Mosisili backs Tlelai in Victoria Hotel fight with DCEO
FORMER Prime Minister Pakalitha Mosisili and six former government officials have denied allegations by the Directorate on Corruption and Economic Offences (DCEO) that the state-owned Victoria Hotel was corruptly leased out in 2002 to businessman Thabiso Tlelai who then used it as a conduit for money laundering activities.
Two months ago, the DCEO said Mr Tlelai’s Sobita Investments was awarded the lucrative deal in 2002 by then Finance Minister Timothy Thahane to lease the strategically located hotel without an open tender process as required by procurement regulations.
Since “corruptly” obtaining control of the hotel, the DCEO alleged that Mr Tlelai used it to move millions of maloti to his other South African based accounts. The DCEO said Mr Tlelai has never paid any rentals or taxes to the Lesotho government, thereby prejudicing this impoverished country of revenue it should have obtained from a key asset.
It was on this basis that the DCEO sought and obtained a provisional order which allowed it to evict Sobita Investments and place the Victoria Hotel under curatorship of M Putsoa and Associates.
High Court judge Makara Molefi granted the provisional order on 15 June 2020.
Mr Tlelai has since filed an application to have the provisional order rescinded so that he can regain control of the hotel.
He has received the support of Mr Mosisili, Dr Thahane and five other former members of the Mosisili administration.
The six others who have thrown their weight behind Mr Tlelai are former Deputy Prime Minister Lesao Lehohla, former ministers ‘Mamphono Khaketla (Communications, Science and Technology), ‘Mathabiso Lepono (Gender and Youth), Pontšo Sekatle (Local Government), former government secretary Tlohang Sekhamane and former finance principal secretary Mosito Khethisa.
They all back Mr Tlelai’s claims that the Victoria Hotel lease was above board. They said it was a cabinet decision in line with the then government’s strategic investment drive through public private partnerships (PPP) and did not have to be subjected to a public tender as the DCEO claims.
In his affidavit filed on 25 July 2020, Mr Mosisili says his cabinet decided to lease the hotel to Mr Tlelai in 2002.
He says Dr Thahane was mandated to finalise the details of the agreement with Sobita Investments.
“I confirm that during or around the year 2002 the issue relating to the investment model (private public partnership) of Sobita Investment (Pty) Ltd in Victoria Hotel was tabled, discussed and decided by the cabinet of the Kingdom of Lesotho under my chairmanship as the then prime minister,” Mr Mosisili states in his affidavit.
Former DPM Lehohla concurs, saying the cabinet discussed and decided to lease Victoria Hotel to Sobita Investments in 2002.
“I confirm that during or around the year 2002 the issue relating to the investment model of Sobita Investments in the Victoria Hotel was tabled, discussed and decided by the cabinet. The then Minister of Finance, Mr Tim Thahane, was mandated to finalise the details of the agreement with Sobita Investments,” Mr Lehohla states in his affidavit.
On his part, Dr Thahane denies corruptly awarding the sub-lease agreement to Mr Tlelai. He says in negotiating the lease with Sobita Investments, he acted in line with the mandate Mr Mosisili had given him to accelerate economic growth through attracting foreign and domestic investment “within the framework of a transparent application of the applicable laws, regulations and policies”.
“I strongly deny any suggestion that the government’s decision to enter into the lease agreement with Sobita was unlawful or corrupt.”
Dr Thahane contends that the lease agreement represented one of those instances where the then government successfully secured a foreign investor “to rehabilitate what was then a dormant and unproductive government asset”.
He backs Mr Tlelai’s argument that Sobita Investments was invited by the government to invest. The former finance minister says he directed then PS Mphutlane to inquire whether Mr Tlelai would be interested to enter a partnership with the government, given his “proven track record and experience in the hotel industry”.
Dr Thahane says he was told Mr Tlelai was interested in leasing the hotel. He says he then requested PS Mphutlane to pursue further discussions with the businessman while he sought cabinet’s approval for a deal.
“After the officials at the (finance) ministry concluded the negotiations with Sobita, I reported back to cabinet the commercial terms that had been agreed with Sobita, that the costs of renovations shall be amortised against rental payments up to M2 million.
“I said that if, however, the cost of renovations and upgrades were to exceed M2 million, then the government would need to be appraised of such additional renovations and the cost thereof. Once approved, such costs would be amortised over the remaining period of the lease. The cabinet endorsed this policy position,” Dr Thahane states.
Similar affidavits in support of Mr Tlelai have been deposited by Dr Khaketla, Ms Lepono, Dr Sekatle, Mr Sekhamane and Mr Khethisa.
The latter goes on to say that the then government had begun to privatise some of its assets in line with the Privatisation Act of 1995. While some assets were privatised, Mr Khethisa says others like Victoria Hotel were not privatised.
He says Victoria Hotel had stood unoccupied for several years, had been vandalised and was derelict. It therefore failed to attract any interest from potential investors.
He says the hotel was eventually leased to Sobita Investments and years later in 2011, he granted the company permission to spend up to M12 million to refurbish the hotel.
“I confirm that on 28 December 2011, on behalf of the government, I signed the permission in terms of the sublease agreement of which the government granted permission to Sobita Investments to spend up to M12 294 574, 55 in effecting renovations, upgrades and furnishing the Victoria Hotel.
“The permission was granted after it became apparent that Sobita Investments would exceed the amount of M2 million in effecting the renovations, upgrades and furnishings in respect of Victoria Hotel. The permission was granted after a reconciliation of improvements made at that stage was made by a team from Sobita Investments and a Ministry of Finance team assigned that task by me.
“I furthermore confirm that on the 11 April 2012 I wrote a memorandum to the then Honourable Minister of Finance, Dr Tim Thahane, in terms of which I requested his approval of the extension of the sub-lease agreement between the government and Sobita for a period of ten years with effect from the 1 July 2013. The reason for the early request was that Sobita Investments wanted to commence some major renovations to Victoria Hotel before the end of the then existing sublease agreement period. The approval was duly granted as sought,” Mr Khethisa said.
In his affidavit, Mr Tlelai accuses the DCEO of acting incompetently by seeking the forfeiture of a property that belongs to the state.
“The DCEO knows or sought to know this (that the hotel belongs to the state). It has presumably sought to preserve a property owned by the state in a misguided attempt to establish a nexus between allegations of unlawfulness relating to the Victoria Hotel, on the one hand, and unrelated property owned by Sobita, on the other hand,” Mr Tlelai states.
He says Victoria Hotel had stood for more than ten years without being occupied. He says it was vandalised and was in a derelict condition when his company was awarded the sub-lease agreement in 2002.
“The air conditioners that were mounted had been pulled out leaving holes in the walls of the hotel. The carpets on the floor of the hotel had been ripped out. The plumbing and electrical cables and been pulled out of the roofs and walls which were pocketed with holes. The bathtubs, showers, taps, geysers and almost all other fixtures had been stolen or vandalised,” Mr Tlelai says.
He says he was then approached by Dr Thahane through Ms Mphutlane to enquire about his interest in investing in the hotel.
He says the cabinet resolved to invite Sobita to invest its own funds and labour in rehabilitating the hotel and managing it with the expectation that this would enhance its value. He says his company renovated the hotel with its own funds and that the necessary permission was granted by the government.
“…as at this date (May 2020), Sobita had invested M26 234 440, 55 in affecting repairs and upgrades to the Victoria Hotel since taking possession in July 2003. The total value of Sobita’s rental obligations over this period is an amount of M18 474 094, 67. The value of Sobita’s investment exceeds the value of its rental obligations by an amount of M7 760 345, 88,” Mr Tlelai says.
On the DCEO’s money laundering allegations, Mr Tlelai denies the claim and explains that Sobita is part of a group of companies in South Africa and Lesotho which are ultimately controlled by his family. He says the movement of funds between these companies is common in the conduct of business the world over and fails the money laundering test.