Mohloai Mpesi
THE Lesotho Electricity Company (LEC) has lost a staggering M26.8 million to a fraudulent scheme involving some of its own staff members and clients.
The scam, which saw clients receive electricity units without the payments reflecting in LEC’s accounts, was executed by clients paying cash directly to corrupt LEC employees who then illegally loaded electricity onto their meters.
Although it appeared on the LEC system as a legitimate purchase, the payments never reached the utility company.
Appearing before the Public Accounts Committee (PAC) this week, Acting Head of Customer Experience at LEC, Tṧepo Mololo, revealed that the company had initially been defrauded of M33 million but managed to recover M7.8 million, leaving M26.8 million outstanding.
“The debt has decreased from M33 million to M26.8 million as some companies are still paying,” Mr Mololo said.
“As the board chairperson indicated, there is now a resolution to terminate all partial payment agreements and immediately disconnect all defaulters.”
PAC had summoned the LEC Board of Directors to respond to queries raised in the Auditor-General’s reports.
LEC Board Chairperson, Thabo Khasipe, who has been attending PAC sessions since Monday, vowed to take decisive action against both the implicated clients and staff.
He was flanked by his deputy, Batalatsang Kanetsi, Acting Managing Director of LEC Nathaniel Maphathe, suspended Managing Director Mohlomi Seitlheko, and other members of both the suspended and current acting Executive Management.
The hearing comes on the heels of LEC filing a case at the Constitutional Court in a bid to block PAC’s intensive interrogation. However, the court has since struck the matter off the urgent roll, having deemed it not urgent.
Mr Khasipe stressed that the utility would not protect corrupt employees and would enforce swift justice.
“Those who have illegally, fraudulently and corruptly benefited at LEC’s expense must face the consequences,” Mr Khasipe said.
“Our fiduciary duty as a board is to protect the interests of LEC. Where prosecution is necessary and disciplinary measures required, those actions will be taken.”
He further emphasised the importance of procedural fairness, adding that while decisive action is necessary, guilt must still be established through appropriate processes.
“However, the guidance that the Board provided to management is that all of this should be done within the context of procedural fairness because we do not have the power to declare people guilty until proven so.”
Mr Khasipe also said clients involved in these fraudulent dealings should not be given lenient terms for repayment.
“We do not have to give them three months or long-term instalments to repay money that was potentially stolen through corruption.
“This is not a normal debt that arises from a contractual agreement. This is suspected fraud or corruption, and the only appropriate response is for LEC to act immediately and recover the money.”
He also explained that LEC had discovered fictitious receipts issued to post-paid clients who, instead of paying LEC directly, made corrupt arrangements with LEC staff. The staff would issue fake receipts while pocketing the money.
“How do we justify giving such people 12 months to repay? That is corruption. That is fraud. The money must be reversed and those responsible must face the consequences, in line with procedural fairness. There should be criminal prosecution in such cases because this is outright fraud and corruption.”
LEC has also been under public scrutiny for numerous other issues, including mismanagement of funds and flawed policy implementation, notably a 2015 policy that states acting allowances should be calculated between the substantive position and the acting position. This contradicts the 2021 policy, which proposes a flat 10 percent acting allowance.
Mr Khasipe announced that LEC will change the policy within a month, as consultations with LEC management have already been completed.
He also highlighted that the board is equally “worried about the high costs that LEC endures”.
Revolution for Prosperity (RFP) legislator for Matala constituency, Tṧeliso Moroke, urged the LEC board to make urgent changes to save the company from further financial erosion.
“LEC is swimming in a lot of financial struggles. We discovered that the board declined to provide bonuses. In the same manner, we advised that the board should go and review the 2021 policy.
“There is a draft 2021 policy, which I believe you know its details. That 2021 policy, which we deem alive as it has already been implemented in parts and paid to certain members of LEC. Your board should go and put that policy into practice (sic),” Dr Moroke said.
Mr Khasipe acknowledged the financial crisis LEC is facing and admitted that urgent reforms are necessary to prevent further losses due to corruption and poorly applied policies.
“The board’s opinion is similar to that of the PAC. According to the LEC financial situation, we must implement a policy that will save the company from losing money at an alarming rate.
“There is something fundamentally wrong in the system of internal control. There is no oversight. There are no assurance systems functioning. For the last two years, there have been no internal audit reports.
“An internal audit report is an assurance function that works alongside the external auditor — the Auditor-General. The absence of these reports becomes a breeding ground for corruption and fraud. It creates a tempting environment for individuals.”
He also committed that LEC’s systems of internal control and policies would be overhauled by August.
“We must fix our internal controls and policies. Yesterday, we took a decision that by the end of August, all LEC policies should be revised and brought up to speed.”
