Dairy board boss fired

MASERU – Lesotho National Dairy Board (LNDB) boss Selematsela Montŝi has been fired.

Montŝi was fired for alleged corruption which was unearthed by a forensic audit firm in 2009, the Lesotho Times can reveal.

Montŝi had served as the LNDB chief executive officer over the past 20 years.

Montŝi confirmed he received a dismissal letter from Agriculture Minister Ralechate ’Mokose on Thursday.

He declined to comment further saying the matter was being handled by his lawyer.

“I will comment later when my lawyer has dealt with this matter. As for now I have no comment,” Montŝi said.

He said the letter did not reveal any reasons for his dismissal.

’Mokose’s decision to axe Montŝi comes barely two months after he invited dairy associations to send names of people who would represent them in a new board.

Dairy farmers wrote to Cabinet soon after the forensic audit in 2009 asking it to intervene after former agriculture ministers Lesole Mokoma and his
assistant Rammotsi Lehata had
reportedly failed to take action against Montŝi.

According to the Matsibolo Dairy Farmers’ Association secretary general, Tseliso Tsenoli, the late agriculture minister Rakoro Phororo had also turned a blind eye to the complaints from dairy farmers about Montŝi.

The LNDB was established by the Ministry of Agriculture in 1991 to prescribe standards of production, storage, packaging, processing and distribution of dairy products.

The LNDB is also vested with powers to issue permits to companies that produce, process and distribute dairy products. 

For the past two decades dairy farmers and the LNDB have been at each other’s throat over what the farmers called “corruption beyond belief” between the LNDB members and the Lesotho Dairy Products (LDP), a public company established by the government with the help of the Canadian International Development Agency (CIDA) in 1987.

The Gobodo Forensic final report, released in February last year, revealed that the LNDB and the LDP were mismanaged.

Investigators say they were unable to access some crucial documents that would have shown how the two bodies were being managed because management had refused to release them.

The LNDB, in a clear conflict of interest was found to be a shareholder in the LDP, which is supposed to get a permit from the former to process milk.

The farmers complained that the LNDB blocked some of them from entering the milk processing business because they would be potential competitors to the LDP.

Dairy farmers’ associations have on several occasions complained to the government that the LNDB and LDP were working together to open business opportunities to foreign companies to process milk while ignoring pleas by locals to have a share of the cake.

Farmers also complained that the LNDB deliberately caused their businesses to fail so that more milk and other dairy products could be imported into the country because it collects a five percent levy from the importers.

The LNDB is also accused of lowering the price of milk to a level below production costs so that it does not buy from local buyers but rely on imports.

The farmers, led by the Matsibolo Dairy Farmers’ Association, had also petitioned former trade minister Popane Lebesa to intervene in the dispute.

Investigators said they were not privy to the accounting records of the LNDB because “Montŝi refused to grant us access to such documentation”.

Accounting records supporting any income and expenditure were also not available, so were LNDB bank statements.

Gobodo Forensic says in terms of audited financial statements, the levy income of the LNDB was M1 222 480 in 2006 and M1 258 181 in 2007, respectively.

This constituted 98 percent of the board’s total income for 2006 and 2007.

The investigators also found that the LNDB incurred M209 782 in development expenses in 2006 and M386 465 the following year.

“It is unclear what the said development expenses entailed,” reads part of the report by Gobodo Forensic.

“There are allegations that the amount of levies collected was understated by the LNDB and that the LNDB could be abusing the collected levies.

“Due to Montŝi not granting us access to the documents of the LNDB, we are unable to either confirm or dispel the allegations,” the forensic investigators said.

They added it was wrong for the LNDB to be a shareholder in the LDP because of possible conflict of interest.

The damning forensic report says LDP held only two AGMs in the past 20 years and had failed to appoint an auditor in terms of the Companies Act.

“We conclude that the LDP for a period of time employed its commissioned accountant to audit its books in contravention of the best practice and making a mockery of the principle of independence.”

Investigators also found that there was a “misdirection of money collected from farmers in respect of dairy meal repayments.”

The report also questioned Denmar Dairies’ shareholding in LDP.

Denmar Dairies is the sole distributor for LDP’s products under a 10-year contract running until 2012.

Its shareholding, according to investigators, “would in all probability entrench their monopoly indefinitely”.

Denmar Dairies, it has been found, received a commission of M2 790 107 in 2008 and M1 998 648 in 2007 from the LDP.

Denmar Dairies bears no risk of production, transportation and processing of raw milk. Their only risk is in finding a market and distributing packaged milk to retailers.

They collect the revenue from sales to retailers and then subtract their commission before paying over the balance to the LDP.

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