PAC grills Kao mine over dividends

The Public Accounts Committee (PAC) on Monday grilled the Kao Mine over unpaid dividends to the government of Lesotho since 2014.
When appearing before the PAC, Kao Diamond mine had to answer questions from the PAC members as to why they have failed to pay the dividends dating back to 2014.


The PAC Chairperson, MP Selibe Mochoboroane said it had come to the PAC attention that the mine had not been paying dividends and therefore demanded to know the reason for not paying.
He also demanded to know the history of the Kao Mine’s production history since 2014 to date to determine if it has been unable to oblige or failed to pay dividends due to negligence or inability to make profits.
In his response, Robert Cowley, Chief Executive Officer of the Namakwa Diamonds, which owns majority shares of 75 percent at the Kao Mine, said in 2014, the mine was able to produce over 2000 diamond carats which were sold for over M886 million.


“The operation cost made at the same year was M518 million and the company made a profit of M69.5 million. In 2015, the company was able to produce 22,484 carats which was sold to the tune of M925.3 million while the operating cost made was M616 million, but we ran a loss amounting to M197 million,” he explained.
He said: “The following year, the company produced 11,397 diamond carats and collected revenue sales of M608 million while the operating cost was M54 million. But we ran a loss of M230 million. In 2017, there was 167,751 diamond carats produced which were sold to M783,6 million while the operating costs were M216 million, making the profit of M136,5 million in the process.”


The final year of 2018, according to Cowley, there were 169,709 carats produced and were sold to the tune of M809,4 million while the costs were M583 million and the loss made was M174,8 million.
Based on the information, MP Mochoboroane asked why the company failed to carry out its obligation of paying expected dividends to the Lesotho government even in the cases where they made profit like in 2014.
Cowley responded: “It was due to many factors like the company passing an insolvency test. The company had also made infrastructure investment and therefore was unable to pay the dividends.”


The PAC also demanded to know from the mining ministry if it was the discretion of the mining board of directors to permit the company to not pay the dividends and if there were any evaluation of the company’s financial status to reach such decision if any.
According to Mohato Moima from the mining ministry “there were no financial statements made and there have been many abnormalities like procurement process, irregular audited financial of the company, which needed to be addressed.”
The Chief Legal Officer, ‘Mamathalea Lerotholi said the appointment of members of the board had been made based on political basis more than on technical know-how.
It was reported that only Lets’eng diamond mine is believed to be paying the dividends to the government of Lesotho.

The hearing was continuing.

Lena

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