June 26, 2011

Kingdom quakes as pyramid crumbles

Simon Thebe-ea-Khale was a school dropout and mine labourer before he graduated to owning 68 properties and 189 cars. Now the collapse of a giant pyramid scheme he controlled has ruined the savings of a nation. Documents before the Lesotho High Court allege that one in every four adults in the kingdom was ripped off after his investment firms racked up debts of more than R1-billion. Liquidators have started recovering what they could from his MKM and Star Lion companies on behalf of at least 200000 investors. Lesotho's Central Bank applied to liquidate the companies after shutting down the investment scheme because it threatened the country's economy.

Thebe-ea-Khale, 56, was a director of South African companies and his properties included one worth R550000 in Ladybrand, Free State, according to a probe by forensic auditors. His attorney, Thabang Khauoe, said that after years of working in South African mines, Thebe-ea-Khale started his businesses with a burial society in Lesotho. A forensic report by PricewaterhouseCoopers (PwC) found that, by 2001, burial club members were offered investment products promising annual returns of at least 60%. Early investors pocketed a fortune. Despite having no licence to conduct banking or investments, he grew his schemes into the country's biggest investment vehicle. But PwC found that successful investors were paid with funds from new investors. In one scheme 10000 investors were "guaranteed" a combined return of R10-billion - close to the country's gross domestic product.
SA Judge Cagney John Musi, who presided after six Lesotho judges recused themselves due to conflict of interest, ordered the companies be liquidated last month. Liquidator Chavonnes Cooper said 205000 investors had been identified but he expected the number of claimants to rise, "or possibly even double". This week he will assess if there are enough funds to bury bodies stored in Thebe-ea-Khale's mortuaries. The PwC report noted that "there are approximately 100 bodies in (Thebe-ea-Khale's) Maseru mortuary at any given time", as well as another 200 in four smaller mortuaries.

Motlatsi Malope, corporate affairs director for the Central Bank, said a new law would be passed to prevent pyramid schemes. A national campaign had been launched to educate people on "financial literacy" and how to spot investment scams. "It's a huge sum of money to be outstanding, so it has certainly had a very negative impact on the economy," said Malope. He said the liquidation was "unpopular" as thousands believed they could still make a fortune.

Nthakeng Selinyane, senior lecturer in political science at the National University of Lesotho, said cabinet ministers, senior officials and thousands of civil servants had lost money. He said Thebe-ea-Khale was considered "a ground-breaker, an entrepreneurial genius", and was widely known as "the owner of Maseru". Khauoe said the liquidation judgement would be appealed and insisted there was no pyramid scheme. (SAPA/Times Live)

Seitenanfang

URL: http://www.sadocc.at/news/2011/2011-117.shtml
Copyright © 2017 SADOCC - Southern Africa Documentation and Cooperation Centre.
Rechtliche Hinweise / Legal notice