Lesotho: Tšepong in Trouble Over M34 Million Tax Arrears

14 October 2020

QUEEN 'Mamohato Memorial Hospital (QMMH) is in trouble with the Lesotho Revenue Authority (LRA) over its failure to meet its tax obligations which are said to have ballooned to M34, 4 million.

The tax arrears are said to have accrued from October 2014 to August this year.

As a result, the hospital, popularly known as Tšepong, has now been referred to the LRA's Debt Recovery Unit. In terms of the measures dubbed the third-party recovery plan, the LRA can instruct all Tšepong debtors to pay their debts directly to the tax authority to enable it to recover the hospital's tax arrears.

Alternatively, the LRA could sue Tšepong for the debt.

According to an LRA letter to Tšepong, seen by the Lesotho Times this week, the hospital fell behind in its tax payments in October 2014. By 31 December 2015, it owed M15 925 784.

As of 28 August 2020, the arrears had shot up to M34 451 608 due to the hospital's failure to meet its obligations.

The LRA is now demanding that the hospital settles the debt forthwith. It has since referred the matter to its Debt Recovery Unit for appropriate action.

In a confidential 10 September 2020 letter to Tšepong's financial manager, Christoffel Smith, the LRA accounts representative, Thabelo Khalema, states that "our records indicate that you have not yet settled your outstanding tax liability despite efforts made to you".

"This letter serves to inform you that your account has been referred to the Debt Recovery Unit for debt recovery measures. Kindly note that the office of Debt Management will contact you in due course," Mr Khalema further states.

LRA public relations manager, Pheello Mphana, this week refused to comment on the matter, saying they were not allowed to discuss such issues with third parties.

"There will never be a time when we will discuss our clients' issues with a third party, the media included. Those are confidential issues and if you happen to have the (LRA's) letter (to Tšepong), you still need to understand that there is no way we can discuss our clients with you," Mr Mphana said.

In a separate interview, Tšepong Consortium board chairperson, Mokutu Makara, said he was not aware of the LRA's letter over the main referral hospital's tax obligations.

"I am not aware of such correspondence but I will make inquiries on the matter.

"The problem with Tšepong is that the management contract is with Netcare and there are serious problems that we have been trying to address for years now. This is why we have been fighting to have the hospital financials subjected to a forensic audit," Mr Makara said.

Tšepong has repeatedly claimed its operations are being harmstrung by the government's failure to meet its obligations to the institution. In July this year, the hospital's majority shareholder, South Africa's Netcare Group, filed a High Court application to compel the government to settle a M686 million debt it says it is owed for running the hospital on behalf of the Lesotho government. The matter is pending at the High Court.

Netcare, a South African company, has a 40 percent stake in the Tšepong Consortium. Four other companies, namely, Afri'nnai Health of South Africa, Excel Health, Women Investments and D10 Investments (all from Lesotho), hold the remaining shares.

QMMH is said to be facing serious financial challenges which Netcare entirely blames on the government's alleged failure to pay its debts.

The other shareholders have, however, accused Netcare of financial impropriety which has seen it make making unauthorised payments to itself, Botle Facilities Management and some unknown persons.

Earlier this year, Afri'nnai Health's founding director Lehlohonolo Mosotho accused Netcare Group of siphoning millions of maloti from the company under "dubious and unexplained circumstances".

Prof Mosotho accuses Netcare of siphoning money out of the consortium and paying out a total of M312 million without the approval of the board. He alleged that Netcare paid itself M201 million in just nine months.

He said the amount was way more than the M161 million that Netcare had submitted to the Tšepong board as its management fees in the 2017/18 financial year.

Prof Mosotho also alleged that Netcare paid Botle Facilities Management M47 million between January 2018 and May 2019 without the approval of the board. Netcare owns shares in Botle which is responsible for repairs and maintenance services at QMMH.

Prof Mosotho accused Mr Smith and Netcare of vehemently opposing a forensic audit into the affairs of the consortium because they were fully aware that the net was closing in on them.

In August this year, Prof Mosotho successfully petitioned the court to remove Netcare representatives from the list of signatories to the bank accounts of the hospital.

Under the new arrangement, Netcare- which manages the hospital on behalf of the consortium- has to seek the board's approval before making payments.

More From: Lesotho Times

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