Fresh fraud claims at MKM
THE Master of the High Court and the provisional liquidators of MKM have been accused of making fraudulent payments to “illicit” service providers at the expense of the long fallen company’s creditors.
Group director of MKM Star Lion Company Simon Thebe-ea-Khale this week accused the Master of the High Court, ‘Makatleho Matiea, of conniving with the liquidators of the company to make what he described as fraudulent payments worth millions of maloti to various firms engaged by the provisional liquidators. He questioned the legitimacy of the payments, suggesting that they were meant to siphon funds out of MKM at the expense of the troubled company’s creditors.
The MKM saga has run for many years now after the business was shut down for doing business illegally. Many Basotho who invested in the company are yet to receive their dues.
Mr Thebe-ea-Khale and one of the MKM creditors, Tšeliso Manyeli, said the money used to pay the companies engaged by the liquidators would have been better spent in paying MKM’s creditors.
Mr Thebe-ea-Khale said the liquidators and Ms Matiea could have long paid off MKM’s creditors but instead “they are working together to victimise us and misuse MKM monies”.
Ms Matiea however refuted the allegations, insisting that she was well within her powers to approve the payments.
“It is my duty to approve such payments and I do so in befitting cases. That is part of my work and I am not misusing anyone’s monies. I am just doing my job here.
“Provisional liquidators are appointed by the courts of law and they are empowered to make such payments. In cases where there is no money to service debts, properties of the liquidated company are sold to raise funds to settle the debts.”
MKM Group of Companies was shut down in November 2007 by the Central Bank of Lesotho (CBL) after it emerged the company was operating banking and insurance businesses in violation of the Financial Institution Act 1999 and Insurance Act 1976, respectively.
A CBL-commissioned investigation conducted by South African firm, PricewaterhouseCoopers, also revealed that of the M400 million invested by depositors, MKM — comprising MKM Marketing Ltd, Star Lion Group Ltd, Star Lion Insurance Ltd and Star Lion Gold Coin Investment (Pty) Ltd — could only account for M100 million in assets that included buildings and vehicles.
However, Mr Thebe-ea-Khale this week insisted that his company only owed its creditors M64 million and not the M400 million as stated in the PricewaterhouseCoopers report.
He said the funds from the liquidation of his company would have been better spent in paying off creditors rather than what he described as fraudulent payments that had been made over the years by the liquidators.
Documents seen by the Lesotho Times this week show that in May 2017, MKM’s liquidators and Ms Matiea approved a payment of R54 million (equivalent to M54 million) to a company called Master System Technologies (MST).
In its invoice to MKM’s liquidators on 12 May 2017, MST stated that while it was entitled to a payment of R73 744 783, 90 (M73 744 783, 90), it was however, prepared to “agree to a voluntary reduction of M 13 744 783, 90” provided the liquidators paid them by 29 May 2017.
Commenting on the MST issue, Mr Manyeli said it was highly suspicious that a company which had performed its duties and correctly invoiced their client would voluntarily offer a huge discount of M13 million.
“Which company does that? Something is fishy here,” Mr Manyeli said.
He added: “The liquidators and the Master of the High Court are conveniently paying everybody else except the creditors who are owed way less than these service providers”.
The documents also show that in 2012, the provisional liquidators and the Office of the Master of the High Court approved payments worth M4 437 609, 27 to different service providers.
In January 2012, a payment of M500 000 was made to Oricle Investment Services CC “to purchase information of companies (sic) to instruct Master System Technologies (MST) to update the finances of MKM”.
There were also payments of M528 415, 90 and M300 000 made to C J D Attorneys for legal services in March and May 2012 respectively.
Mr Thebe-ea-Khale and Mr Manyeli also questioned the payments to Oricle Investment Services and CJD Attorneys.
They argued that the MST company registration number which is given as 2013/148677/07 suggested that “MST did not exist at the time when the provisional liquidators purchased the information from it”.
Mr Manyeli said this suggested that Ms Matiea and the liquidators were conniving to make fraudulent payments to service providers.
He also questioned why C J D Attorneys were paid almost M1 million just for legal advice for a few months.
“How on earth did the Master of the High Court approve such huge and dubious payments in such a short period? What were they doing that needed so much monies,” Mr Manyeli asked.
Mr Thebe-ea-Khale and Mr Manyeli argue that the money used to pay the liquidators and service providers would have been better used to pay off MKM’s creditors.
Although the courts said the MKM owed its creditors M400 million when the company was shut down in 2007, Messrs Thebe-ea-Khale and Manyeli insisted that MKM only owed M64 million. They produced a document prepared by Oricle Investment Services to back their claim.
The document titled ‘Interim Report Analysis’ and dated 4 December 2009 states that “based on the PWC’s report of the total policies identified from the files, Oricle has determined from Scheme Numbers with no Payment Vouchers attached, that M64 347 884, 49 has not been paid to investors”.
Mr Thebe-ea-Khale said the document from Oricle vindicated his stance that the value of monies owed to creditors by MKM had been grossly exaggerated. The Oricle report, prepared for the Master of the High Court, puts the value of creditors owed to about M65 million.
“I have always maintained that I owe creditors M65 million but people who were out to get me exaggerated the amount because they wanted to make me look bad. We have enough monies to pay back our creditors and we are planning to start effecting payments beginning in September 2018.
“We are sure that rentals collected from our FBN property has accumulated to more than M20 million by now. That money together with M30 million that was taken by the Central Bank of Lesotho in 2007 will be enough to pay back creditors their hard-earned monies,” Mr Thebe-ea-Khale said yesterday.