MKM saga: The cir­cus con­tin­ues

Lesotho Times - - Scrutator -

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.

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