By Sechaba Mokhethi, Pascalinah Kabi and Billy Ntaote (MNN Centre for Investigative Journalism, Lesotho).
In a desperate bid to win the 2017 elections, former Prime Minister Pakalitha Mosisili ordered the Ministry of Finance to disregard due procedure and swiftly take M1.3 billion (US$82 million) Chinese loan that would see a 91-km road built in his home constituency, Tsoelike, which he also represents in parliament, MNN Centre for Investigative Journalism can reveal.
Mosisili is alleged to have abused ‘limited’ powers of a caretaker prime minister as he ordered that Lesotho should take a rushed China loan for construction of the Mpiti to Sehlabathebe road after the dissolution of parliament and was leading the country to early polls, having lost a vote of no confidence.
Prompted to explain his decisions, Mosisili flatly declined.
His order came in sharp contrast with decisions of the Ministry of Finance and Office of the Attorney General that Lesotho should not sign a contract that exposed its property and military hardware to possible seizure by China.
Mosisili ignored our written questions and after several attempts to reach him over a phone call, he picked up. As he had already seen the questions, he interjected our reporter’s introductions saying: “Hold it right there, I cannot entertain being disrespected…stop bothering me (hanging up)”.
LISTEN: Former Prime Minister Pakalitha Mosisili speaks to MNN Centre for Investigative Journalism reporter.
The damning revelations against Mosisili were made by Public Debt Director Khotso Moleleki as he disclosed that the loan contract for Sehlabathebe road, that cuts through Tsoelike constituency, “attached [undisclosed] military hardware and other state properties” as surety in the event Lesotho defaulted on its financial obligations to China.
Moleleki’s revelations were corroborated by former Minister of Finance, Tlohang Sekhamane in a separate interview.
According to Moleleki, Lesotho owes the Chinese government around M2 billion ($126 million). This amount is based on the Mpiti to Sehlabathebe road, Ramarothole Solar Generation Farm, National Convention Centre renovation and two loans taken on behalf of Econet Telecom Lesotho.
“Because we are implementing two projects [Mpiti to Sehlabathebe Road and Ramarothole Solar Generation Farm], this debt is likely to grow further as we claim more funds from China,” Moleleki said.
For the Mpiti to Sehlabethe road, Lesotho borrowed M1.3 billion ($82 million) and for phase 1 of the Ramarothole 70-megawatt solar power generation farm, it borrowed M2.8 billion ($177 million), all from the Exim Bank of China.
MNN can reveal that the public debt management office negotiated these two projects under immense pressure from politicians with Mosisili pushing for road construction in his constituency ahead of elections while former Minister of Energy Mokoto Hloaele was behind the cost-inflated solar farm.
Before the road construction loan was signed, Moleleki said as Finance, they were considering abandoning the project as it had stalled for four years with its cost escalating from M1.1 billion to M1.8 billion due to inflation but politicians forced the office into signing it.
“One morning in May, as we headed for [June 3] 2017 elections, I and Ntate Sekhamane were summoned by Ntate Mosisili,” Moleleki told MNN. Sekhamane confirmed that Mosisili summoned them to several meetings as he exerted pressure for the signing of this project.
In that meeting, Moleleki claims Mosisili asked them why Mpiti to Sehlabathebe road was not funded and went further to instruct them to be in China once his spit dried on the ground (promptly).
Moleleki and Sekhamane succumbed to pressure and did as they were ordered despite serious reservations on one particular clause in the contract that the Exim Bank of China notoriously puts in its agreements with African governments. According to former Attorney General, Hae Phoofolo, this clause is illegal in Lesotho.
Moleleki and Sekhamane had initially stalled the signing of the contract because Exim Bank attached Lesotho property including its military hardware to the agreement and they wanted that clause removed.
“We could not attach property of this country against its constitution in that agreement,” Moleleki said. Also, he said, the agreement was imposing a Chinese contractor on the project and the Ministry of Public Works wanted that changed.
Moleleki said a legal opinion of the office of Attorney General clearly showed the country’s military hardware and equipment that included helicopters cannot be attached in the loan agreement’s sovereign immunity clauses.
Although Sekhamane has forgotten details of the Mpiti to Sehlabathebe road loan agreement, he confirmed there was a clause a finance ministry was very uncomfortable with, “we did not understand its relevance in that agreement and wanted it removed”.
While Sekhamane does not remember if that controversial clause was finally removed, Moleleki insists it was not. “Because we account to politicians, we went to China and took the loan to avoid being accused of holding the project hostage. At some point all the attack was directed towards me,” Moleleki said.
However, Moleleki is quick to stress that “we believed that we’ll service the loan to finality”.
Among other things, Sekhamane understood the pressure from Mosisili was inspired by narrow ambitions to develop his constituency, Tsoelike.
“It would be a major failure on his part to have prevailed over that constituency for over 20 years yet there was no single tarred road in that constituency having constructed many across the country,” said Sekhamane.
Despite his call for the signing of Mpiti to Sehlabathebe road loan agreement, Mosisili’s Democratic Congress (DC) lost elections to its main coalition partner, All Basotho Convention (ABC).
The ABC, along with its three other partners, appointed Phoofolo as Attorney General whose contract ended last year.
In an interview with MNN, Phoofolo said his advice to Cabinet was that Lesotho cannot have its property attached within its jurisdiction, “I told them it is wrong and it must change in all agreements”.
Phoofolo argues that Government Proceedings and Contracts Act No 4 of 1965 section 5 prohibits the execution of attachment of government property.
Section 5 reads “No execution or attachment or process in the nature thereof shall be issued against the nominal defendant or respondent in any action or other proceedings against Her Majesty in Her Government of Basutoland or against any property of Her Majesty; but the nominal defendant or respondent may cause to be paid out of the revenue of Basutoland such money as may, by a judgement or order of the court, be awarded to the plaintiff, the applicant or the petitioner (as the case may be).”
Phoofolo said the Cabinet took his advice and “negotiated removal of such clauses in new agreements under negotiation and future ones”.
Two Econet loan agreements also have the same clause that Lesotho property and military hardware would be seized in the event Lesotho fails to successfully repay this debt.
Moleleki does not know who was responsible for their signing “because I was not yet in office”.
The government signed Econet’s loans with the Exim Bank of China on May 9 2008 and December 14 2011 to finance Telekom National Network Phases I and II.
In her report on the consolidated financial statements of the government for the year ended March 31, 2019, Acting Auditor General Monica Besetsa raises concerns that “Telekom [Econet] has defaulted for three years since 2016/2017 and once again it is in arrears of the principal and interest totalling M101,664,945 and M103,799,388 for its two projects respectively as at the end of 2018/2019”.
Besetsa further raised concerns that Econet had arrears of M121,352,960 on principal repayments and interest charges as at 31 March 2019.
In another report, for the year ended 31 March 2020, Besetsa said Econet’s situation had changed for the better after repayment of M8,733,333 was made reducing the owed arrears for both repayments of loans and interest charges to M92,931,612.
“After these projects, we had to negotiate with the bank to remove this clause [that attached Lesotho’s property and military hardware] and submitted our request to the China Ministry of Commerce; they agreed, so the Ramarothole Solar farm agreement doesn’t have it,” Moleleki said.
Inflated prices and kickbacks
However, the Ramarothole solar farm is at the centre of allegations that its M2.8 billion Chinese loan is grossly inflated to accommodate kickbacks to politicians who push these deals from inside the government.
In November 2020, Chief Accounting Officer ‘Mathabo Mahahabisa told Lesotho Times “the government will pay US$70 million for Phase I of the project which is expected to produce only 30 MW of electricity”.
In neighbouring South Africa, a 40 MW solar project will cost that country’s taxpayers only M660 million, far less than the M1.1 billion Lesotho is spending on a smaller scale project of 30 MW.
Ministry of Energy Principal Secretary Themba Sopeng defends the price tag, saying the Ramarothole project comprises four major components of a 30MW solar power plant, expansion of substations at Ramarothole and Mazenod, 132kV transmission line from Ramarothole to Mazenod, and operation and maintenance of the plant for a period of three years by the contractor.
“It is prudent to understand these project components as the USD 70 million that you refer to covers all these components and not just the power plant. It would be interesting to know what the M660 million…
