MKM battles to fend off liquidation

MASERU — MKM’s last stand for survival took off in the Court of Appeal yesterday with lawyers for the troubled company shying away from arguing on the merits of the case.

MKM’s legal representatives led by a King’s Counsel who also serves as judge of Labour Appeal Court, Kananelo Mosito, confined themselves to points of law which Court of Appeal judge, Justice Lionel Melunsky, said was likely to result in an
academic judgment.

MKM is petitioning the Court of Appeal to set aside an order by acting High Court judge Justice John Musi to liquidate three of MKM’s investment companies, Star Lion Gold Coin Investment (Pty) Ltd, Star Lion Group Ltd and Star Lion
Insurance Ltd.

The High Court and the Court of Appeal have previously ruled that the MKM companies were guilty of running illegal insurance and banking businesses in breach of the Financial Institutions Act and the Insurance Act.

The courts ruled that the firm owed tens of thousands of investors over M400 million.

Yesterday Mosito said the late Central Bank of Lesotho (CBL) governor Moeketsi Senaoana did not have powers to institute proceedings in the High Court seeking liquidation of MKM because that was the prerogative of the commissioner of insurance.

Senaoana, Mosito argued, was governor of the CBL and not the commissioner of insurance and by filing the application for liquidation of MKM he usurped the powers of the commissioner of insurance.

“The Central Bank itself is the commissioner of insurance and it ought to have petitioned the High Court instead of the governor doing so,” Mosito said.

The line of argument suggested that Mosito was banking on the Court of Appeal ruling that the late Senaoana did not have locus standi which could lead to the falling off of the entire application.

But the court warned that the result might be academic in that the CBL could solve the problem by properly authorising the acting governor to institute proceedings as the commissioner of insurance.

Mosito also challenged the appointment of MKM liquidators as unprocedural.

He told the court that according to the Companies Act all stakeholders including the MKM’s three companies should have been engaged when the Master of the High Court appointed the liquidators.

The liquidators were directly appointed by the High Court and the legal procedure was not followed, Mosito argued.

“It was not a judicial exercise of its discretion when the court a quo granted application for liquidation,” Mosito said.

He also challenged Justice Musi’s granting of application by creditors to intervene without giving MKM a chance to oppose it.

The CBL’s lawyer, Kemp J Kemp, said Senaoana had always been acting in his capacity as governor of the bank and filed all applications without MKM challenging his status.

“All what he has been doing was correct in terms of the law,” Kemp said.

Justice Musi in May granted an application by the Commissioner of Insurance, who petitioned the court in the person of the late Senaoana, to liquidate the three MKM companies.

Justice Musi also granted the petition by Trustees of the Investors Trust and Pan Asia International Construction (Pty) Ltd to be joined in the proceedings as intervening creditors.

He also ordered the lifting of the corporal veil of the companies.

He however dismissed an application to sequestrate personal estates of the man who ran the companies, Simon Thebe-ea-khale.

Justice Musi directed the Master of the High Court to appoint two attorneys, Chavonnes Badenhorst from St Clair Cooper in Bloemfontein and Daniel Gerhardus Roberts from Webber Newdigate as the joint liquidators.

Thebe-ea-khale had in the past fought to avoid liquidation without success.

He approached the Central Bank with several proposals which were all turned down.

Judgment will be handed down next Friday.

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