The Independent Electoral Commission (IEC) has admitted violating financial management laws after diverting M80 million in unspent election funds towards purchasing a commercial building in Maseru West, a transaction that has drawn allegations of possible corruption from the Public Accounts Committee (PAC).
Director of Legal Services at the IEC, Advocate Lehlohonolo Suping, told the PAC that the organisation had not budgeted for the building in the 2023/24 financial year, but proceeded with the purchase after receiving instructions based on a Cabinet-approved decision.
“We acknowledge that things did not follow proper laws,” Suping admitted, explaining that the advice he gave the Commission was that it could invest the money within the financial year, not that the funds should be diverted outside the legal requirements.
The matter emerged when the IEC appeared before the PAC on Tuesday this week, to respond to queries raised by Auditor-General ’Mathabo Makenete concerning the year ended March 2024.
In her report, Makenete said the Consolidated Fund was understated by M80 million as at March 31, 2024, because the IEC had failed to remit unspent budget allocations at the close of the financial year.
The report states that on March 28, 2024, the IEC transferred M80 million held in its bank account to a Stanlib Lesotho Inflow account. The same amount was received back into the IEC account on April 2, 2024.
“The movement of these funds and the timing thereof was not in compliance with the PFMA (Public Financial Management and Accountability Act, 2011) Section 14.3 and Treasury Regulations R31,” it says.
Section 14(3) of the Public Financial Management and Accountability Act of 2011 provides that unspent appropriations lapse at the end of the financial year for which they were approved and cannot be spent or reallocated after that date.
Advocate Suping explained that the M80 million had been left over from the budget allocated for the September 2023 Local Government elections because some planned activities cost less than anticipated or were delayed.
“For instance, training sessions took fewer days than planned, while the delivery of uniforms for temporary election workers was delayed,” he explained.
According to documents presented to the committee by IEC Finance Manager, Mokheseng Mofolo, Cabinet approved the acquisition of a commercial property in Maseru West through Home State Holding, acting as an intermediary, following its meeting on March 15, 2024.
The approval was contained in a letter dated March 18, 2024, and involved a joint memorandum from the ministers responsible for finance, local government, home affairs, law and justice, and public works and transport.
Suping said the Minister of Finance and Planning, (Dr Retšelisitsoe Matlanyane) had informed the Commission that Cabinet had approved the diversion of the unspent funds towards the purchase.
He maintained that he and the then finance manager had advised the Commission to seek direction from Matlanyane on how the funds could be used.
“When the then Director of Elections (Mpaiphele Maqutu) told us that there is an unspent M80 million that can be used to purchase the building, it was in October during that financial year I and the then finance manager advised that the Minister of Finance can give direction on the usage of the fund,” Suping told the committee.
He noted that they had also approached Stanlib to enquire about investing the money.
However, acting PAC chairperson Dr Tšeliso Moroke challenged the legality of the transaction, saying the unspent funds should have been returned to the Consolidated Fund rather than diverted to buy property.
“You are wrong that you decided to divert the unspent fund to purchase a building instead of returning it to the Consolidated Fund. Secondly, you allowed the Minister to act above the law and mislead you,” Moroke said.
He alleged that the circumstances surrounding the purchase raised concerns about possible corruption.
“Just within that financial year, you decided that since you have an unspent fund, you should purchase a property? I foresee a motive that resulted in corruption here. Somebody saw an opportunity of the unspent fund and decided to make his own deal out of it,” Moroke alleged, without elaborating.
The IEC said the building was worth M77 million. However, Procurement Manager Elias Molise told the committee the other valuers engaged by the Commission had placed its market value at M74 million and M75 million respectively.
Molise said the IEC paid about M100,000 for the valuation exercise. Only four companies were considered under limited tendering and the procurement process was not publicly advertised. The valuers, he stated, were provided by the Land Administration Authority (LAA).
The committee also heard that the IEC was yet to obtain the property’s lease.
Advocate Suping said the then minister responsible for local government and police had indicated that the lease would be registered in the police’s name, despite the building having been purchased using the IEC’s budget.
He stressed that his advice had not been to use the money unlawfully and the transaction did not proceed as he had recommended.
Advocate Suping also questioned the dates on which the funds were invested, saying they did not add up.
The government had previously promised to provide M231 million for the construction of a commercial property for the IEC, with the intention of helping the Commission avoid rental costs, he added.
The committee’s inquiry forms part of its examination of the Auditor-General’s findings on the IEC’s financial management for the 2023/24 financial year.
