MASERU — Prosperity Insurance Brokers wants the Central Bank of Lesotho (CBL) to reverse its decision to revoke its operating licence which was cancelled last October.
Last week the troubled insurance broker lodged an urgent application in the High Court challenging the CBL’s decision.
The company also wants High Court judge ’Maseshophe Hlajoane to order the CBL to “retract their public notices” in which it announced the decision to cancel the licence.
The notices, Prosperity said, had been published prematurely because the minister had not made a decision on the company’s appeal against the cancellation.
The procedure is that banks or insurance companies whose licenses are revoked can appeal to the minister of finance for redress.
Only when the minister has rejected the appeal can the cancellation be considered effective.
In his founding affidavit, Prosperity managing director Motlohi Siimane told the High Court that following the revocation of the licence by the CBL governor, Moeketsi Senaoana, he appealed to the Minister of Finance, Timothy Thahane.
“I must point out that any revocation of applicant’s (Prosperity’s) licence is automatically suspended by Re: notice of appeal in terms of regulations 21 of legal notice no 71 of 1985 (Insurance regulations 1985) (SM3) pending the decision of the minister,” Siimane said.
“To date the Honourable Minister has not decided applicant’s fate.
“Last week and to my surprise Moafrika FM (radio station) ran a public notice that applicant’s licence had been revoked and that applicant’s clients should report at second respondent’s (Alliance Insurance Company) office’s with their contracts.”
“I immediately went to second respondent’s (Alliance Insurance company’s) offices about their notice on March 5 and I was given SM4 (Revocation of Prosperity Insurance Brokers’ Brokerage licence) on the basis of which they had put up the notice with Moafrika FM,” he said.
“As if that was not enough third respondent, (Prosperity Insurance Company Limited Lesotho), put up a public notice in the Public Eye newspaper of 5th March to the effect that applicant’s licence had been cancelled. The notice is copied and marked SM5 (Public Eye, Friday March 5, 2010).
“Today the 8th March first respondent (Central Bank of Lesotho) put up another notice on their web to the same effect.”
Siimane said this had left his company with no “alternative remedy” but to seek the High Court’s intervention.
He said the company’s position “is rendered precarious day by day”.
“Applicant’s business is bound to be highly prejudiced if these steps are not taken.”
In the court papers, Prosperity Insurance Brokers wants CBL to show reasons why it should not be restrained from falsely publishing that it had revoked the company’s operating licence pending the determination of applicant’s appeal to the minister.
They also want the CBL to show cause why it should not be ordered to retract public notices it has already published in the media.
CBL cancelled Prosperity Insurance Broker’s licence after accusing the company of failing to remit premiums it got from clients to insurance companies.
Insurance brokers are middlemen between the client and the insurance companies.
The brokers charge a commission for every client they get but they are supposed to surrender all the premiums to the insurance companies.
Prosperity Insurance Brokers was accused of collecting premiums and keeping them for its use, which is a serious breach of business conduct and ethics.