—as court upholds Mahao’s decision to dismiss it
Moorosi Tsiane / Hopolang Mokhopi
FORMER Energy Minister Nqosa Mahao acted within his rights to dismiss the former board of the Lesotho Electricity Company (LEC), the High Court has ruled.
However, the ex-minister was wrong to press ahead with appointing a new board while the previous board’s application was still pending before the courts, Chief Justice Sakoane Sakoane ruled.
To penalise the minister for disrespecting the authority of the courts (i.e the sub judice rule), the Chief Justice has thus ordered the government to pay the legal fees of the ex-board members on a higher attorney-client scale.
Even though the government had won its case, the punitive costs order would serve as a stern warning to senior government officials who frequently disregard the principle of sub judice by acting on matters still pending before the courts.
Professor Mahao fired the LEC board on 10 October 2024, despite their then-pending High Court application challenging his August 2024 intention to remove them.
Prof Mahao had issued show-cause letters to the board on 27 August 2024, accusing them of approving millions in staff bonuses while the power utility was heavily indebted to its electricity suppliers in Mozambique and South Africa. At the time, LEC owed a staggering M712 million to Eskom (South Africa) and EDM (Mozambique) for electricity imports. The company had also requested a M300 million bailout from the government to cover electricity imports during the ongoing maintenance shutdown of the ‘Muela Hydropower Station.
The ‘Muela station, which supplies 72 megawatts of electricity to LEC, has been under maintenance since 1 October 2024 and will remain offline until 31 March 2025.
After getting their show cause letters, eight of the 11 board members immediately filed an urgent court application to stop Prof Mahao from firing them. However, Justice Sakoane ruled that their matter lacked urgency at the time.
Believing there was no specific order to stop him, Prof Mahao dismissed the board and appointed a new one, led by Seaja Ntšekhe, on 10 October 2024. The new board members included Nati Maphate, Thabo Khasipe, Lebohang Ramaisa, Lerato Mphaka, Batalatsang Kanetsi, Moholisa Fako, and Rethabile Sakoane.
The ousted board members returned to the High Court, arguing that Prof Mahao had violated the principle of sub judice by appointing a new board while their case was still pending.
In his detailed judgment delivered this week, Justice Sakoane acknowledged that, in firing the board, Prof Mahao had acted within his legal powers as the government’s representative. However, he stated that the Minister should have refrained from taking action on a matter pending before the court.
“It is common cause that the Minister represents the government as the sole shareholder in LEC. It is also not denied that LEC presented a report to Cabinet explaining the financial stress it was under and requesting a bailout,” said Justice Sakoane.
“The LEC is a statutory body incorporated under the Companies Act, with the government as its sole shareholder. The board is constituted under section 59 of the Act, and its members are appointed and removable under Regulation 42(1) of the Companies Regulations, 2012. If the government decides to remove members of the board, their removal is without prejudice to any claim for damages arising from a breach of their service contract.”
Justice Sakoane dismissed the board’s claims that the Minister’s show-cause letters constituted political interference.
“Removal of the board is quintessentially the business of the shareholder. The show-cause letters are part of the legal process to exercise that right. They are neither an abuse of process nor an overreach of the shareholder’s legal powers. On the contrary, the Minister’s approach is commendable and supported by high authority.”
However, the judge chastised Prof Mahao for firing the board while the matter was still pending before the court.
“The Minister’s act of removing the applicants before judgment was delivered constitutes misconduct and undermines the authority of the court. It deserves strong censure. The court marks its displeasure with a punitive costs order,” said Justice Sakoane.
While upholding the minister’s legal authority to remove the board and issue show-cause letters, Justice Sakoane said the board members’ remedy lay in filing a claim for damages for breach of contract rather than challenging the removal process.
“The subsequent removal of the applicants cannot be reversed. It can only be remedied by a claim for damages,” he said.
Justice Sakoane dismissed the board’s application and ordered the government to pay costs on the highest scale to signal the court’s disapproval of Prof Mahao’s actions.
“In the result, the following order is made: The application is dismissed, and the Minister is ordered to pay costs on an attorney-and-client scale as a mark of disapproval of his conduct,” ruled Justice Sakoane.
