MASERU — MKM boss Simon Thebe-ea-Khale wants a five-year grace period to repay depositors who lost their money when his troubled company crashed.
And he wants time to make deals with some of the depositors so he can repay them when he has the money.
It also emerged this week that Thebe-ea-Khale is the brains behind a trust fund that got a questionable interim court order on November 19 to block proceedings in a court case seeking to liquidate the company.
The liquidation case that was supposed to resume last Monday stalled after the 2020200 Trust Fund, in which Thebe-ea-Khale has a hand, produced the November 19 interim court order blocking the proceedings.
After that Justice John Musi, a South African judge hired to hear the case after local judges recused themselves from the case, had to set aside the liquidation proceedings to deal with the interim court order.
Arguments on the application will be heard on Monday.
The 2020200 Trust Fund claims to represent MKM depositors’ interests.
Advocate Makhetha Motsoari, MKM director Mothofela Ramakatsa, Thaba-Bosiu principal chief Khoabane Theko and ‘Majane Poea, who is an MKM employee, are listed as 2020200 Trust Fund’s trustees and therefore applicants.
In the application that resulted in the interim order Thebe-ea-Khale himself was listed as a respondent together with his companies, the commissioner of insurance, the central bank as well other companies.
Some creditors and an investors’ trust led by Thandiwe Metsing, who was a legal adviser for the central bank when it closed MKM in November 2007, are also listed as respondents.
Nowhere in the application does the 2020200 Trust Fund mention that Thebe-ea-Khale is the man behind it.
But a deed of trust in possession of the Lesotho Times reveals that he is actually the founder of the trust fund.
He is also listed as the trust’s sponsor.
Apparently the deed says the MKM boss donated M10 000 to the 2020200 Trust Fund to finance its court battles against efforts by the central bank to liquidate MKM.
At the end of the deed Thebe-ea-Khale is listed as the founder.
All these details are contained in the deed of trust but are not mentioned in the 2020200 Trust Fund’s application.
This means that in the application for the interim court order Thebe-ea-khale was indirectly an applicant as well as a respondent.
Last Thursday Justice Musi questioned the manner in which Justice ‘Maseshophe Hlajoane issued the interim court order.
He said it was strange that the notice of motion said the application was going to be heard on November 19 at around 2.30pm but the respondents had only been given the court papers at around 3.15pm, almost an hour after the interim court order had been granted.
But the seemingly sinister actions of the 2020200 Trust Fund do not end there.
Because Thebe-ea-Khale is both an indirect applicant — since he is the man behind the trust — and also a respondent it means he was actually issuing himself with the notice of motion and the interim court order.
So by the time the notice of motion was purported to have reached him, he already had the interim court order as an applicant.
It is possible that he could have deliberately delayed issuing himself the notice of motion because he wanted to get the order first.
Yet even if he had received the notice of motion for the application’s hearing on time he would not have opposed it because he is both the respondent and the applicant.
His other companies Star Lion Group Limited, Star Lion Insurance, Star Lion Gold Coin Investment and MKM Marketing which were listed as respondents in the 2020200 Trust Fund also got their notice of motion way after the interim court order had been granted.
But even if the order is dubious there is no way that the four companies can challenge it because they are controlled by Thebe-ea-khale.
Although according to the Companies’ Act these companies are independent entities it is Thebe-ea-Khale himself who makes decisions on what action to take when they are sued.
In this case he would not have possibly made the decision for them to challenge the application because he was the applicant by virtue of being the founder of the 2020200 Trust Fund.
On Thursday, Justice Musi said he was going to call Justice Hlajoane to find out how the interim court order of this nature could have been granted.
For Thebe-ea-khale the interim order had the desired result, all the same.
The 2020200 Trust Fund wanted the arguments for the application to be heard on November 6 and they succeeded despite the central bank’s protests.
It also managed to delay the liquidation proceedings because when the hearing resumes on Monday the lawyers will be arguing about the application and its merits.
That means the liquidation proceeding will only resume when Justice Musi has made a ruling on the application.
Even then, the liquidation proceedings might stall if the 2020200 Trust Fund’s application is granted.
MKM would have managed to delay its fate.
Yet it is the real motive of the 2020200 Trust Fund’s application itself that has raised questions.
In their heads of argument the lawyers for the trust fund say the liquidation proceedings should be stayed because the trust wants more time to gather depositors and negotiate payment arrangements with some of them.
To do that, the trust says it needs three months.
The lawyers however say MKM needs five years to repay depositors.
The trust also says it wants more time to negotiate with the current depositors so that they don’t demand their monies now.
In addition the trust also wants MKM to have more time to make a list of how many people deposited money with it and how much it owes them.
Yet this is in stark contrast to what MKM has been saying all along.
In previous court papers the company has claimed that it is solvent and should be allowed to repay its depositors.
It has also claimed that it has its own list of depositors that is different from the one that the central bank has.
The amount of M300 million that the central bank claims is missing from MKM’s books is wrong, the company has claimed in previous court papers.
Nearly 300 000 Basotho have their monies locked up in MKM after it was shut down by the central bank in November 2007.
An audit revealed that of the M400 million that MKM took from depositors only M300 million could be recovered.
This means if MKM is liquidated depositors are likely to get only 25 lisente for every loti they invested.
However, that figure could be much less if the administrative costs of the liquidation are included.
The liquidators will also get their commission from the total assets of MKM.
Also, any court case that is brought by a depositor against the company will have to be defended using the investors’ funds.
The Court of Appeal and the High Court have already ruled that there was nothing wrong with the central bank’s decision to close MKM because it was operating banking and insurance businesses without licences.
Currently it is not clear from where MKM will raise the money to repay depositors.
Its previous attempts to inject new capital into the company by bringing new shareholders were rejected by the central bank.
First, the company proposed to get loans from banks to improve its liquidity.
When that failed its directors came back to the central bank with a proposal to sell the company to South African insurance firm, Channel Life.
The central bank found the proposals “unprofessional and lacking in substance”, according to Finance Minister Timothy Thahane.