MKM saga: The circus continues
LESOTHO never ceases to amaze. After the shuffling off of our small time terrorist Tlali Kamoli to the land of Idi Amin, we had hoped for a bit of respite from the perennial madness that has become a byword in our kingdom.
But after Thebe-ea-khale’s violent attempt to stop the auctioning of his MKM’S assets, it certainly appears we are in for some more hoopla drama.
Except that the players have changed from our Looney Tunes politicians to our humpty dumpty schemers who masquerade as businessmen.
The point does not need any more be-laboring. MKM is the biggest corporate fraud ever perpetrated on unsuspecting Basotho since independence, some donkey years ago.
As Scrutator declared long back, MKM is a Ponzi scheme, an archetypal pyramid scheme that robs, robs, robs and robs to make its promoters rich before it collapses. Like all Ponzi schemes MKM was always destined to meet its fate; inevitable collapse. Ponzi scheme owners and their initial recruits cream off the goodies first, the rest (the majority) then follow to pick up the crumbs, if any are left, before crying all the way to penury.
In countries with established commercial sectors and top notch judiciaries, Ponzi scheme owners inevitably end up in jail (Bernard Madoff style).
The rest of the investors in such schemes learn their lessons the hard away and move on.
Thebe-ea-khale must count himself among the luckiest men in this world.
That he can go as far as renting a crowd to foil a legitimate courtsanctioned sell-off of MKM assets speaks volumes of the kind of society Lesotho has become.
Here is a man at the centre of a pyramid scheme which ran unlicensed businesses and must be firmly ensconced in a 2x2 cell at Maseru Central Prison.
But he still has the temerity to violently stop a judicial process while our police officers remain spectators as a prominent lawyer is assaulted. Anything can surely now happen in Lesotho. Thanks to the small time terrorist. We continue on a slippery slope to perdition.
Scrutator does not normally want to chide the judiciary. Our judges try their best under the most difficult circumstances. They also rank among the least paid jurists in the world. So it is not surprising that some of them fell victim to Thebe-ea-khale’s ruse that he could make any Basotho who invested into his pyramid scheme get rich very quickly.
remember the number of recusals from the bench at one stage to avoid conflict of interest situations by local judges who invested in MKM and could not sit to judge its cases. Not only judges invested in MKM. Ministers, principal secretaries, senior government officials at different levels, senior politicians as well as the rank and file Basotho etc.
About 400 000 of them. Everyone who ought to have known better, and everyone who cannot reasonably be expected to have known better, fell for ea-khale’s scheme.
Scrutator’s question is; how can 400 000 people be so daft. I am not sure the extent to which vested interests in MKM by our political and judicial elite have dragged this matter which must have ended long ago. But the judiciary is certainly not acquitting itself well on this one.
The conflicting interdicts from the courts stalling, then enabling and then stalling the liquidation of MKM are a cause for major worry.
Perhaps there is a whiff of suspicion that liquidation can be avoided and MKM can be salvaged with investors being able to reclaim some of their lost assets.
A report in the Sunday Express disclosed a deal in which ea-khale and his co-crook, Mothofela Ramakatsa, promised to form a special purpose vehicle to assume and run the assets of MKM and later allow investors to be paid out.
The deal appeared stillborn as some of the original cash required to make it work from ea-khale and Ramakatsa did not materialise.
The point that everybody misses in this whole MKM saga is that a Ponzi scheme is never salvageable. Anybody stupid enough to have invested in a Ponzi dream loses their money.
The Ponzi planners normally filter as much as possible away. The lucky ones are the ones who cash in early as new investors are recruited to pay the old ones. In the MKM saga, no one, or at least very few, seem to have emerged better off than ea-khale himself.
MKM was run without all the necessary regulatory approvals to run legitimate financial and insurance related businesses.
The Central Bank of Lesotho was right to pull the plug. The Appeal Court was right to order its liquidation so that those who invested can share the remaining crumbs and then close this chapter. ea-khale has tried to discredit the Pricewaterhousecoopers audit report which proved his Ponzi’ scheme’s bankruptcy. He has unfortunately not furnished any credible alternative argument against the Pricewaterhouse report.
If he is stashing some MKM loot somewhere to cover for the M300 million insolvency gap, then he must say so. That would be a welcome relief for those harbouring elusive hopes of ever getting their money back.
Otherwise the sooner MKM assets are sold and the company is wound up the better. Maybe the assets will fall to prudent entrepreneurs who can make some good from them. The tragedy is that the assets are just buildings with no underlying business models.
The best they can do is generate rentals for the new owners unless any new owners have innovative ideas to house in these shells and create good jobs. The point is that this MKM nonsense is tiring and it’s a huge pity Advocate Stefan Carl Buys was not allowed to complete his mandate. The courts must now put it to an end to these shenanigans and allow everyone, not only the 400 000 ea-khale victims, to move on with the following critical lessons;
1) Anyone who invests in any ventures promising ridiculously high rewards above market-related interest rates thresholds is an ignoramus;
2) Pulled investments like MKM cannot simply work in a country with a non-existent industrial base like Lesotho.
Which sector or sectors could have viably attracted the hundreds of millions pulled from MKM investors and guaranteed decent rewards to the 400 000 investors.
3) If you have a little moolah to invest, better buy a hose-pipe and start a car wash venture in your yard. If you clean 10 to 15 cars every-weekend, you are guaranteed a better return than giving your money to ea-khale and Ramakatsa in lieu of a dream of quick high returns which will never materialise.
4) For anyone to get rich, you must work hard. Not every Mosotho can become a politician and have an opportunity to stretch their hands into the national cookie jar. It’s better to invest your cash in ideas or services that you are sure are needed and will enjoy a market than to hand it over to ea-khale on some promise of mouthwatering returns.
5) With no viable private sector economy in Lesotho offering substantial returns, any pulled investment is likely to turn into another MKM unless the scheme targets offshore opportunities.
What the hell did the 400 000 investors who poured their money into MKM reasonably think their moolah would be deployed for a reasonable return. Erecting buildings around Maseru with no blue-chip tenants to pay decent rentals could hardly generate a decent return but only create white elephants.
6) MKM is a hoax. ea-khale is a clown. The more lessons learnt from this episode the better for everyone.
STEFAN Carl buys (centre) is forced to to carry a placard which read: “We, members of the MKM burial Society, declare this public auction unlawful and must stop with immediate effect. We say so!” as he is harangued by an irate mob.