Raw Nikuv deal haunts Lesotho passports



MASERU – A controversial deal government struck with Israeli company Nikuv International Projects for issuance of passports almost a decade ago is behind the current freeze on the processing of the much-sought-after travel documents, Public Eye can report.

Home Affairs Minister Mokoto Hloaele has expressed displeasure over the government’s contract with Israeli company Nikuv, stating that the deal has fundamental flaws which have hamstrung the ministry from issuing new passports.

The freeze is frustrating thousands of Basotho itching to travel abroad for various reasons, but mainly for work purposes.

Official figures indicate an estimated 500 000 Basotho are migrant workers contributing a sizeable amount of money to national earnings.

The importance of these remittances has been underlined lately by the decline in Southern African Customs Union (SACU) revenues which pose a challenge to the country’s fiscal outlook.

SACU revenue fell from 24 percent of GDP in 2014/15 to an estimated 17.2 percent of GDP in 2017/18 and is projected to decline further to 15.8 percent of GDP in 2019/20.

As a landlocked country, Lesotho finds itself dependent on South Africa for trade, foreign currency and migrant workers sending money home to support their families.

These remittances now account for 30 percent of the local economy and often do much more for Lesotho than foreign investment or aid.

To emigrate and work legally abroad, Basotho need to obtain passports which the Ministry of Home Affairs stopped issuing to ordinary citizens in March because passport booklets were in short supply, leaving thousands of passport-seeking Basotho in limbo.

Material for a few passport papers was reserved for special cases approved by the ministry.

Hlaele told Public Eye then that “we stopped production of the new e-passports because we do not have enough passport booklets”.

Nikuv was controversially awarded the lucrative contract to computerise the country’s border control system and produce electronic passports, birth and death certificates and national Identity Documents (IDs) without going through the requisite open public tender in 2012.

In November 2013, bribery and corruption charges were levelled against the then Principal Secretary (PS) of the Ministry of Home Affairs Retšelisitsoe Khetsi for allegedly receiving M5 million in bribes from Nikuv to influence the awarding of a M300 million tender.

In the indictment, the crown said the bribe was given through a middleman called Motsotuoa Makoa, with whom Khetsi was jointly charged.

Nikuv was not charged after it signed an indemnity deal with the government and the Director of Public Prosecutions.

The agreement was that the company, its employees and agents would not be prosecuted as long as they give truthful evidence in the prosecution of locals like Khetsi.

In 2016, Nikuv was found guilty by a court in Israel of bribing Khetsi in order to advance the company’s business interests in Lesotho.

As part of a plea deal, Nikuv was fined NIS4.5 million (US$1.15 million) by a Tel Aviv Magistrate’s Court for the offence.

In addition to the fine and forfeiture of assets, the company was ordered to co-operate with law enforcement authorities in Lesotho investigating the case, as well as revise its internal policies in order to prevent future cases of bribery.

However, the Lesotho High Court in 2017 quashed the charges against Khetsi because of inordinate delays in proceeding with the case, thus denying the accused his right to a free and fair trial.

The Nikuv deal seems to have come back to haunt the government.

“There are three fundamental flaws with the contract. First, it was agreed in a foreign currency, in US dollars.

“Second, the lead time between the placement of an order and delivery of blank passport booklets is very long. Third, is the payment module where they need a 50 percent down payment upon order,” Hloaele told Public Eye this week.

He said every time when making a payment to Nikuv, government has to convert the Loti to the US dollar.

This means if the exchange rate is constantly fluctuating, the government cannot anticipate how much it would require to convert to dollars and meet its obligation.

The minister said if the deal had been agreed in local currency, this would have provided a stable basis for government to work out its expenditure in Maloti without any concerns about the volatile exchange rate.

“They also say they cannot deliver passport booklets in less than six months after we have placed an order, the reason being they also buy the booklets from someone else.

“If we place an order this month, it means we will only get the stock next year. We are in negotiations with this company to change these terms of contract,” Hloaele explained.

“Now we have a very limited stock of passport booklets in our inventory, that is why we are now only issuing passports to people who desperately need them.

“A passport is a travel document issued primarily for the purpose of international travel. An applicant must convince the ministry that he/she is going to travel out of the country,” he said.

After the ministry stopped issuing passports, it extended the deadline for the expiry of the old analogue passports which were due to expire at the end of March.

Hloaele said then that the ministry would not be able to manage the influx of applicants for new passports before the March 31 deadline.

The deadline was extended to next year.

The Ministry announced in 2018 it was phasing out old passports and called on holders to exchange them for electronic passports for free.

People were given until December 31 to replace old passports but the deadline was later extended to March 31, before it was moved to 2020.

’Machaba Lemphane-Letsie, the ministry’s PS, acknowledged on Tuesday that the ministry had problems with some aspects of the Nikuv agreement but would not discuss those terms because she was in Quthing for the King’s birthday celebrations.

“The agreement was signed in 2012. That was even before the first coalition government got into office. It was not signed by this government. Come to my office when I am available so that we can sit down and I will tell you which aspects of the contract we have problems with,” Lemphane-Letsie said.

Around September 2014, the ministry suspended the production of passports, national identity documents and birth certificates after Nikuv withdrew its services demanding M34.7 million for services rendered over a six-month period.

Nikuv wrote to the then Minister of Home Affairs Joang Molapo stating: “If such a payment is not made in the next 14 days, NIP will have no choice but to terminate the PKI solution programme application license (e-passport key management system) which NIP is required to pay to the supplier, which will lead to the termination of the passport issuance (sic), all in accordance with the terms and conditions of the Agreement and the Maintenance Agreement with the Ministry.”

Following this communication, the Ministry obtained an urgent High Court order on 8 August to “interdict any possible disruption or suspension of service” by Nikuv, while the issue was being resolved.

Nikuv ignored the order and withdrew its services forcing government to indefinitely suspend production of passports.

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