By Seleoe Nonyane
Parliament’s Public Accounts Committee (PAC) member ‘Mamarame Matela has accused the Lesotho Electricity Company (LEC) of evading tax.
Matela said this during the committee’s meeting with the ministry of natural resources-controlled utility company LEC which had been summoned to address and provide responses to queries raised in the auditor general’s report covering the period from March 31 2017 to March 31 2021.
The report states that there was an unresolved variance of M27, 869, 943 between the value added tax (VAT) payable in the financial statements and the VAT disclosed in the then Lesotho Revenue Authority (LRA) return for the year ended March 31 2020.
It indicated the financial statements showed a liability of M33, 896, 237 while its VAT returns showed a liability of M6, 035, 295.
The auditor general pointed out that it was difficult to determine the appropriate figure to be disclosed in the financial statements.
Matela accused LEC of tax invasion, adding she did not comprehend how the power supplier even acquired the subvention while they still had not paid Revenue Services Lesotho (RSL), which replaced the LRA.
“Since proceeds towards the consolidated fund are collected by RSL, LEC actually owes the same consolidated fund from which LEC gets its subvention that the company did not pay.
“By demanding a subvention while at the same time failing to pay taxes which are not even theirs, LEC is being self-centred. I reckon the company just enjoys taking and not paying tax.
“They should understand that they are stealing public money because as a registered vendor, fundamentally the company is not the one that pays the VAT but only collects in on behalf of RSL. How soon will the M27 million be paid to RSL before someone actually goes to jail for it?” she asked.
In response, LEC corporate secretary Khotso Nthontho insisted the company does not receive any subvention or funding but only survives on tariffs and other funding from the Lesotho Electricity and Water Authority (LEWA).
However, PAC chairperson ‘Machabana Lemphane-Letsie argued that whenever LEC makes a debt in the name of the government then that is a subvention.
“The CEO of LEC will appreciate our concerns about their finance management system because they blame inadequacies in the system for every other variance that appears in the auditor general’s report.
“The committee does not understand why LEC stuck to EOH Holdings, the consultancy company that administers the system, notwithstanding such glaring inadequacies. The system has proved to be non-functional yet LEC has held on to it for this long.
“We are now in 2023 and still talking about the same company that caused and continues to cause so many problems,” Lemphane-Letsie said.
Another PAC member, Montoeli Masoetsa question why LEC’s head of finance (‘Makabelo Matsoso) continues to pay M400 000 to the consultancy company when the system does not work.
He went on to suggest that the head of finance could be benefitting from the arrangement somehow.
However, Matsoso said during the compilation of the AG’s report the company was using the Acpec finance management system which the company discovered was not compatible with the other systems used by LEC to easily have a perfect flow of information.
According to Matsoso, LEC dumped Acpec and introduced a new system called SAP in 2017, which was more compatible with the power utility’s needs.
SAP had challenges of its own as it was vulnerable to a Malware attack which saw some information lost, she noted.
EOH has since been out of the picture and has been replaced by current consultant Focus On. EOH’s contract with LEC still stands, though.
