Ministers accuse banking sector of sabotaging govt
Ntsebeng Motsoeli/Bereng Mpaki
CABINET ministers Chalane Phori (Small Business Development, Cooperatives and Marketing) and Tefo Mapesela (Defence and National Security) have accused the banking sector of sabotaging the wool and mohair industry “to make the government look bad” in the eyes of the farmers and the general population.
Messrs Phori and Mapesela said the government had introduced progressive legislation to localise the sale of wool and mohair to ensure farmers fully benefited from their produce. They said instead of supporting the government efforts, the Central Bank of Lesotho (CBL), the Lesotho Revenue Authority (LRA) and Standard Bank of Lesotho had all conspired to sabotage the government to make the latter unpopular in the eyes of the farmers.
Mr Phori went as far as saying the recent resignation of “one of the local bank managers” was good riddance as the bank manager had contributed to the controversy in the wool and mohair. Although Mr Phori did not mention the local bank manager who had resigned, this could have been directed at former Standard Lesotho Bank Chief Executive Officer, Mpho Vumbukani, whose impending resignation was announced last month.
Mr Vumbukani’s resignation is with effect from 30 September 2019. He joined the bank on 1 January 2011, becoming the first Mosotho to be appointed to the top post. Contacted for comment, Mr Vumbukani referred this publication to Standard Lesotho Bank.
Standard Lesotho Bank denied the sabotage allegations and said the bank had actually expressed concern over the payment challenges recently experienced wool and mohair farmers.
The ministers said this when they addressed a parliamentary committee that was recently set up to investigate the state of affairs in the troubled wool and mohair sector.
Farmers have been at loggerheads with the government ever since it passed the controversial Agricultural Marketing (Wool and Mohair Licensing) (Amendment) Regulations of 2018. The regulations prohibit the export of wool and mohair from outside Lesotho and the trade in the wool and mohair without a licence from the Ministry of Small Business. The net effect is that local farmers can no longer have their produce sold from South Africa through their preferred South African brokers, BKB, as they had done for 44 years until last year. The farmers bitterly opposed the regulations and in June this year they came together in their thousands to stage the ‘mother of all protests’ in Maseru to press the government to amend the regulations to allow them to sell their produce from anywhere and through the brokers of their choice.
The government eventually bowed down to the farmers and last month it awarded new licences for the brokering and auctioning of wool and mohair to five companies, including South African brokers, BKB.
The awarding of the new licences brought to an end the year-long monopoly that Chinese national, Stone Shi, had enjoyed in the sector through his ownership of the Lesotho Wool Centre (LWC).
Two South African companies, namely BKB and OVK (CMW) and three local companies, Maluti Wool and Mohair Centre, Highlands Veterinary Services were granted licences to broker and auction wool and mohair.
Another local company, Frasers, was licenced to engage in the shearing and bulk storage of wool and mohair.
While the LWC monopoly held, angry farmers accused the government of bias in favour of Mr Shi’s company even if it prejudiced them through delayed payments they said were way less than what they had received from BKB.
But when they appeared before the parliamentary committee this week, Messrs Mapesela and Phori accused the LRA, CBL and Standard Lesotho Bank of sabotaging government. They were accompanied by fellow ministers, Mahala Molapo (Agriculture and Food Security), Mokoto Hloaele (Home Affairs) and the latter’s deputy, Machesetsa Mofomobe.
Mr Phori alleged that the three institutions presented false information about BKB to give the impression that it had complied with the local financial regulations when in fact it had not done so.
“These people were trying to sabotage government with the wool and mohair sales,” Mr Phori said.
“Standard Lesotho Bank claimed that BKB’s financial status was clean when in fact it was not. The Lesotho Revenue Authority lied that BKB did not owe any taxes for trading in Lesotho but we have papers to prove that there was a letter written by the LRA to BKB asking them to comply with regulations. The Central Bank also presented false information about BKB and we have proof of all this.”
Mr Phori even said the recent resignation of “one of the local bank managers” was “good riddance” as the bank manager had contributed to the controversy in the wool and mohair.
“I am happy that one of the local banks’ managers has resigned. I am hopeful that his departure will breathe some fresh air into this (wool and mohair) project. In one of the meetings that the cabinet subcommittee (on wool and mohair) held with managers of local banks, he (the bank manager) told us point blank that he would not consider the proposals which were raised to speed up processing payments for farmers,” Mr Phori said.
Mr Mapesela, who served as Trade and Industry Minister from 2017 until last December, concurred with Mr Phori, saying that the wool and mohair sales were sabotaged by some individuals to make the wool and mohair regulations look bad.
Mr Mapesela said it was unfortunate that there were negative perceptions about the wool and mohair regulations when they had been enacted to protect the farmers from exploitation by brokers.
He said the idea of localising the auctioning of wool and mohair was mooted by the farmers and government only enacted the regulations in response to the farmers’ call.
“All the government did was to enact the regulations because there was previously no law to provide for the auctioning of wool and mohair locally,” Mr Mapesela said.
He accused that BKB of robbing farmers of their hard-earned money by charging unsolicited taxes. He said the farmers were illegally charged Value Added Tax (VAT) by BKB.
“There was the so-called import VAT that was deducted from the farmers. That was illegal. BKB has never been the buyer of wool and mohair from Lesotho. They were brokers or agents who sold on behalf of Basotho farmer from which they collected commission. So, they lied to the South African Revenue Service (SARS) that they were buying the wool and mohair so that they deduct some false taxes from the farmers.
“The truth is just like the textile products from Lesotho, wool and mohair are not taxed because they are on transit to be sold abroad. They (BKB) lied to the SARS and some money was deducted illegally from the farmers. Basotho are producers and therefore cannot be charged the import taxes as if they were the buyers.”
Mr Mapesela said as a result, BKB owed Basotho farmers money and the South African brokers had to pay back that money.
“They (BKB) have list of the farmers they owe and the best they could do is to pay back that money. There have been many other challenges in the wool and mohair industry. There was also political influence at some of the storage posts where farmers’ produce was degraded so that farmers would be paid smaller amounts of money to cause them to be disgruntled with the government,” Mr Mapesela said.
On his part, Mr Molapo said that the wool and mohair saga was fuelled by opposition parties and “that has troubled us for a very long time”.
He said government was forced to send wool and mohair samples for testing in Switzerland after its efforts to have the produce tested much nearer home in Port Elizabeth were frustrated by some unnamed Basotho.
“Government endued harassment from people who tried by all means to frustrate the wool and mohair sales. But that is over now and farmers are at liberty to pick and choose agents they want to work with,” Mr Molapo said.
He also dispelled allegations that the LWC paid less than BKB, saying he was one of the wool and mohair farmers who had been paid and “the sum is much higher than what I have received before”.
Standard Lesotho Bank yesterday denied the ministers’ sabotage allegations.
“Standard Lesotho Bank has been involved in the facilitation of payments for wool and mohair farmers since the merger between Lesotho Bank 1999 and Standard Bank, first with BKB and now with Maseru Dawning since 2018. This was after the government of Lesotho gazetted new regulations which directed farmers to sell their wool and mohair through the Governments’ authorised broker.
“The bank is also very cognisant of the fact that our very existence is dependent on how well we serve and retain our valued customers inclusive of personal customers and corporate / business customers. As such, the challenges being experienced by the wool and mohair industry is of great concern to us. On the basis of the foregoing, the bank cannot in anyway attempt to sabotage the sale of wool and mohair because we value the business we get from our customers and how this business contributes to our bottom line and the economy of the country as a whole.
“Ever since this matter came to the surface, we have been engaging extensively with our clients to agree on an effective and mutually acceptable long-term solution to this challenge. One such alternative is the automated payment process that we currently have for all our corporate clients that can make up to 10 000 payments at a time. Our executives have also made numerous representations to the parliamentary sub-committee on wool and mohair, to clarify our processes and our role in facilitating payments for wool and mohair farmers,” Standard Lesotho Bank said in a statement to the Lesotho Times.
LRA’s public relations manager, Pheello Mphana said, “We haven’t had an opportunity to hear the claims and therefore we cannot comment”.