…eager to restore utility’s image and hunt down fraudsters
Mohloai Mpesi
THE Lesotho Electricity Company (LEC) chairperson, Thabo Khasipe, has vowed to root out corruption and fraud that have crippled the state-owned power utility for years.
In an exclusive interview with the Lesotho Times yesterday, Mr Khasipe said the turnaround strategy would be aggressive and deliver visible progress within a year.
He was speaking between sessions of the Public Accounts Committee (PAC), which has been grilling the LEC board and executive management since earlier this week.
He said his strategic move aligned with the King IV Report on Corporate Governance, which advocates for four critical outcomes: Ethical Culture, Strong Internal System Controls, Good Performance, and Legitimacy.
According to Mr Khasipe, LEC lacks all the principles of good governance, which consequently exposes the power utility to deep-rooted corruption and fraud.
He disclosed that LEC had been losing millions since 2020, and the situation had progressively worsened.
“We lost M78 million in 2022-2023. Indications are that in the past financial year, we might have made a loss of M256 million. Cash flow for the 2022-2023 is a negative M88 million. So, our finances are not good,” Mr Khasipe said.
It crucial to implement robust changes and turnaround strategies that will pull the corporation out of the fire, he added.
“LEC lacks a system of internal control,” he said.
Ethical Culture
“The outcomes that corporate governance seeks to achieve are four. First is ethical culture within the organisation — this means uprooting corruption, fraud, and misdemeanour.
“These are a problem in LEC. We lack ethical culture. It is replete with corruption, theft, and misdemeanour. Many problems point to the fact that the ethics are not aligned.”
He added that there were no strong internal system controls within LEC, which should explain how processes were run to achieve objectives and mitigate risks, while also leaving an audit trail.
To turn the company around, Mr Khasipe said, they needed to start by building an ethical culture which guarantees accountability and uproots corruption and fraud within LEC.
“We are not going to spare anyone — all LEC employees from management down to the last employee.
“We are going to turn LEC around by focusing on these four elements. We are going to start by building an ethical culture. You build an ethical culture by ensuring accountability for acts of corruption and fraud.
“We are going to go after corrupt people within LEC and make sure that they account and pay for what they did. When there is evidence, we are going to fire them. Otherwise, we should be fired ourselves if we fail to do that.
“We are not going to spare anyone, from Exco all the way down. These processes are part of instilling an ethical culture.”
Mr Khasipe said they were mindful of the fact that not everyone at LEC was corrupt, and they were in the process of appointing a law firm that will evaluate corruption-related cases.
“But we are aware that it is not everyone in LEC who is indulging in acts of corruption. There are many pockets of meritocracy. There are many people who are dedicated and do their jobs exceptionally well.
“But there is an element of corruption and fraud — and all audit evidence points to that issue. It risks becoming a culture. We have to uproot that culture of corruption and fraud in order to build a positive ethical culture — that will be our first port of call.
“We are already appointing a law firm that will evaluate cases of corruption, fraud, and poor performance, and charges should be drafted. People should be sued. It will start with management all the way down.”
Strong Internal Controls
According to Mr Khasipe, internal systems of control need urgent strengthening, as some have remained unchanged for over 20 years.
“A strong internal system of control ensures a clear articulation of how processes are run in a company in order to achieve objectives while mitigating risks that could derail us — especially risks posed by corrupt individuals or external factors.
“These days, IT systems are vulnerable to external risks like ransomware, which can steal money, electricity units, or sabotage the network. When you have internal control systems, you must have policies that articulate how things are done.”
He added: “Part of the internal control system includes internal audit, risk management, and compliance. These departments are present at LEC, but historically, they have been weak in identifying and mitigating risks before they materialise.”
He said the board had instructed management to urgently begin policy reviews.
“We have just instructed management that in the next two months (until mid-August), we want all policies to be reviewed.
“Some policies date as far back as 2003. The newest policy is the HR policy, from 2015 — that’s already 10 years old. The IT policy is as old as 2005. How can an IT policy be 20 years old in these times, when IT issues are so dynamic?” he said.
Performance
Mr Khasipe said LEC’s performance fell far too short of what is expected and that a complete turnaround was urgently needed so that the company would no longer rely on government bailouts.
“We would agree that LEC is doing very badly in that area — our performance is bad.
“According to LEWA (Lesotho Electricity and Water Authority) metrics, we are doing very poorly — so much so that the board decided to cancel staff bonuses because we failed to meet LEWA’s operational targets.
“This is our spearhead in improving performance — it is part of our turnaround strategy. Given the many problems at LEC and the fact that the government is constantly bailing it out, we have to act. The government cannot afford to keep funding LEC, especially in this poor economy with high unemployment and steep reciprocal tariffs. The government doesn’t have money to throw at LEC.”
They were preparing to present their turnaround strategy to Cabinet, he said.
“LEC needs to improve its performance. We need a total, 180-degree turnaround from where we were headed. The board held a two-day retreat to reflect on the fundamental transformation needed at LEC.
“We are now seeking an audience with Cabinet to present the restructuring we are recommending. The details will be made public once approved.”
Legitimacy
Mr Khasipe said the company’s image has been severely damaged by corruption, and the turnaround strategy was essential to restoring its credibility and brand value.
“The fourth outcome of corporate governance is legitimacy. It is about the social licence to operate, the social capital, and the public’s perception of LEC.
“Every company needs legitimacy — it is about brand equity. LEC’s name must be respected. When the company is constantly involved in controversy and its name is dragged through the mud, it harms stakeholders such as suppliers and the public.”
“Corporate governance ensures that a company earns its legitimacy. When the public faces problems, they will still give you a licence to operate because they respect you, your brand is trusted and honoured.”
He said the board was working closely with the PAC, as both are oversight bodies aimed at ensuring smooth operations at LEC for the benefit of Basotho.
“There comes a point when a company loses its legitimacy so much that people begin to protest against it. That’s the stage we are at. We have lost legitimacy due to poor performance and entrenched corruption — something even the public sees.
“The PAC process is adding value. We appreciate it as a board because the PAC and the board are both oversight institutions, and we are working together hand in glove to solve these problems.
“There is no denying that the LEC brand is in the mud. The only way to pull it out is to fix the first three outcomes: ethical culture, internal control systems, and performance.
“When we fix those areas, people will begin to see that the turnaround strategy is working, and the LEC brand will begin to improve.
“We are asking for a year to turn this situation around. We may not be completely done in a year, but we promise that signs of improvement will be visible — because we are dealing with a crisis.”
