Mohloai Mpesi
THE Lesotho Electricity Company (LEC) has failed to account for about M400 million in its financial records, drawing a scathing disclaimer from the Auditor-General for the financial year ended March 2023.
The disclaimer is contained in Auditor-General ‘Mathabo Gail Makenete’s Report on the Consolidated Financial Statements of the Government of Lesotho for the year ended 31 March 2023.
A disclaimer is issued when an auditor cannot obtain sufficient, appropriate evidence to form an opinion on financial statements.
The Auditor-General’s report makes damning findings, revealing that there is no supporting evidence for journals amounting to more than M400 million.
“We were not provided with evidence to prove that journals amounting to M408.9 million existed and have been authorised,” the report reads.
Ms Makenete’s report further discloses that during the financial year under review, the power utility’s financial records reflected a discrepancy of M37.9 million.
“There is a discrepancy of M37.9 million between the trade payables recorded in the annual financial statements and those reflected in the age analysis. Management was unable to provide an explanation for this significant variance.
“The financial statements report trade payables of M293.1 million, while the age analysis shows a total of M331 million, resulting in a difference of M37.9 million,” the report states.
The report also flagged unallocated deposits amounting to M47.2 million, as well as an unexplained difference of M32.1 million between the annual financial statements and the inventory schedule.
“The company has unallocated deposits of M47.2 million which represent the funds received in LEC bank accounts but have not been cleared or allocated to their accounts.
“Our investigations revealed that such so-called unknown deposits clearly reflect who was paying the company,” the report reads.
On inventory, the Auditor-General said:
“Initially, the inventory schedule was provided to support an amount of M66.4 million in the annual financial statements. As a result, the entire inventory balance could not be tested. Subsequently, a schedule amounting to M89.5 million was provided, resulting in a difference of M32.1 million. The difference could not be explained by management,” the report states.
Ms Makenete further revealed that there is no supporting list for sales agents’ prepayments amounting to M17.8 million, which were incorrectly classified.
“Sales prepayments amounting to M17.8 million have been included in the trade and other receivables, even though the nature is that these are trade and other payables.
“The fact that it has a receivable balance indicates that the sales agents have received electricity loadings exceeding what they have actually paid for to the company. The listing that supports this amount was not provided, so it is not clear what this is made up of,” the report reads.
The report also raised concerns over a deferred tax asset of M205.2 million, for which no supporting computations or disclosures were provided.
“During the review of these financial statements, it was noted that the current year deferred tax asset is M205.2 million. The tax computations supporting this balance or any movements therein were not provided.
“Further, the required tax note disclosure requirements have not been done as per IFRS disclosure requirements. The disclosure requirement dictates that a reconciliation should be made on deferred tax; however, management failed to provide these reconciliations despite numerous discussions of what is expected of them,” the report reads.
Another inconsistency was identified in mobile agents’ accounts.
“The schedule that was provided to support mobile agents amounts to M16.5 million, while the financial statements reflect an amount of minus M616,461. The total difference is M17.1 million.
“Management purported that they have passed a journal to address this, but the balance in the financial statements remained unchanged, indicating that the said journal has not been processed in the annual financial statements,” the report states.
The power utility company was also reported to be in severe financial distress, with its current liabilities exceeding its assets by M98.6 million.
The LEC has previously hogged headlines after appearing before Parliament’s Public Accounts Committee (PAC) over allegations of mismanagement of funds and unlawful procurement practices. The utility was summoned following accusations of widespread financial irregularities, including management’s failure to provide supporting documents to the Auditor-General during the March 2023 audit. The Auditor-General was subsequently forced to seek the intervention of the PAC.
In a separate report, the Auditor-General revealed that the parastatal had failed to account for M568 million, heightening concerns and prompting calls for a forensic audit, which has since been completed.
The utility has also been linked to a litany of procurement irregularities, including the purchase of M6 million worth of incompatible electricity meters, delivery of transformers without purchase orders, and the procurement of four-core cables from HDM Catering and Projects — a company alleged to be non-existent.
The company’s financial challenges have at times rendered it unable to procure electricity for distribution, posing a serious threat to the country’s power supply.
LEC suspended its executive management in March last year to pave the way for investigations into alleged financial misconduct. The company has reportedly paid over M12 million to the suspended executives.
Of the 10 executives suspended, two — Corporate Secretary Attorney Khotso Nthontho and Head of Finance ‘Makabelo Matsoso — resigned while still under suspension.
Those still under suspension include Managing Director Mohlomi Seitlheko, Head of Corporate Services Moipone Mashale, Head of Strategy and Growth Limpho Mokhesi, Head of Information Technology Sakhele Mapetja, Head of Customer Experience Lebohang Mohasoa, Head of Legal, Risk and Compliance Selebalo Ntepe, Head of Internal Audit Thato Matsoso, and Head of Operations Serolo Tikoe.
At the time of the suspensions, then board chairperson Nathaniel Maphathe was appointed interim managing director, relinquishing his role as chairperson. The board is now chaired by a former top civil servant Thabo Khasipe, who is also the CEO of the Lesotho National Development Corporation (LNDC). Mr Maphathe returned to the board as an ordinary member when his acting MD tenure lapsed in September 2025. This led to the appointment of Tšeliso Mokela as acting MD in October 2025.
Mr Mokela, a highly reputable former senior civil servant and corporate executive, now faces the unenviable task of cleaning up the LEC. It needs re-emphasis that the rot at the LEC happened before both Messrs Khasipe and Mokela’s appointments as chairperson and acting MD respectively.
