MKM director, Simon Thebe-ea-Khale, has expressed confidence that his company would be back in business before the end of this year. Mr Thebe-ea-Khale’s brainchild 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 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.
The CBL then applied for MKM’s liquidation in the High Court, citing the company was insolvent because its liabilities were more than its assets. The application was granted on 18 May 2011, and upheld on 21 October 2011 by the Court of Appeal after the company had challenged the ruling.
An estimated 400 000 investors were left stranded following the company’s closure, but in this wide-ranging interview, Mr Thebe-ea-Khale tells Lesotho Times (LT) reporter, Lekhetho Ntsukunyane, that there is hope yet for his beloved MKM, while also making some startling allegations regarding the “real motive” behind the closure.
LT: Let us recap the MKM saga. In November 2007, the Central Bank of Lesotho (CBL) shut down MKM, arguing the company was operating illegal banking and insurance businesses which promised investors unrealistic profits as high as 60 percent. The closure left an estimated 400 000 investors stranded, but you decided to challenge the CBL action through the courts. However, on 18 May 2011, Acting Judge Justice John Musi of South Africa, appeared to have concluded the case when he ruled that MKM was indeed, insolvent based on the PricewaterhouseCoopers audit. Again, you challenged this ruling but on 21 October 2011, the Court of Appeal found that the High Court was correct when it ruled that companies under the MKM group should be liquidated and investors paid their dues. This ruling paved the way for MKM’s liquidation by Chavonnes Badenhorst of St Clair Cooper in Bloemfontein and Daniel Gerhardus Roberts from Webber Newdigate. Could you tell us what has transpired since then?
Thebe-ea-khale: Let me start by indicating that indeed, there was an order from the Court of Appeal directing that MKM should be liquidated. So as we speak, we are under liquidation; that process is being carried out against us in line with the ruling. The process of liquidation, as you may recall, started way back before the current coalition government came to power in June 2012. But since the new government took over, there have been several meetings with various stakeholders regarding MKM. The Prime Minister (Thomas Thabane) has even assigned (Senior Minister) Chief Thesele ’Maseribane to facilitate these meetings on behalf of the government. And since Ntate Thesele’s intervention, we are having regular meetings with these stakeholders, who include the liquidators themselves. And I can assure the nation that the talks are really going smoothly, although I will not go into details in case I jeopardise the process. But we are really having fruitful talks with Ntate Thesele and the liquidators. Even today (Monday this week), there is supposed to be another meeting that has been called by Ntate Thesele where we are going to proceed with the same agenda of ensuring that MKM is back on its feet again. We are all banking on the outcome of these talks and hoping that something positive is going to come out of the negotiations.
LT: How has your relationship with the current coalition government been regarding the MKM saga and also your interaction with the liquidators? I am asking this because you have previously said the MKM issue was political and that you were just a victim of some vindictive politicians.
Thebe-ea-khale: Ntate Thabane seems to have a clear understanding regarding the MKM issue. Like I said, since he assigned Ntate Thesele to mediate in the case, everything seems to be going well. For instance, for the first time since MKM got in trouble under the previous government, Ntate Thesele was able to bring us and the liquidators together at one table to discuss this issue in a very positive manner. The first time we met with them (liquidators) was when Ntate Thesele had organised a meeting at his home, although I am not going to go into details about the date. We met there and made peace for the first time. Prior to that meeting, we were the worst of enemies and never thought we would meet that way to discuss our differences. I can guarantee you that a long-lasting solution to the MKM problems is not far away due to these talks, but like I said, I cannot go into details as doing so would be unfair to the other parties concerned.
LT: Do you mean there is a possibility that MKM can return to business once again despite the court ruling?
Thebe-ea-khale: MKM is going to be back in business; it is going to be even stronger when it returns. You see, some people had only connived and conspired to pull us down for their own personal interests and agendas. You saw the many people I have just accompanied out of our offices as you got in? They were here for burial services and we were able to assist them. A lot of people, because of being afraid of what was going on with MKM and the liquidators, had terminated their burial policies and investments with us. But I can assure you now that they are gradually coming back for our services. They are regretting their decision to leave because other people, who were not easily intimidated and remained with us, have continued to benefit through our burial schemes. And I should mention now that we are trying, as much as possible, to abide by all the rules and terms of our service-provision so that MKM goes back to what people had come to know us for—a reliable company committed to assisting Basotho.
LT: But you are under liquidation, which means your operations have been stopped, if I understand the term well. Or does it mean only some of the MKM companies were placed under liquidation and not the entire group?
Thebe-ea-khale: It is true that our funds have been seized and are with the liquidators. The courts have also confiscated our buildings and put them under the control of liquidators. They are controlling everything, including rental-collections because of the court’s directive. But we are still coping under these circumstances. We are pushing from every corner to survive and keep this business running.
LT: You still haven’t answered the question… Which of your companies have actually been liquidated?
Thebe-ea-khale: Like I mentioned, some of these issues are still being discussed in the meetings we are holding. This means there some of issues I will not discuss in case I jeopardise the proceedings. So allow me not to answer some of your questions.
LT: You say the current coalition government is working towards a solution to MKM’s problems, but what happens when this government fails to return to power in the snap election scheduled for February 2012? Isn’t this a big worry for MKM considering that you were found to be in violation of the law by a competent court, while a forensic audit by a reputable firm also revealed that your finances were in a shambles?
Thebe-ea-khale: Based on the effectiveness and speed by which these talks are being managed; and considering that the discussions are aimed at reaching a lasting solution, I find it impossible that the next government will come before we have finalised this matter. Actually, our target is that by end of December this year, we should have found a solution to this matter. In fact, there are a few agreements we have already reached. We have moved from the dispute mode into the next stage whereby we are able to negotiate amicably and we are seeing light at the end of the tunnel. Together with the liquidators, we are now sharing ideas of how we should be getting out of this. Well, I should mention that there are also other small issues that I must confess are dragging the process. Issues like how the liquidators have handled our business; issues of funds and so forth. You see, things should have been straightened out as we proceeded, but the bottom line is after these talks, MKM is going to continue with services.
LT: You referred to some of your buildings being confiscated. And I want us to talk about the new office complex located in the heart of Maseru city (near Sparrows), which has never been occupied…
Thebe-ea-khale: I know the building you are referring to. And indeed it has never been operational. You see, the liquidators have only come to realise, through our meetings, that we were only sabotaged by a certain lawyer (name withheld), who in our meetings, has appeared obvious that he is one of the sources of the MKM troubles. The liquidators are convinced that that lawyer was unreasonable when he alleged that we owed him about M70 million with regard to that building. He later, as the talks continued, reduced his claim to M17 million. But the liquidators made their own assessments and found out that we only owed slightly over M1 million, which we had not paid to the architect who drafted the building, on time. This was the crux of our liquidation. But now the liquidators can see that this particular lawyer was actually out of his mind and he was basically the one who drove MKM into all this mess. Recently, he was the subject of our meeting and his contribution was carefully scrutinised. The main contractor to that building was called and he produced documents of payments. There was no valid reason, in the first place, that the building should have been taken away from us, but it was still taken away from us, and has not been operational at all. The authorities have written so many letters to the lawyer requesting him to release the building so it can be leased but to no avail. Right now, it is just deteriorating for nothing. But all this, like I said, is being finalised as we speak.
LT: There was some dispute towards your purchase of the Agric Bank building along Kingsway in Maseru around 2007. Allegations were that some politicians were interested in that building, and that when you bought it, they were not happy and you have previously alleged this could also be the source of your problems. Could you explain this further?
Thebe-ea- khale: That building is actually the main reason why MKM found itself in trouble. It is how I managed to obtain that property that politicians began to harass MKM. The way I won the tender to buy that building shocked many people because I was clever enough to beat some heavyweight politicians to it. It actually came as a disappointment to them when I won the tender. You see, these people knew about my money because they were in control of the banks at the time and they knew about my bank accounts. They had calculated my monies and mistakenly assumed that I only had a certain amount. Based on that, they had thought they would beat me in bidding for the Agric Bank building. But they had been misinformed. They were not aware that I had opened another bank account outside the country. I took M16 million from the business and placed it in my bank account in South Africa. That money was hard-cash when I took it out of the business to South Africa. At that time, I had over M13 million in one bank here and M18 million in another local bank. So that was the only money they thought I had. Then came bidding day and I came up with the other M16 million to buy the building. They were shocked because the money was in hard cash; it was in my truck. They didn’t know my secrets; that’s how I beat them. And that’s when there were suspicions that I owned a bank inside MKM buildings. It’s because they didn’t know my secrets. It only took me a few hours to win that bid against the so-called heavyweights. I even told them jokingly that because they were maqai (uninitiated Basotho men), they would not beat me. Little did I know that winning that bid was going to cost me big time. From that day, I was being chased from place to place; I have never known peace from that day. They wanted to find out where I got the money. They even used their political muscle to pull me down. I was defeated through politics. And from what I later realized, they were holding secret talks to strategise how best they could defeat me. They used the media, for instance, the national television, radio stations and the internet to create problems for me. So myself, I don’t know anything about the internet and I don’t want to bother myself with it. That’s how they managed to talk behind my back because I could not even respond on time.
LT: How much did you buy the building for and who was selling it?
Thebe-ea-khale: I bought the building for over M35 million, and it was being sold by the Central Bank of Lesotho. And from what I discovered, people had been promised big things had they been able to secure that building for some politicians. They actually came to negotiate with me after I had won the tender so I could surrender the building to them, which I refused.
LT: What can you say to Basotho in conclusion? Do you have an apology to make to the thousands of people who lost their monies when MKM was shut down?
Thebe-ea-khale: We will soon be making an official statement to the public regarding how MKM is soon going to be back in full operation. But like I said, I cannot make the details of the negotiations I am having with the relevant stakeholders in case I jeopardise the discussions. But like I have mentioned earlier, there some of issues I will not discuss so allow me not to answer some of your questions.