By Thoboloko Ntšonyane
MASERU – The Public Accounts Committee (PAC) has heard how the Cabinet of Ministers has irregularly influenced the Lesotho National Development Corporation (LNDC) to advance loans to foreign owned textile firms.
The Committee has this week summoned the LNDC to clarify its decision-making processes regarding loans that it has advanced following the Cabinet’s resolutions.
It questioned the Corporation about the adherence to legal procedures, particularly concerning the intervention of the Minister of Trade, Industry, and Business Development, Hon Mokhethi Shelile.
The Minister has reportedly written to the LNDC to see how it can assist the textile factories that were facing financial constraints.
As the investment promotion arm of the government, LNDC is charged with driving economic development, attracting investments, and managing projects for the country’s benefit.
The Committee scrutinised a loan of M2 million advanced to Luqys Manufacturing (Pty) Ltd in 2023. The firm, owned by Basotho of Indian descent, was to repay the loan within six months at a 2% interest rate to service overseas orders.
Committee Member Honourable Thabiso Lekitla questioned the conditions under which such loans were approved.
Reacting to the Member’s question, the Legal and Administration Services Manager, Florence Motoa, stated that the LNDC board’s approval was required for all loans. She revealed that the board had communicated these requirements to the Minister in November 2023, following his directive to suspend LNDC policy to facilitate such loans.
LNDC also revealed that it has acted on a directive from the Cabinet that it should advance M10 million to Duty Free Sourcing Inc for a United States market order, with requests for additional funding.
In another case, PAC was told of the letter of demand that had been issued, with LNDC threatening to attach the company’s property if repayment was not made.
The hearing established the governance issues, calling for stricter oversight of LNDC operations to protect public resources.
The PAC Chairperson, Hon ‘Machabana Lemphane-Letsie, criticized the lack of due process in decisions taken by the LNDC. Specifically, concerns were raised over loans advanced to firms without proper board approvals and the alleged influence of Minister Mokhethi Shelile in facilitating these loans.
General Manager of Development Finance, Marina Bizabani, explained that the LNDC’s policy allows loans up to M10 million, provided 75% of the company’s ownership is Basotho.
The Chairperson criticised the Minister’s involvement, arguing that directing companies to the LNDC undermines governance procedures. Lemphane-Letsie warned that such practices could lead to abuse, particularly during election periods, with funds potentially diverted to political campaigns.
The Legal Officer from the Ministry, Matšeliso Lehohla, stated that her office had not drafted the Cabinet memo that was directing the LNDC to loan these firms, raising further doubts about procedural adherence.
The PAC called on the LNDC to strictly follow its policies and avoid political interference. It said Ministers should provide guidance to companies rather than direct intervention in loan approvals.