MKM saga takes yet another twist

MASERU — The MKM saga has taken yet another twist after a shareholder in one of the companies under the group approached the High Court this week challenging the appointment of two provisional liquidators.
The new application comes with the troubled MKM due to appear in the Court of Appeal tomorrow to seek a stay of execution of a May 18 High Court judgment which said the company should be liquidated.
‘Mabokang Mokhele, who is a shareholder in Star Lion Group with 200 shares, says the two provisional liquidators who were appointed by Acting High Court judge Justice John Musi on May 18 do not have the capacity to liquidate the company.
Mokhele’s lawyer, Advocate Koili Ndebele, in his certificate of urgency, says the High Court should hear the case on an urgent basis because the liquidators are threatening to dismiss the security guards of the Star Lion Group from work.
“Contrary to the provisions of the Companies Act the respondents are strongly engaged in the liquidation process of the Star Lion Group Ltd,” she said.
The case has not been set for hearing.
Justice John Musi in May appointed Chavonnes Badenhorst from St Clair Cooper in Bloemfontein and Daniel Gerhardus Roberts from Webber Newdigate as joint liquidators to liquidate MKM.
Justice Musi appointed the two lawyers as provisional liquidators after he ruled that MKM companies should be liquidated because they were insolvent.
The companies are MKM Marketing Ltd, Star Lion Gold Coin Investment (Pty) Ltd, Star Lion Group Ltd and Star Lion Insurance Ltd.
Mokhele in her affidavit says the appointment of Roberts and Badenhorst is flawed in law.
She says she is challenging the appointment of the provisional liquidators because she wants to protect her interests in the company.
“I have been advised that liquidation of a company is done in the best interest of members and creditors.
“Being a member of the Star Lion Group Ltd, I am therefore entitled to make this application in my capacity as such for any reason what so ever in order to protect my interest in the liquidation process,” she said.
Mokhele says Justice Musi acted contrary to the provisions of the Companies Act of 1967.
She also wants the High Court to order a stay of execution of its order to liquidate MKM, specifically Star Lion Group Ltd.
A similar application where MKM wanted the High Court to order stay of execution of its May 18 judgment was dismissed on June 16.
MKM had said the execution should be stayed because it had appealed against the High Court judgment.
Now Mokhele wants the execution of the same order to be stayed so that she could argue against the appointment of Roberts and Badenhorst as the provisional liquidators.
“I am further advised and believe same to be true that the court in appointing the respondents as liquidators has acted ultra vires the Companies Act.
“Any appeal so laid may therefore not address this issue hence I remain prejudiced,” she said.
She also challenges the interim order which the liquidators obtained on May 20 to extend their powers.
Mokhele says the liquidators did not have legal capacity to make an application in the High Court for extension of their powers because they were not properly appointed.
The liquidators should have been appointed by the Master of the High Court not Justice Musi, she argues.
“Firstly because they have never been appointed as liquidators and secondly that even if they were appointed as such by the court they were incapable of acting as liquidators of my company or any of the companies in liquidation because they had not by then paid security in terms of section 241 of the Companies Act.”
She says it is even worse for Badenhorst because he does not have a local address to qualify to liquidate a local company.
Mokhele, who claims she got mentally ill after MKM was closed, says Star Lion Group should not be included among the MKM companies that should face liquidation because it is still solvent.
“It was wind up because it is alleged that it was trading as an insurance company.
“This is on its self prejudicial to me because though that may be the decision there was no allegation and or evidence that it ever continued to do that business after being interdicted by the Court of Appeal in Star Lion Group Ltd and others V Central Bank of Lesotho (Commissioner of Insurance) C of A (CIV) No. 12/08, hence no justification for liquidation,” she said.
She says Star Lion Group liabilities are far below its assets. She says the total value of the assets is approximately M42 934 236.42 while its liabilities amount to M10 940 400.
“The available liquid cash and the income of the company can assist it to settle its liabilities in no time.”
MKM faces liquidation because it could not account for M300 million of the M400 million it collected from depositors.
MKM approached the Court of Appeal after Justice Musi refused to stay execution of his judgment last month.
The company had approached the High Court seeking an order to stop the liquidation process pending its appeal against the May 18 ruling which said the company should be liquidated so its nearly 400 000 investors could be paid their dues.