MASERU — A trust purportedly representing MKM depositors and creditors has raised eyebrows after it emerged one of the key people behind the trust was the Central Bank of Lesotho (CBL)’s legal adviser when it shut down the company in 2007.
Thandiwe Metsing, who heads the recently established investors trust, was a CBL legal adviser when the central bank shut down MKM in November 2007 for running illegal insurance and banking businesses.
In fact, she is said to have played a key role in the closure of MKM.
Motlatsi Mpobole, another key member of the trust, was once employed by Webber Newdigate, the law firm representing the CBL in its bid to liquidate MKM.
A source at Webber Newdigate said Mpobole worked at the law firm until “quite recently”.
In a curious turn of events, the trust headed by Metsing, Mpobole and a South African lawyer, Luke Bernard Saffy, emerged in April saying it wanted to protect the interests of MKM depositors and creditors.
MKM has, however, said the three are neither creditors nor depositors with the troubled company.
The trust has since applied to be enjoined in the case in which the central bank is seeking to liquidate MKM.
About 400 000 depositors, nearly a quarter of Lesotho’s 1.8 million people, had their money locked up in MKM when the CBL shut down the company.
“The main object of the trust is to protect, preserve and advance the interests of the beneficiaries (MKM investors) insofar as they have invested or have participated or are beneficiaries in terms of any of the scheme products (MKM schemes), subject to fairness between investors,” says the trust.
It also says it will “assist investors enforce any right and to investigate, pursue and recover any claims for repayment, restitution, damages or otherwise which they may have, relating to or arising from any scheme transactions with the scheme operators”.
The trust also seeks to “acquire by purchase or otherwise the rights of one or more investors as may be necessary to give the trust locus standi to launch or support applications for sequestration or liquidation”.
The trust deed has been filed in the MKM liquidation cases so that the trust can be responsible for liquidating MKM and sell its assets to pay out depositors if the central bank wins its court battle to liquidate MKM.
But the trust deed exempts the trustees from being liable for any losses of assets in the trust.
These are assets that would have been acquired from MKM in the event that MKM is liquidated.
Clause 15 says: “The trustees shall not be personally liable to the beneficiaries for any trust losses, except caused by gross negligence or deliberate wrong.
“The trustees shall under no circumstances be personally liable to creditors of the trust.”
The trust was registered at the Deeds Registry on April 20, 2010 under the name MKM Investors Trust.
The name was however amended to Investors Trust on June 2, 2010.
But MKM directors are not happy with the setting up of the trust alleging the trust was a scheme to fleece depositors of their money.
MKM boss, Simon Thebe-ea-Khale, said the trust was bogus because no meeting of the depositors and creditors was ever held to establish it.
“I have already filed an application in the High Court challenging the legitimacy of this trust,” Thebe-ea-Khale said.
He was particularly peeved by clause 20 of the deed of trust.
The clause says: “Any benefit becoming vested in any beneficiary in terms of this deed and any profits thereon, shall be specifically excluded from any community of property which may exist or come into existence between such beneficiary and any spouse, and in addition, in the case of a female beneficiary, the marital power of any husband shall not apply in respect of any such benefit or profit.”
Thebe-ea-Khale said the clause was laden with legal loopholes designed to fleece investors of their money.
“How can a married person not benefit from his or her partner’s investments when they are married under community of property?” he said.
“The intention here is clear. These people want to enrich themselves from the depositors’ funds.”
MKM director Mothofeela Ramakatsa said the trust was not established to serve investors’ interests.
“Imagine someone establishing a trust on behalf of some people yet their beneficiaries don’t get anything in the event that they die,” Ramakatsa said.
“Can we say the trust is in the interest of the investors? No!
“It is only sad because if it (trust) succeeds the burden will be directed to MKM yet we have a clear procedure regarding the beneficiaries of our investors.”
The High Court was expected to hear the MKM liquidation case on June 5.
It was expected that the High Court would also deal with MKM’s application in which MKM was challenging the legitimacy of the Investors Trust.
The case did not proceed because High Court Judge Lisebo Chaka-Makhooane recused herself from the case alleging that Thebe-ea-Khale had sent an emissary to strike a deal on the matter on his behalf.
But Thebe-ea-Khale has since denied ever sending anyone to the judge to negotiate the case on his behalf.
The central bank is pressing for MKM’s liquidation after an auditing firm, PriceWaterhouseCoopers (PWC), declared the company insolvent in 2008.
PWC said MKM had failed to account for M300 million of the M400 million it had collected from depositors.
PWC was hired by the central bank in 2007 to investigate MKM businesses.
The investigation resulted in MKM businesses being shut down in November 2007.
Metsing, who is the donor of the trust, was the central bank’s legal adviser at the time when the central bank approached the High Court to seek an order to shut down MKM.
Yesterday she refused to discuss her role in the MKM saga.
“I don’t want to speak to you because many things have already been said about this issue,” Metsing told the Lesotho Times.
“I can only speak when I have instructions from the people appearing on the deed because I’m just the trustee.”