Lesotho Times

Malie seethes over block farmers

MASERU — Former trade minister Mpho Malie is breathing fire over the embezzlement of state funds by block farmers.
Malie, who resigned from the government in 2006, has since written an angry letter to Standard Lesotho Bank questioning why the bank has continued to give credit to farmers who have defaulted on their previous loans.
The letter, dated February 9, 2010, was addressed to Standard Lesotho Bank managing director, Roger Snelgar, and was copied to the governor of the Central Bank of Lesotho, Moeketsi Senaoana, as well as the chairman of parliament’s public accounts committee, Vincent Malebo.
Malie says he was writing the letter as a “concerned citizen and taxpayer”. 
In the three-page letter Malie makes scathing allegations about the scheme’s mentors and questions the bank’s lending prudence when it continued to give credit to defaulting debtors.
Although it doesn’t mention names, Malie’s letter is particularly damning in its description of the role played by the mentors in the block farming loan saga.
When the programme started in 2006 each group of block farmers had a mentor.
Finance Minister Timothy Thahane was mentoring a group from his home village in Mpharane.
The late agriculture minister Rakoro Phororo was mentoring the other group while Ralechate ‘Mokose, the forestry minister, was helping the other group.
Malie’s letter alleges that the lending arrangement was between the bank, the farmer and their mentor.
He says the M5 180 500.17 was disbursed to the “seven block farmers, with one of the mentors carrying 66.09 percent of the national loan”.
He however does not mention who the mentor is but alleges that three of the mentors were all recipients of the loans but have never paid a cent. 
What angers Malie, according to the letter, is that the bank continued to give loans to the same people that had not repaid their loans.
“The biggest defaulter carrying 66.09 percent of the previous year loan, and another zero payment mentor defaulter, together with the three farmers were included as bank clients for the 2007/2008 summer cropping season,” says the letter.
“Over M16.43 million was disbursed to a mentor who had defaulted completely the previous year, and who was once more the greatest beneficiary of the disbursement,” he adds.
“Once more, during the 2008/2009 cropping season farmers and mentors, who had previously defaulted, were still given loans by the bank.”
Malie says he wants to know why Standard Lesotho Bank continued to extend loan facilities to the same bad debtors season after season.
“This state of affairs vis-a-vis Standard Bank Lesotho Bank is of great concern to me as a tax payer,” he says.
“If the mentors were to act as financial intermediaries-effectively managing subsidiary loan books that were funded by Standard Lesotho Bank, then there is a question of whether they were adequately licensed to carry out this business.”
He also wants to know how the mentors “end up becoming principal debtors themselves”.
He wants to know if Standard Bank Lesotho:  
● “Conducted a thorough due-diligence on all projects that were presented under the scheme before disbursing funds? Or were the loans disbursed without regard to normal risk management and credit control protocols — the view being that “after all Gol (government of Lesotho) carries all the risk” would the qualifications process have been more rigorous if it was Standard Lesotho Bank that bore all the risk?
● Take any measures when the projects failed to recover the debt from the principal debtors before turning to Gol to make good on the loans, or did Standard Lesotho Bank not bother to expend the time and energy, opting rather to simply go for the softer option of calling state guarantees?
● Respond upon realising that some of the applicants for the loan scheme were also senior Gol officials, did this not signal to the bank that this might be a money laundering scheme? After all how can an official effectively issue himself with state guarantee?”
He said he was particularly concerned that:
● There is reason to believe that in some instances (involving Gol officials) no farming was done. Block farming was actually a convenient pretext against which the state could be defrauded by using a commercial bank to launder the funds.
● There was no due diligence done by the bank before approving loans. If there had been, then Standard Lesotho Bank should have raised concerns about the obvious conflict of interest involving Gol officials. This is the first suggestion that Standard Lesotho Bank may have been complicit in the scheme.
● When the loans were not repaid there was no audit to determine what could be salvaged from the projects and the principal debtors. The loans were simply written off and state guarantees were called. This further supports the idea that Standard Lesotho Bank may indeed have been complicit in the scheme.
● Standard Lesotho Bank continues to extend (higher levels of) funding to known delinquents (Gol officials) after the initial round of loans had failed so spectacularly. This again strengthens the idea that Standard Lesotho Bank was indeed complicit in the embezzlement and laundering state funds.
Malie also wonders “how these people were retained as mentors for further programmes even after showing dismal failure towards their responsibilities, a question that one poses both to the bank and guaranteeing party (Gol)”.
Malie this week confirmed that he had written the letter but could not elaborate further.
The Lesotho Times understands that Malie recently handed the letter to the public accounts committee to push them to investigate the matter.
Committee chairman Malebo on Tuesday said they were going to meet with Thahane to discuss the allegations made by Malie.
He said there will be a press conference to deal with the matter at around 11am this morning.
“I cannot comment because we have already met the owner of the letter,” he said.
Thahane, who is one of the mentors mentioned in Malie’s letter, said he had not borrowed any money under the scheme but was only assisting the block farmers “manage their books and with the procurement process”.
“There was never such a thing as money laundering and embezzlement. Because this was seasonal funding what would happen is that every time the farmers suffered a crop failure and could not service their loans the government will pay on their behalf,” he said.
“My group suffered a crop failure but they have continued to pay their debt. In fact as we speak now they are in the process of delivering some 2 000 bags of wheat to a local company. Soon they will be harvesting potatoes.”
Forestry Minister ‘Mokose said he never borrowed from the fund.
“I did not cultivate any field,” he said.
“I was only just a guarantor. I have the list of people from Ha-Molelle who owe. You can go to the Ministry of Agriculture and get the list for yourself.
“I have for a while now been persuading those farmers to pay back what they owe to the government. I also had them know that the government would take legal action against them if they fail to pay.
“I, ‘Mokose, will not be charged for anything because I do not owe the government.”

Lesotho Times

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