MASERU – A lawyer representing MKM this week argued that the High Court should throw out the Central Bank of Lesotho (CBS)’s liquidation proceedings against the troubled company.
Advocate Kananelo Mosito told the court on Tuesday that the central bank governor Moeketsi Senaoana should not have brought the applications to liquidate MKM in his name because he is not the commissioner of insurance.
He argued that Senaoana does not have locus standi (legal right) to bring the petitions to liquidate the company because the law says only the central bank itself can do so.
In the court papers Senaoana claims he has instituted liquidation proceedings against MKM in his capacity as the commissioner of insurance in terms of the Insurance Act of 1976 which was amended in 1983.
But Mosito said the Central Bank Act of 2000 contradicts Senaoana’s proposition because it cites the central bank as the commissioner of insurance.
Mosito said the applicable law to institute liquidation proceedings is the Central Bank Act of 2002 because it has, by implication, repealed the 1976 and 1983 laws that Senaoana claimed to be using.
He said according to the Central Bank Act of 2002 the central bank was the commissioner of insurance and therefore should have brought the applications to liquidate the MKM.
“We are now interrogating the position of the commissioner of insurance suing in his name.
“The provisions of the Act under which these petitions (applications) were brought say they should be brought by the commissioner who is the governor. But now the commissioner means the Central Bank of Lesotho in terms of the 2000 Act,” Mosito argued.
“Once he (Senaoana) deposes on the affidavit as the governor not as the central bank the questions arises: Does he have locus standi?”
He said Senaoana, as the petitioner (applicant), had failed to comply with the legal requirements to institute liquidation proceedings against MKM.
“The petitioner (Senaoana) must stand or fall by the contents of his petition.
“To make matters worse Mr Senaoana says ‘I am the petitioner. And if he says so we say no! These applications (petitions) should not be brought by you but by the Central Bank of Lesotho.
“And if he instituted proceedings against the law they (proceedings) are a nullity,” he added.
“If the bank had intended to institute proceedings against my clients it should have done so in its own name.”
Mosito also challenged the format of the court papers that Senaoana filed.
“In this Kingdom where there is a clear law dealing with petitions there is no phenomenon known as ‘Notice of Petition’.
“And if the court rules in our favour and the notice of petition is thrown out only the petition will remain,” Mosito said.
“But the court will realise that once the notice is thrown out the petition here does not have relief sought.”
In response to Mosito’s submissions the central bank’s lawyer Advocate Johannes de Bruin said Senaoana has locus standi to institute liquidation proceedings against MKM as the commissioner of insurance in terms of the Insurance Act of 1976 as amended by the 1983 Act.
De Bruin said the Central Bank Act of 2002, which cites the bank as the commissioner of insurance, did not repeal the already existing laws.
“This is a point of law. Our argument is that the Central Bank Act did not repeal the Insurance Act. Yes the 2000 Act says the bank is the commissioner. But the commissioner in this law is the bank that has no fingers to hold a pen,” De Bruin said.
“There should be someone to do so.”
He also rejected Mosito’s submission that the Central Bank Act of 2000 repealed the Insurance Act of 1976 and the 1983 amendment.
“Why should the Act be repealed when it harmonises with the new law?
“If the intention of the legislature was to remove the commissioner of insurance there should have been an amendment to repeal it. The two Acts can live together,” De Bruin said.
He also said the format of Senaoana’s court papers was correct “because all relevant information was included”. Mosito said if the “court finds that they (petitioners in four petitions) have no locus standi, even if they have a good a case on the merits, they must be told to go home,” Mosito said.
South African judge Justice John Musi, who was hired last year to preside over the case, said he would reserve judgment to a later date to consider the arguments.
This means that MKM’s fate is now hanging in the balance until Justice Musi has pronounced himself.
If Justice Musi rules that Senaoana does not have locus standi to institute liquidation proceedings against MKM it would mean that MKM is off the hook.
Four liquidation applications were lodged against MKM in 2008 after the central bank said the company was insolvent.
PricewaterhouseCoopers (PWC) said MKM was insolvent because it could not account for M300 million of the M400 million it collected from depositors through unlawful schemes.
MKM was shut down in November 2007 after the central bank said it was operating banking and insurance businesses without licences. MKM was a pyramid scheme meant to fleece people.
The courts have already ruled that the company was operating illegally. Nearly 300 000 people had their money locked up in MKM when it was shut down.
The company has had running courtbattles with the central bank since 2007.
Until early last year the company had always insisted, without concrete evidence though, that it has the money to repay depositors.
Late last year a trust fund established by MKM boss Simon Thebe-ea-Khale told the court in an application that the company needed five years to repay depositors.
