Mohloai Mpesi
The Public Accounts Committee (PAC) is investigating the missing M175 million owed to the government by Lucapa Diamonds for its 2017 acquisition of Mothae Diamond Mine.
While the Ministry of Natural Resources says Australian company had paid the government, Deputy Accountant General ‘Mabakubung Pitso is adamant that there was no such payment reflected in the government’s accounts.
This issue came to light during a PAC session on Monday, where the Ministry of Natural Resources was questioned about queries raised in the Auditor General’s Report for the year ending March 31, 2022.
Auditor General, ‘Mathabo Makenete, noted in her report that M175 million was owed by Lucapa from their 2017 acquisition of Mothae.
Lucapa operated the Butha-Buthe mine from 2017, controlling a 70 percent stake, while the government owned the remaining 30 percent share.
This until last month when Lucapa announced its deal with Lephema Executive Transport to take over its 70 percent stake.
This has raised a lot of controversy as Lephema Executive Transport is owned by the Minister of Local Government, Chieftainship, Home Affairs, and Police, Lebona Lephema. He was chastised by opposition parties over the obvious conflict of situation that arises from the deal. It means he will effectively be doing business with the government he is part of, a situation that flies in the face of the Revolution for Prosperity (RFP)’s claims for probity. The same conflict of interest scenario had compelled Prime Minister Sam Matekane to divest from Letseng Diamonds, where he did the same earth moving business as Mr Lephema did at Mothae. Mr Lephema appears unbothered however.
It is not yet clear whether the government will approve the deal but Natural Resources Minister, Mohlomi Moleko, has already defended Mr Lephema saying there was nothing wrong with the acquisition of the mine as the minister was not hands on in the operations of Lephema Executive Transport.
Part of the deal is that Lephema Executive Transport will inherit Lucapa’s undisclosed debts. The disclosure of the missing M175 millions adds another layer of complexity to the Mothae Mine saga. If the government was not paid the money, as claimed, then it means the mine was acquired fraudulently.
The PAC had therefore summoned the Ministry of Natural Resources to clarify the status of the M175 million before Lucapa Diamonds exits the country.
The ministry claimed the money had been paid by Lucapa but they had failed to report it.
The Accountant General’s office nonetheless denied the existence of any proof of payment.
Principal Secretary of Natural Resources, Relebohile Lebeta, explained that the government had agreed to Lucapa’s acquisition of Mothae Diamond Mine on 27 January 2017. The agreement stipulated that Lucapa would acquire the mine for USD$9 million (M175) to be paid in instalments.
“According to the agreement, the sale of Mothae amounted to USD$9 million. The first payment was to be USD $400,000, the second USD$4.1 million, and the remaining USD$4.5 million was to be paid in eight instalments of USD$562,000 each,” she said.
Ms Lebeta detailed the payment history, asserting that the total of USD$9 million was paid by August 2021.
She said the first payment of USD$400 000 made on the 13th of March 2017, USD$4.1million was paid as the second payment on the 6th of September 2017.
“Third payment of USD$562 500 was made on the 20th of July 2018. On the 30th of August 2018 there was another payment of USD$562 500, and on the 27th of May 2019 there was a payment of USD$562 500.
“On 28th of May 2019 there was another payment of USD$562 500. On the 1st of July 2019 there was a payment of USD$562 500, on the 2nd of August 2019, the same amount was paid.
“On the 13th of August 2021, two payments were made, which totalled to USD$1.1025 million and the total was USD$9 million as per the agreement,” she said
Despite these payments, she said Lucapa was still finalising its departure.
However, ‘Mafani Masoabi from the Auditor-General’s office, said there was no such. She said there was no proof for the payments.
She stressed the need of supporting evidence for all financial transactions reported to the Accountant General.
“When financial statements are submitted to the Accountant General for consolidation, they must include evidence of how national finances were used. This submission lacked such evidence, leading to the current confusion,” Ms Masoabi stated.
“The government resources are controlled by documents. Even the last cent is supposed to be reported. The report is supposed to indicate the money that went out, the one that came in and the one that is owed to the government. The law binds the chief accounting officers to report the money with all transparency. Hence, they are guided by the law.
“So, you must produce evidence that the money has been paid. The work of the Auditor General is premised on documents. We don’t work on verbal issues, we need written proof.
“So, this one that it is said to have been captured, but not reported in the financial statement, does not reflect the true financial position of Lesotho,” Ms Masoabi said.
Furthermore, Deputy Accountant General, ‘Mabakubung Pitso, maintained that the claimed payments by Lucapa did not reflect in the government’s accounts. She explained that in the 2021-2022 financial year, the ministry’s submission lacked details on receivables, unlike in the previous years.
Accountant in the Ministry of Natural Resources, Sebueng Tlabanyane, admitted the failure to report the payments correctly but insisted that the money had been paid. She acknowledged the oversight in not attaching receipts to financial statements.
“I acknowledge that we only reported in 2022 that the money had been paid without providing the proof of receipts, hence the Accountant General does not see any receipts attached.
“We did not report that the money was available; we had previously reported in 2021 that it was a receivable. In our submission as the Ministry of Mining, it was not clear that the money we received was the money we had been expecting. We did not report that it had been paid; we only removed it from the receivables. It was not reported properly,” Ms Tlabanyane said.
She thus insisted the money had been paid but had not been reported correctly.
“It was paid into the ministry’s account, then we received bank statements from the treasurer, and we captured it into our system. We have proof that the money is in the account. I did not attach the receipts and failed to report it in the financial statements of 2022. “From the financials of 2020, when I assumed office, I reported that we had receivables of M175 million that were not paid. When it was paid, we did not report in the books that the money had been paid nor did we present the proof.”
Chairperson of PAC, ‘Machabana Lemphane-Letsie, asked Ms Pitso to clarify whether Lucapa still owed the government.
Ms Pitso confirmed that no documents had been received from the ministry to indicate payment by Lucapa.
“When the money comes in, it will be seen, then the statements are given to ministries to capture it. They are the ones who bring documents to us. But we have never seen any Lucapa documents, they have not given them to us,” she said.
Basotho National Party (BNP) leader, Machesetsa Mofomobe, queried whether there was any unaccounted for money in government accounts. Ms Pitso conceded that there might be unidentified funds, suggesting possible discrepancies in financial recording.
Ms Lemphane-Letsie concluded that the committee remains unconvinced about the payment issue. Until the required documents proving Lucapa’s payment were provided, she said the mining company was considered to be owing the government M175 million.
“It seems like there is no answer to this issue. It is important that we have an answer on this matter. Advise is that the ministry and Accountant General should meet to clear this issue and give the Auditor-General a response that will come to the PAC.
“Up to now, what remains is that Lucapa owes the government of Lesotho M175million for the acquisition of the diamond mine….,” Ms Lemphane-Letsie said.
The meeting was postponed to next Monday morning for further investigation.
