required.
Revenues are routinely pilfered from LEC coffers, because of lack of controls, putting its viability at risk.
“Revenue is the most crucial asset to ensure the survival of the LEC in the long term,” part of the IDA report states, adding, “However, the current controls over revenue protection become a real cause for concern and calls for a strong message from the board to management to ensure business stability”.
“In our opinion, the LEC is exposed in the way in which it handles its revenue until such time that appropriate and effective controls are put in place.
“The IAD has identified that there is significant misalignment between the strategic plan, corporate risk register and corporate plan and this hinders the effective delivery of the overall company strategy.
“The LEC has been in the spotlight for quite a while over rampant fraud which seems to be escalating. It is the management’s responsibility to prevent and detect fraud while the IAD is expected to evaluate the risks arising from the fraud.”
The IAD also called for the appointment of external auditors to examine the affairs of LEC.
“The journey that the LEC has travelled since 2011/2012 has indicated that the entire organisation is engulfed in fraudulent activities, with the magnitude escalating.
“It has been observed through audits conducted in the period 2011/2012 to date that the internal control environment continues to weaken. This can be attributed to a very poor culture, no sense of responsibility and accountability resulting in non-observance of and overriding of controls. Based on this, the IAD is of the opinion that that the current state of affairs within the LEC cannot be dealt with through normal audits.
“The situation therefore warrants the engagement of external forensic experts who would do a thorough analysis and provide a holistic view of the root causes that resulted in this situation as it is evident that IAD initiatives only treat the symptoms.”
The report goes on to list some of the fraud cases that are currently before the courts of law including that of eight cashiers and sales agents. Some of the cases concern illegal connections, the issuing of free electricity and irregularities in the financial statements.
The IAD also notes that it scored some successes with the recovery of M5 million from the public who had illegally consumed electricity while making subsidised payments to some LEC employees.
The amount is however, still way below the M11 million that the IAD expects to recover in total.
The IAD says that in addition to recovering the M5 million, it has so far blocked 100 electricity meters over the illegal use of electricity and the exercise is on-going.
It says that as a result of its investigations some employees have been arrested and they are facing criminal charges in the courts.
One such investigation pertains to illegal connections in the Qoqobe area of Quthing which resulted in the arrest of an LEC employee only identified in the report as Mr Nkuebe.
Another LEC employee identified as Mr Lephatsoe was also arrested and faces charges for allegedly demanding a bribe from a customer to reduce the quotation for a service connection in Quthing.
The IAD also gave evidence in an ongoing disciplinary hearing where five LEC employees are accused of illegally providing free electricity to consumers and issuing service connection materials free of charge to one client in the Rothe area.
Commenting on the latter issue, the IAD said that “there is a high possibility that incidents of this nature have been occurring as this is just one example considering the lax controls over the service connection process”.
“There is a high possibility of collusion among LEC staff from the planning and projects department, the allocation committee and stores department. The illegal transaction had gone through all the process and none of the personnel in the whole process who acted as the control managed to pick up such an abnormal transaction.”
The affairs of LEC have been shrouded in controversy with the family of the company’s late head of internal audit, Thibello Nteso, saying that he was probably murdered to frustrate his probe into an alleged embezzlement of funds totalling in excess of M170 million at the state-owned power utility.
Mr Nteso was shot and killed on the night of 6 February 2017, allegedly by two police constables who were guarding the residence of former Police Commissioner, Molahlehi Letsoepa, in Maseru West.
Early this year, the deceased’s younger brother, Tankiso Nteso told the Lesotho Times that his brother had confided in him that he had been handling a big case of embezzlement of funds from LEC coffers involving more than M170 million.
The IAD alludes to the death of Mr Nteso in the report, saying that “the IAD is under-capacitated following the untimely death of the Head of Internal Audit”.
The IAD’s report as well as Mr Matekane effectively confirmed the embezzlement of the M170 million.
Mr Matekane, the new LE chairman, last night said that his board found numerous irregularities at the LEC after their appointment early this year.
“What captured our attention as the Board were the numerous irregularities that were reported in the internal audit reports. The external audit reports also indicated that most of the issues highlighted by the internal audit were not addressed by the management of LEC and that contributed in the weak control environment.
“One of the irregularities reported in the audit reports was the overriding of controls where the former General Manager Finance effected in the journals in excess of M170 million without authorisation from the higher authorities.
Such journals did not have corresponding entries, did not have the source documents, did not have narrations and were not disclosed to the external auditors during the review of the financial statements of LEC.
“Following the numerous irregularities, the board strongly feels that there is a need to bring stability to the LEC. It is against this background that the board was compelled to make a decision to engage a forensic expert to identify the root causes with a view to strengthen the controls and mitigate the emerging risk of fraud and corruption facing the company,” Mr Matekane said.
