By: Thoboloko Ntšonyane
MASERU – The government of Lesotho was dealt severe blow last week after losing rescission application to the protracted legal battle with the German solar based company- Frazer Solar GMBH.
The government has lost to Frazer Solar at the Gauteng Division of the High Court as this court has recently dismissed Lesotho’s application to overturn Frazer Solar’s arbitration award.
The court has dismissed the government’s case and ordered it to pay legal costs to Frazer Solar.
The Frazer Solar’s claim run in the north of €58 million approximately M1, 2 billion.
In 2018, the government allegedly entered into the energy equipment supply contract with Frazer Solar‘s company which they were to supply the government with 350 000 solar lanterns, 40 000 SWHs equipment (solar water heating) that would replace electric geysers, and about 1, 5 million LED lights (Light Emitting Diode).
This contract was allegedly entered into on behalf of the government by then Minister in Prime Minister’s Office Temeki Tšolo who has since rebuffed these claims. These developments transpired during the Motsoahae Thabane’s led administration and then Minister of Finance was Dr Moeketsi Majoro.
The government did not proceed with this contract prompting Frazer Solar to approach the courts for relief. Frazer Solar felt that the government had breached their contract and had petitioned many courts seeking restitution including in South Africa, United States of America, Mauritius, and the United Kingdom.
The government had also held that entering into this agreement with Frazer Solar would be inconsistent with the provisions of the Lesotho’s Constitution, the Public Financial Management and Accountability Act, 2011 as well as the Procurement Regulations, 2007.
The case was also instituted at the Lesotho’s Commercial Division of the High Court the court which ruled in favour of the government’s review application. In its ruling, the Commercial Court held that:
“What is clear is that Minister [Temeki] Tšolo’s mind was dead set on concluding the agreement regardless of every conceivable legal impediment which stood in its way. Despite there not being Cabinet approval, Minister Tšolo and Mr. Frazer, on 24 September 2018, signed the supply agreement.”
This court also moved on to declare the supply agreement as “unconstitutional, unlawful, and invalid, and is reviewed and set aside”.
Taking swipe at the government, the judgment said “the evidence shows that the Kingdom was in willful default for not opposing the enforcement application. The Kingdom provides no factual substantiation for why Lesotho’s Prime Minister and Government Secretary failed to act. From when it was in a position to file its (sic) stay application to when the rescission application was launched, there is no acceptable explanation for its additional delays”.
Tšolo had since distanced himself from the allegations that he had signed this supply agreement on behalf of the government saying also the order of names appearing in the documents is not how he writes. Former Minister of Finance who later became the Prime Minister Dr Moeketsi Majoro’s affidavit points to the direction of Tšolo.
It reads: “The Supply Agreement appears to have been signed by former Minister Tšolo on behalf of the Kingdom of Lesotho. At the time Minster Tšolo was a Minister, in the office of the Prime Minister.
“The then-Prime Minister, Mr. Motsoahae Thabane, resigned in 2020 and I was appointed as Prime Minister. There is an ongoing investigation into the circumstances of the signature on the Supply Agreement, which is being conducted by the Directorate on Corruption and Economic Offences (DCEO).
“At the time the Supply Agreement was signed, no member of the Lesotho Government, apart from Minister Tšolo and his secretary (and the second witness, Mr. Hlophe Matla, the personal aid (sic) to the then Prime Minister [Thabane] had any knowledge of the signing and existence of the Supply Agreement. Though I was subsequently (in November 2018) informed, by FSG’s Mr. Fintelmann, that the supply agreement had been concluded, my understanding was that this could not be the case, as proper processes had not been followed.”
Dr Majoro in his affidavit continues to point out that Tšolo was “not authorized to sign” this contract on behalf of the government and had “no power in law to bind the Kingdom in any agreement”.
He said he was aware of the proposed Frazer Solar project but such project had no Cabinet’s approval and therefore could not be undertaken.
The former Prime Minister pointed out that he only became aware of the court order awarded in favour of Frazer Solar against Lesotho through the media reports.
It would seem Frazer Solar did not back down as it continued in its efforts to have the government of Lesotho atone for their “alleged” breach of the supply agreement.
Frazer Solar then issued a statement following this Commercial Court’s ruling saying it welcomes the judgment but “fundamentally disagrees with the court’s decision…the ruling enables Frazer Solar and its legal team to re-start global enforcement proceedings against the Kingdom of Lesotho”.
The government was already in talks with the Chinese to mount a solar power plant at Ramarothole in Mafeteng, hence backed down on the Frazer Solar’s deal.
Had this project been implemented Frazer Solar was supposed to install the energy saving equipment in the government buildings, facilities and infrastructures; Lesotho National Development Corporation (LNDC) properties; industrial and commercial customers; civil servants housing; private sector housing; and at households that use paraffin and candles as primary sources of lighting.
Also, if the government had proceeded with this supply agreement, it was prepared to borrow money from the German financial institutions.
The government was an applicant at the Gauteng Division of the High Court and the respondents were Frazer Solar GMBH, Trans-Caledon Tunnel Authority, Lesotho Highlands Development Authority, Standard Bank of South Africa, the Sheriff of the Court: Johannesburg, the Sheriff of the Court: Centurion East, the Minister of Justice and Constitutional Development and the government of South Africa being the first to eighth respondents respectively.
In this application the petitioner- government of Lesotho sought the two reliefs which are that the court should set aside the arbitration award as per the provisions of Article 34 of the Model Law under the International Arbitration Act 15 of 2017 and also sought the rescission of the court, making an arbitration award an order of the court.
It would be recalled that the Belgian court had granted Frazer Solar €50 million about M1 billion award during the proceedings which Lesotho was not represented and the government wanted the court to reverse that order. This court had recognized arbitration against Lesotho ordering that Frazer Solar to proceed with attaching Lesotho assets as well as freezing the bank account of the Lesotho Embassy in Brussels, Belgium.
The government then approached the court in Belgium to reverse the decision to have its assets attached and bank accounts frozen in favour of Frazer Solar, the plea which that court had granted.
Also, the Gauteng Division of the High Court had previously handed down a default ruling against the government of Lesotho, which is mainly due to the fact that Lesotho was not represented at those particular proceedings.
The recent High Court judgment delivered in Johannesburg reads: “The primary reason for the Kingdom’s default is that the process notifying the Kingdom of the application was not received by the relevant officials of the Kingdom. In the Kingdom of Lesotho, services of process in legal proceedings against the government must be made on the office of the Attorney-General.
“It is common cause that: Prime Minister Majoro was aware of the importance of the matter because when he received the Case lines invitation, he forwarded it to the Government Secretary on 21 March 2021 with an email saying: ‘The e-mail below suggests this case is proceeding. Are we ready? How are we ready? No one has spoken to me even though now it is suggested [that] I am a respondent.”
The court further remarked that “nobody took any steps to ensure that the Kingdom was represented at the hearing or even follow up their emails”.
The court has then dismissed the government’s rescission application with costs ordering the government to pay the costs of the first respondent, including the cost of three counsel. It further directed the government to pay the costs of the seventh respondent including the cost of two counsels.
Attempts to solicit a reaction from the government on what action it plans to take going forward as the Attorney General and the Minister of Justice and Law phones were not answered and had not responded to WhatsApp messages left on their phones last night at the time of going to press.
Frazer Solar GmbH has vowed to pursue this case until the government honours the court orders and is adamant on pursuing the attachment of Lesotho’s assets held in other countries.
“We urge Prime Minister Sam Matekane to acknowledge the reality that Lesotho has lost and to reach out to us to settle the matter,” reads Frazer Solar.