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Consider MKM bail-out

by Lesotho Times

THE proposal by a High Court judge for the government to push for a political solution to the MKM scandal could mark a significant turning point in the search for a solution to the long-running saga.

The respected judge says the MKM case required “a political solution involving the executive and legislature and not the judicial process of liquidation”.

“Like was done by the US President Barrack Obama who bailed out delinquent banks in a national financial crisis . . . it could indeed be a great gesture of magnanimity for the government and parliament of Lesotho to treat the MKM saga as a special case which requires a political remedy,” says the judge.

The judge says a “bail-out” would be a bold and magnanimous step on the part of the government of Prime Minister Pakalitha Mosisili.

He proposes that the government should pump money into MKM to enable the company to pay off depositors who were fleeced of their money.

Once depositors have been paid, the judge suggests that the government can then pursue MKM directors separately to get them to repay the loan.

The judge is fiercely opposed to the liquidation route that is being pursued by the Central Bank of Lesotho.

He argues that liquidation has never guaranteed full repayment with depositors likely to get a small fraction of the money they invested.

We think the judge is making a reasonable proposal that could help unlock the MKM logjam.

We think the saga has been allowed to rumble on for almost three years because there is clearly no political will on the part of the government to deal with the case.

The delays, which have hurt the poor most, are inexplicable and inexcusable.

We think the 400 000 people who invested in the scheme have waited for too long to have this matter addressed.

As we have argued in our previous editorials it would be in the government’s interest to have this matter resolved urgently.

The lackadaisical approach that we have seen for almost three years does little to help remove perceptions that the government does not care for the plight of Lesotho’s poor.

Most of these invested their life’s savings in MKM and saw all their investments wiped out when the central bank shut down the firm in November 2007.

It is therefore the poor who stand to benefit if this bail-out proposal were to be adopted and endorsed by parliament.

What better cause could surpass bailing out your own people?

The government is not being asked to do the impossible.

The move is not without precedence.

Governments all over the world have sometimes gone out of their way to bail out struggling firms for the national good.

The bail-out strategy might be seen as encouraging corporate irresponsibility.

But in the case of Lesotho the government would do a lot to repair its battered image by implementing this bold proposal.

There is already a groundswell of discontent regarding the manner in which the government dealt with the MKM saga.

No subject generates as much rage as MKM.

There is a perception that senior government officials did not bear the brunt of the crisis because they were tipped off to withdraw their money just before the central bank shut down MKM.

These allegations have soiled the image of the government in the eyes of the public.

The MKM saga is also a national security issue.

It has the potential of causing civil strife if not properly managed.

It is therefore urgent for the government to come up with an intelligent mechanism to deal with the MKM scandal.

And one way of doing so could be by directly intervening and bailing out the company as proposed by the honourable judge.

We think it is a progressive suggestion that could leave the government and the 400 000 people who invested in MKM happy.

If adopted it could bring a swift end to a saga that has brought nothing but misery and anguish to a sizeable fraction of Lesotho’s 1.8 million people.

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