A former shareholders’ nominee on the board of directors of a local cannabis company has made sensational claims that the firm is engaged in fraudulent activities, which include improper financial dealings and lack of transparency.
A subsidiary of Agriobiomed Global Ltd (AGL), Morama Holdings (PTY) Ltd is one of the few cannabis companies that parliament’s social cluster committee recently acknowledged was complying with the terms of their licenses, and the general regulations of the industry.
Morama Holdings (PTY) Ltd, is a Lesotho registered company, holding a full cannabinoid and hemp cultivation, manufacturing and exporting sales licence – granted in terms of section 12 of the Drugs Act, 2008.
The company is the registered owner of 45 hectares of pristine agricultural land which is situated in the picturesque Berea Valley in the Maluti foothills, located approximately 30 minutes from the capital, Maseru.
Moelo Ramahlele, who was removed by three other shareholders on 22 October 2024, this week painted a different picture.
She blew the whistle on the company’s alleged fraudulent activities, which include failure to pay shareholders their dividends.
In their letter, the shareholders; Lineo Agatha Griffiths, Rapolokoe Daniel Molise and ‘Matumelo Rosalia Mabaso, did not give their reasons for removing Ramahlele and replacing her with Molise.
Ramahlele claims that despite being registered in Lesotho, a significant chunk of Morama’s financial transactions are conducted at its head office in Johannesburg, South Africa. This raises questions about the accuracy of both reports submitted to the Revenue Services Lesotho (RSL) and profits distributed to local shareholders, she said.
She further alleged that as a director of Morama, she had a legal responsibility to oversee the company’s operations and financial affairs, but she was not allowed to do this.
“I should have had access to financial reports and transactions that affect the company’s performance and dividends that shareholders are entitled to. One of my roles was to look at the finances of the company but I never sat down with the three shareholders to do this. Instead, they gave all the finance related documents to the Johannesburg office. They are deliberately hiding information from local shareholders,” she told theReporter in an interview.
She added that the withholding of critical information raises the possibility that local shareholders may be receiving less than their fair share of profits due to undisclosed financial activity.
“While the company is registered and licensed in Lesotho, the major transactions and financial dealings are handled outside the country. Shareholders’ paperwork and documents are done from the Johannesburg offices.
“The company bring little money to Lesotho through a local bank. But all transactions are initiated in Johannesburg, meaning that even though they report at RSL, as a local shareholder I do not have access to them, despite representing the Lesotho shareholders within the board.
“What are their interests in doing accounts in Johannesburg when the company operates in Lesotho and not in South Africa? The accountant of Morama Holdings is based in Johannesburg. They hide their salaries but give Basotho peanuts,” she alleges, adding that while Morama Holdings reports its activities to RSL, she is concerned that the reports may not be accurate.
“If the financial information being submitted to RSL is misleading or incomplete, the company could be underreporting its profits and thus, paying less in taxes or providing lower dividends to shareholders,” she pointed out.
When this publication called one of the shareholders, Mabaso, for comment, a response came from a woman who identified herself as ‘Mabasia Khantṧi, Mabaso’s daughter.
“I hold my mother’s proxy in the company. She says she is aware of the accusations involving Morama, but is not comfortable talking about them in the social media. She prefers the matter to remain private and be addressed privately,” Khantṧi said in a WhatsApp voice note on Wednesday this week.
When Morama Holdings appeared before the parliamentary social cluster committee recently, its chief operating officer, Lee-Ann Jacobs, claimed that since the beginning of its operations in 2019, the company has only executed one export in June 2024.
Jacobs said in 2018 they purchased land where the site is situated.
“We have about 12 previous land owners and of those 12 land owners, each has a representative with an exception of one that currently works at Morama Holdings. That is the agreement with the land owner.
“The total investment of the land was around M2.5 million. The field owners charged us M100,000 per square metre,” she noted.
Morama chief executive officer, Scott Henson, also claimed that the company had not paid out dividends due to lack of profit, having only one export to show.
For his part, social cluster committee chairman Mokhothu Makhalanyane told theReporter this week that the parliamentary social cluster committee had instructed the ministry of health to conduct an audit into Morama’s affairs.
The ministry would provide its report in the last quarter of the 2024/2025 financial year, Makalanyane said.
Meanwhile, the chairperson of the public accounts committee and a member of the social cluster committee, ‘Machabana Lemphane-Letsie, said some companies come to invest in Lesotho without declaring any dividends.
“These companies claim that they are not making any profits even though there are indications that their businesses are thriving.
“This is a concern for many African countries. As the public accounts committee, we are on the lookout for fraudulent transactions because they are common between local based companies and their so-called investors abroad,” she stated.
Weighing in, registered auditor and chartered accountant, Sesinyi Rakubute, told this publication that the absence of transfer pricing legislation creates a situation where companies can exploit the lack of rules to shift profits between related entities in ways that minimise their overall tax burden.
Rakubute said by manipulating intercompany transactions, such entities can allocate more profits to lower-tax jurisdictions or even zero-tax jurisdictions, while reducing taxable income in higher-tax countries like Lesotho.
“This results in less tax being paid to RSL, which impacts government revenue and the country’s economic stability,” he pointed out.
Rakubute also indicated that companies can charge high management fees, royalties, or interest payments to subsidiaries in Lesotho, which reduces the profit left in the country.
Since there are no rules to enforce “arm’s length” pricing (ensuring transactions are conducted as if the companies were unrelated), there’s little to stop this kind of behaviour, he cautioned.
“If Lesotho were to implement transfer pricing rules, it would set clear guidelines on how related entities should price their transactions and make it easier for the government to detect and challenge artificial profit-shifting. It would also prevent companies from exploiting the system and ensure that they are their fair share of taxes.
“The absence of transfer pricing legislation essentially leaves a gap where businesses can structure their transactions in ways that lower their tax liabilities. The fact that no one can legally challenge these excessive charges in Lesotho means that the system is open to manipulation.
“And, because Lesotho cannot impose regulations to prevent this, it’s left with the ethical dilemma of how businesses should act,” Sesinyi added.
