‘Open criminal case’

MASERU — The Central Bank of Lesotho (CBL) wants the directors of the troubled MKM and the now defunct Millennium Goal Society to face criminal charges for fleecing depositors with their money multiplication schemes.

Although the Millennium Goal Society was liquidated last November and its depositors were paid a small share of their investments, the CBL believes its directors should still face criminal charges.

The CBL believes the directors of MKM and Millennium Goal Society have a case to answer for operating pyramid schemes and running banking and insurance businesses without licences.

MKM is still battling to fend off liquidation proceedings brought to court by the central bank.

The Lesotho Times is in possession of a letter that central bank governor Moeketsi Senaoana wrote to the Directorate for Corruption and Economic Offences requesting the government’s anti-corruption unit to criminally charge the directors.

In that letter dated February 12, 2010, the governor says at a January 27 meeting the CBL board of directors resolved to institute criminal charges against the directors of the two firms.

“Following protracted civil action in the courts (all of which pointed on the part of the operators of the schemes), on 27 January 2010 the board of directors of the Central Bank of Lesotho resolved to have instituted criminal charges against the involved entities and natural persons,” Senaoana says.

“By this correspondence, we accordingly call upon the Directorate for Corruption and Economic Offences to institute criminal action as may be appropriate.”

In the two-page letter, the governor explains that criminal action should be taken against the directors because the courts of law have already declared that the two firms were operating illegally.

“Towards the end of 2007, the Central Bank of Lesotho instituted civil action against two groups of entities which had been engaging in the illegal money-multiplication schemes, namely the Star Lion Group (MKM) — incorporating all persons against which action could be levelled — and Millennium Goal Society.”

“In both instances, the courts found that the money-multiplication activities orchestrated by the entities had constituted illegal banking and (or) insurance business.”

Senaoana says: “In our assessment, several criminal charges may stand competently against involved entities and persons, including fraud, theft and other statutory offences.”

He further says the “extensive forensic investigation report” undertaken by PricewaterhouseCoopers on MKM and Millennium Goal Society’s businesses should form the basis for instituting criminal action against the firms and their directors.

“It is probable that the findings made in the forensic reports may prove useful in the preparation of the criminal investigation files.”

The director general of the Directorate for Corruption and Economic Offences, Leshoele Thoahlane, responded to the governor’s letter on May 31.

In his response Thoahlane said the matter “is receiving my attention and I will revert to you as soon as possible”.

If the central bank’s wish is granted, the MKM directors who are likely to face criminal charges are the managing director Simon Thebe-ea-Khale and Mothofeela Ramakatsa.

So too will Millennium Goal Society directors ‘Mota Nkuatsana, Seth Mokotoane, Thabiso Molapo, Tieho Mafoso and Mofana Ramofana.

The central bank hired a forensic auditing firm, PricewaterhouseCoopers (PWC) to investigate MKM and the Millennium Goal Society’s operations.

In 2008, PWC reported that MKM was insolvent because, out of M400 million it collected from the depositors, only M100 million could be accounted for.

PWC also discovered that of the M16 million invested by depositors in Millennium Goal Society only just over M5 million was still in the company’s coffers.

After a protracted legal battle, Millennium Goal Society was liquidated in November and depositors were paid only 31 lisente for every loti they had invested in the company.

That meant that a depositor who invested M100 000 could only get M31 000.

The central bank is now pursuing the liquidation of MKM but the court cases are moving slowly in the High Court.

So far, five High Court judges have dealt with the matter without bringing it to finality.

Recently two High Court judges — Justice Tseliso Monapathi and Justice Lisebo Chaka-Makhooane — recused themselves from the case.

Justice Monapathi, the most senior High Court judge after the Chief Justice, recused himself in March saying he had borrowed a vehicle from MKM director Ramakatsa.

He said he had known Ramakatsa for nearly 20 years and at one time MKM had given his son a temporary job while he was on school vacation.

Justice Chaka-Makhooane pulled out of the case in June saying she had received a nocturnal visit from an acquaintance who said he had been sent by MKM boss Thebe-ea-Khale to talk to her about the MKM case.

Thebe-ea-Khale denied sending the emissary to the judge.

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