FOUR ministers namely – Prince Maliehe, Chalane Phori, Mokoto Hloaele and Machesetsa Mofomobe – have now been named in a M26 million tender scam involving controversial Chinese businessman Yan Xie and four local companies that were early this year awarded tenders to supply the government with park homes.
The scam is the subject of investigations by the parliamentary Public Accounts Committee (PAC).
Messrs Maliehe (Public Works), Phori (Small Business Development, Cooperatives and Marketing), Hloaele (Education and Training) and Mofomobe (Home Affairs) have been sucked into the scam after the PAC heard that some of the companies awarded the tenders had approached them to intervene in their standoff with Mr Xie, who now stands accused of defrauding them. But the ministers now stand accused of doing nothing. In fact, the PAC accuse them of committing a crime by concealing fraud because of their failure to report the whole matter to the police once they had become aware of Mr Xie’s alleged fraud. The law requires every citizen to report any criminal offence to the police once they become aware of it.
Already implicated in the scam is Home Affairs Principal Secretary ‘Machabana Lemphane-Letsie, who is alleged to have directed the four firms awarded the lucrative tender to go to Mr Xie for funding to enable them to complete their respective parts of the tender.
However, Ms Lempane-Letsie vehemently denied the allegations when he appeared before the PAC last week.
The fraud scam is centered on allegations that the four companies awarded the tender were paid a total of about M26 million by the Ministry of Home Affairs on 22 March 2019. However, the money was immediately fraudlently transferred into Mr Xie’s accounts by the controversial businessman’s employees. It is alleged that Mr Xie – popularly known as John – had access to the four companies’ accounts after he had helped them to fund the tenders. He had funded them on the basis that he would control 51 percent equity in each of the companies as well as have access to their bank accounts to protect his investments.
But then payments were finally made to the companies, Mr Xie swept the account leaving them with nothing. One of the companies involved Legends Construction Pty Ltd hadn’t even completed the work before it got its payment. Legends Construction has since told the PAC that it was not aware that it had been paid. The company’s directors say Mr Xie had fraudulently made a claim on its behalf without its knowledge and then went on to transfer about M7 million from its bank account into the account of Mr Xie’s own Teboho Construction firm. This had been easy to achieve since Mr Xie had access to the Legends Construction account.
Mr Xie allegedly then also transferred funds from the bank accounts of Selemela Steel Works and Construction, BT Group and L & Kiti, the other three companies awarded the park homes contract.
According to new information given to PAC members this week by a local commercial bank, all the transfers were done on the same day on 22 March 2019 and totaled about M26 million. The commercial bank ‘s report to the PAC, seen by the Lesotho Times, clearly tabulates the amounts withdrawn from each of the four companies’ accounts into Mr Xie’s Teboho Construction account.
The commercial bank says in its own analysis and view the four companies were merely used as fronts for Mr Xie’s Teboho Construction.
The bank said in its report to the PAC that Teboho Construction also operates an account with the same institution under the name First Choice Supermarket. The Lesotho Times was asked not to mention the name of the commercial bank.
After the four companies’ accounts had been emptied by Mr Xie, they confronted him wanting to know why he had scammed them.
Legends Construction director ‘Maamohelang Letsie said Mr Xie bluntly told them that they would not get a cent from him as the venture had run a loss. Ms Letsie said they immediately demanded invoices to determine whether or not they had indeed made a loss.
“The invoices that he claimed were for park homes included those for factory sewing machines, tissues, cloths, pots and groceries for his supermarket. There were assessment fees of around M200 000 and M100 000. Upon inquiry, we were told that assessment fees were in fact bribes. He (Mr Xie) said he had paid bribes to the Ministry of Home Affairs. He didn’t mention names…,” said Ms Letsie. The PAC has already been told that bribes has been paid in exchange of payment for work not done or completed.
The other three scammed companies had agreed to challenge Mr Xie in court but are said to have abandoned that course, allegedly at the behest of Ms Lempane-Letsie. It’s not clear how they intend to recover their losses.
Monaheng Letsie, a director with Legends Construction, told the PAC that they had written to Minister Hloaele, who was then Minister of Home Affairs, drawing his attention to how they had been defrauded. Mr Hloaele, who has since been reshuffled to the Education and Training ministry, subsequently called the aggrieved Legends Construction directors to a meeting, also attended by his deputy Mr Mofomobe.
“Yes, it is true that we wrote to the Minister of Home Affairs on 8 August 2019. He invited us for a meeting together with his deputy (Mr Mofomobe). I gave them the whole story and they said that they were surprised because ‘m’e PS had told them that the work had been completed and the site handover had been done… They were then surprised that I still had the keys for the sites,” Mr Letsie said.
Mr Letsie said despite bringing their plight to the minister and his deputy, they hadn’t got any help from them. It is that very same point that now bothers the PAC. PAC members say once the minister had got wind of the story of Legends Construction and how it had been defrauded by Mr Xie, the minister and his deputy should have immediately acted, particularly in light of evidence that their PS was being accused of being complicit in all of Mr Xie’s alleged illicit behavior, especially for paying for work that had not been completed.
Contacted for comment this week, Mr Hloaele confirmed that he met with the Legends Construction directors over the matter but said he was reshuffled from the ministry shortly after that meeting. He could thus not have taken any action. He rejected accusations that his action amounted to condoning corruption and fraud.
“In the short spell that I had been there (Home Affairs), the issue came to my attention. They approached me through my then deputy minister (Mofomobe) and we called them for a meeting. While I was in the process of addressing their grievances, I was transferred to another ministry.
“I had not even started my own investigations into this matter. I had not even talked to the PS about the allegations that were levelled against her nor had I called John for a meeting,” Mr Hloaele said. He says there is thus no basis of accusing him of any wrongdoing as he had never sought to protect anyone. Mr Mofomobe has been repeatedly refusing to comment.
PAC members told this publication that they had also been made aware that Mr Xie’s alleged fraud had been brought to the attention of Ministers Phori and Maliehe, whose help was sought to try and get Mr Xie to account.
The two ministers had nevertheless done nothing and the PAC now wants them censored for not reporting Mr Xie to the police.
Minister Phori confirmed to the Lesotho Times last night that he had been approached by Legends Construction but said he had asked them to get more information to enable him to assist. He too denied any wrongdoing saying that employee never got back to him. He could not recall the name of the employee. He too does not admit he has a case to answer for he could not have rushed to the police without any proper information.
Minister Maliehe sent an automated response promising to call back but he did not do so. He also failed to respond to text messages send to him for comment.
Another Legends Construction director Bataung Thulo said it was clear that all the ministers to whom they had turned for help, including Hloaele, Mofomobe and PS Lemphane-Letsie herself were terrified of Mr Xie, presumably because of his close connections to influential people.
A PAC member was irate with Mr Xie accusing the Chinese businessman, who has since become a naturalized Mosotho, of enriching himself at the expense of Basotho. He said Mr Xie was using his proximity to the current government “to get away with murder”. He said the PAC would get to the bottom of the matter. It was plain wrong for an individual to pocket R26 million in the circumstances under which Mr Xie is alleged to have done in this case, he said.