Were political supporters favoured in a deal that was pushed through despite red flags?
The government has dished out a M2.45-billion stadium deal to a group of contractors that includes two senior members of the Alliance of Democrats (AD), a long-standing contact of AD sports minister Mahali Phamotse, and a relative-cum-business-associate of two men convicted of financial crimes, the MNN Centre for Investigative Journalism can reveal.
In addition, the government handed out a guarantee securing loans for the total value of the project to an obscure South African company, Property 2000, which is linked to another controversial company, Grissag (see “Grissag behind Lesotho’s M2.4-billion loan guarantee rumpus”).
Phamotse was last week charged with unrelated corruption in the Maseru magistrate’s court. According to the charge sheet, Phamotse, as then minister of education, allegedly influenced the awarding of a 2015 high school textbooks tender.
She was released on free bail.
The involvement of the AD is of particular concern. The party is the second-largest member of Lesotho’s current ruling coalition, while Phamotse is both the party’s secretary-general and head of the ministry that awarded the stadium contracts.
She denied any impropriety, saying the construction companies were hired after following “due processes”.
The new details about the contractors follow widespread media coverage of a finance ministry document, dated August 8 last year and presented to Parliament’s public accounts committee, recommending that the deal should not be signed because of “irregularities”.
Among other objections, the leaked ministry document highlighted an “alleged addendum to convert [an expression of interest] into a request for proposals” – a formal bid in a tender – saying, this “is unheard of in the supply chain practice”.
The document also pointed out that there was no feasibility study before the contract awards.
The finance minister, Moeketsi Majoro, echoed these concerns in a widely covered memorandum (See “Cabinet Guarantees M2.4 Billion Loans For Unvetted Companies“) to the cabinet in September last year, in which he warned of “huge risks involved in the acquisition of the infrastructure, especially given the financial model and the timing of the construction”.
“Procurement and sourcing procedures have been undermined,” he added.
Despite this, Majoro said in his memo that he supported the initiative and went on to sign it.
Valued at M2.45-billion, the stadium, indoor sports arena and athletes village encompassed by the contracts are intended for the regional games of the African Union Sport Council in Lesotho in December this year.
Majoro’s memorandum suggested the cabinet approve loans and guarantees for three groups, Nepco Two Consortium, MFT Lesotho and Design Edge, for M760-million, M785-million and M898-million respectively, with a 30-year maturity at a three percent interest rate.
The finance ministry did not respond to questions about what benchmark (such as the domestic prime lending rate) the “three percent” interest rate was calculated against – and later revealed the guarantee agreement with Property 2000 had been cancelled (see lead story).
In addition to the procedural problems, MNN has unearthed that the three beneficiary companies have some worrying associations.
• Design Edge is co-owned by Shabeer Moosa, the son of Sally Moosa and the brother of Shameem Moosa. The latter two were convicted by the Lesotho high court of fraud, theft and tax evasion in 2011.
The three Moosas are senior executives in the Lesotho-registered Moosa Group, with Sally being its chairperson, Shabeer its chief operating officer and Shameem its chief financial officer.
The trio are either directors or shareholders in all the group’s subsidiary operations, which cover the fields of manufacturing, construction, agriculture, retail and fast-moving consumer goods, and real estate.
In the 2011 case, Judge ‘Maseforo Mahase sentenced Sally to 12 years’ imprisonment, half of it suspended, or a fine of M500 000 for fraud, theft and tax evasion. Shameem was sentenced to three years or an option of a M100 000 fine for tax evasion.
Their company, Selkol 1983, was ordered to pay a fine of M1.5-million after being convicted of fraud. The company also paid M4-million in unpaid taxes it owed to Lesotho Revenue Authority.
Selkol, now liquidated, was a retail company in the Moosa Group that operated in Lesotho, South Africa and the Democratic Republic of Congo.
Lesotho’s companies register shows that Design Edge is housed at the Moosa Group at 35 Moshoeshoe Road, Industrial Area, Maseru.
In response to questions, Shabeer said: “Design Edge is a completely independent company with independent shareholders and directors… This company and its operations are therefore unrelated to the Moosa Group.”
“Whilst I have indicated that I do not want to incur legal fees where I have done nothing wrong, I will be more than happy to do so should you mention my name or the Moosa Group or my company Design Edge being associated with any wrongdoing whatsoever,” he said.
“I therefore let you know that I do not provide any consent for my name, the name of the Moosa Group and my company to be disclosed in any article or report. I also do not give any consent for you to publish anything in our communication.”
Moosa is also the chief executive of Namso Construction (trading as Namcon) the company involved in the construction of a R6-million house for former Free State premier Ace Magashule and his so-called “Bloemfontein wife”, Mosidi Lydia Motsemme, as reported last year by Daily Maverick.
This may or may not be significant, given the strong Free State connections of the mysterious South African funders involved in the stadium project (see accompanying story 1).
• MFT Lesotho’s 51% shareholder, Lesotho businessman Tayob Jooma, told MNN in a phone interview that he had a close relationship with sports minister Phamotse, saying the latter used to take care of him as a child and continued to have ties with him.
Last year MFT Lesotho was also awarded a contract by the sports ministry to construct an indoor arena at Lepereng in Maseru.
Since May 2018 a 70% Jooma-owned company, the TJ Group, has rented out a building to the ministry of home affairs in the TJ Complex in the Botha Bothe district.
The home affairs ministry is also controlled by the AD party.
On his relationship with Phamotse, Jooma said: “M’e Mahali used to be my neighbour at Ha Mokete [in Botha Bothe] while we were still young. She used to back-carry me as a child and I have forever known her… Even now there is still that relationship. It has never been about our status.”
In a separate interview, Phamotse corroborated Jooma on their long-standing ties, but argued that she does not have “a special relationship” except that “I know him from my home village in Botha Bothe and as a kid that I raised”.
She added that she has not exerted any influence for Jooma’s company to be hired. “Like other contractors, he followed due processes and his company got hired… I was not involved,” she said.
Jooma denied allegations that his companies were getting business from the government because of his relations with Phamotse: “The truth is that I have also heard allegations about her involvement, but she has no hand in this.”
Jooma said that MFT was contracted for the stadium project through a transparent and competitive process. “There is nothing sinister about our selection, as we went through all necessary processes,” he said.
On the Ministry of Finance objection that a legal due diligence had not been conducted, Jooma said: “We made presentations to all the government ministries [involved] and still have minutes of those meetings. It took us almost three months to be awarded this contract.”
Lesotho’s procurement legislation requires a feasibility study for all government projects.
Jooma claimed to have a feasibility study in his possession, but when asked for it he backpedalled, saying he was not technically minded and that some of its contents would only be known to his team.
• Nepco Two Consortium’s two shareholders are AD party stalwarts with a chequered history.
The Lesotho companies register shows that Makoatla Molatuoa has an 80% stake in Molatuoa Construction, which has a 10% stake in Nepco.
Molatuoa is an AD secretary in the Hlotse constituency.
Another Nepco shareholder is Makhabane Leluma, who unsuccessfully contested the Thaba Phechela seat in the 2017 elections under the AD banner.
Phamotse was ambiguous about whether their AD affiliation could have played a role.
“I am not going to agree or disagree that it is because they are ADs. I don’t think we could hire anyone belonging to a political party of another country, but with a Lesotho party, you may be right.
“I never identify anyone with their political parties because everyone has their own political inclination,” she added. “So if we are talking about these two as coming from the AD, I won’t be surprised to find that others are coming from the ABC.
“As long as we hire contractors, there is no doubt we will find ourselves contracting either politicians or those affiliated to political parties.”
Molatuoa declined to discuss his involvement in the stadium project. “I cannot discuss this matter with you,” he said, and rang off.
Molatuoa was arrested in June 2013 in a police trap, when he allegedly handed M10 000 in cash to former Directorate on Corruption and Economic Offences (DCEO) principal investigations officer Tsotang Likotsi.
He was charged with bribery in the same year. The DCEO’s chief prosecutor, advocate Sefako Seema, told MNN that the court case is still not concluded.
Molatuoa was also linked to the controversial M300-million identification card and e-passport tender that was awarded in 2012 to an Israeli company, Nikuv International Projects, without following procurement processes.
When Molatuoa was arrested for the alleged bribery, media reports claimed that the DCEO was looking into 200 cheques allegedly deposited into his account between March and December 2012.
The DCEO’s position was that Molatuoa was one of the “runners” Nikuv used to distribute bribes to senior government officials.
According to Seema, Molatuoa has not yet been charged in relation to the Nikuv allegations.
In Israel, Nikuv was reportedly convicted in 2016 for bribing former home affairs principal secretary Retšelisitsoe Khetsi and fined US$1.15-million.
According to The Times of Israel, Nikuv paid its Lesotho associate Motsotuoa Makoa $500 000 (M7.5-million now) “with a significant amount of that sum intended for Khetsi”.
In Lesotho, the duo were charged with bribery and corruption, but were granted a permanent stay in 2017 by the high court due to “inordinate” trial delays. Nikuv reportedly struck an indemnity deal with the government and was not charged.
Prosecutor Seema told MNN that the case would return to court once information from the South African justice department and National Prosecuting Authority was received, as “many of the misdeeds were done in South Africa”.
“When I checked in November last year, they were doing final touches,” he said.
Leluma, a former defence ministry official, owns five percent of TM2 Construction and Civil, a 22% shareholder in Nepco.
In the 2017 elections, he contested the Thaba Phechela constituency seat under the AD banner but lost to a representative of the Democratic Congress.
Leluma brushed off any possibility that Nepco was contracted because of his affiliation with the AD. “This is not about our AD positions. Ministers from different political parties were involved in the procurement process – how would they agree to contract AD members only?”
In 2011, while he was working for the defence ministry, Leluma was named by Parliament’s public accounts committee as having been criminally involved in air-conditioning tender for the Makoanyane Barracks, according to media reports.
The Lesotho Times reported that his “criminal” case in the Maseru magistrate’s court was repeatedly postponed because he was unavailable, but did not specify the charge.
MNN could not establish the current status of the case, as it could not be traced in the court records.
Leluma told MNN that he had won the case but that his victory was never reported by the media.
Phamotse claimed she was not aware of the cases against Molatuoao and Leluma but argued: “Maybe their [international] partner companies are the ones that gave them credibility and their background was seen to have no bearing.”