FAL gambles with association funds in ponzi scheme

NTHAKO MAJORO

MASERU – Members of the Federation of Athletics Lesotho (FAL) are shaken by what some have characterised as an investment in a pyramid scheme using the association’s funds by certain executive members.   They discovered the scam during their annual general meeting (AGM), which was held at Durham Link in Maseru last Saturday, that their federation had entered into a pyramid business.

According to inside sources, this was revealed by FAL President, Tšeliso Pheta in his keynote address to the AGM.

Sources said Pheta, who is also the Lesotho Sport and Recreation Commission’s (LSRC) treasurer, told the AGM that the Federation had invested a certain sum of money in a business, even though he did not go into details about it.

But the sources said the Congress (at the FAL AGM last Saturday) refused to adopt Pheta’s report and, instead, told him to provide them with all the documents of the business so that they could see how it operates before making any decisions.

Sources said the pyramid business in which the Federation’s money was invested was a betting company known as All Bets, allegedly bought out for between M50 000 and M250 000. The pyramid business, which sources said was on the verge of collapsing when FAL leadership decided to buy it out, operated in Maseru and Mafeteng, and has since collapsed.

“Its trading licence was for one year, and it expired at the beginning of September this year,” said one source. “We found out that the previous owners of the company sold it after realising that it was about to collapse.”

Sources further said: “So, basically, FAL leadership stepped in to provide the pyramid business with a bailout, using the Federation’s money.”

The shareholders of the company, sources said, included FAL President Pheta, and a Police Constable who is a silent partner, but whose wife is taking an active role in the shareholding, together with the son of one of the country’s top magistrates.

“The Federation’s President is one of the shareholders, together with three people who are not members of the association,” another source said.

 The sources said the FAL was the fifth financier, adding that this was after the Federation’s executive committees rented out their Electronic Time System to the Zambian Athletics Federation and the DRC’s national athletics federation.

The said Electronic Time System, sources said, was bought for the Federation by the Government of Lesotho through the Ministry of Sports during the recent African Union Sports Council (AUSC) Region 5 Youth Games, which were held in the country in 2021.

“They rented out the Electronic Time System to both Zambia and the DRC for M250 000, and we suspect that they used the same money to buy that company out,” said the sources.

The FAL President’s report also confirmed that the Federation’s Electronic Time System had been rented out to other countries in the region. “We seized the opportunity to provide our time system services to neighbouring countries and successfully generated revenue from this venture,” reads Pheta’s report.

 Pheta further confirmed in the report that they had invested the Federation’s money in a betting business known as All Bets. “With the revenue from our time system services, we bought some shares in All Bets. “Unfortunately, due to a lack of adequate training, we faced challenges in managing this investment,” Pheta said in the report.

He further said: “We still have the software, trading licence, and equipment that have the potential to benefit our federation and generate significant income. However, this can only be accomplished with proper training and management.”

But sources contend that none of those shareholders had actually invested their own money in the pyramid business, adding that all of them were bailed out by the Federation.

 “The money used to buy out that company was the Federation’s.  “None of them used their own money to invest in or buy the company. Instead, they borrowed money from the Federation.” According to the sources, the Federation had never gotten returns from the claimed investment until today.

But the sources said they found out that the business generated profits to the tune of about M104 000. They claimed that the profits were used to pay employees’ salaries, most of whom were the families and friends of one of the shareholders.

“We also found out that people who were responsible for collecting returns from both businesses in Maseru and Mafeteng used the money for their gains after finding out that the profits were used to pay the employees.” Sources further said this was despite the fact that FAL’s leadership used to say there was no money when they had to hold local athletic activities and, according to the financial report presented during the AGM last Saturday, the Federation’s balance is M5 420.83.

FAL Secretary General, Makara Thibinyane confirmed that his executive committee had indeed involved the Federation in the business, saying their main purpose was ensure financial independence of the Federation. “Our main purpose was to be financially independent because we always complain about not getting funds,” said Thibinyane.

As a result, they grabbed the investment opportunity with both hands, he added.  “We do not even have to ask for permission from the AGM because, as the executive committee, we are doing a lot of things without asking the Federation members, but we report to the AGMs in due course.”

Thibinyane said FAL may be a non-profit organisation, but he said their constitution still allows them to generate funds. He referred our reporter to Article 3 of the FAL Constitution (p continued at q), which reads: “Partner or cooperate with other entities to protect and enhance the Federation’s intellectual property, including entering into commercial, marketing, and sponsorship transactions.”

Former FAL President Serake Makhaola said he was shocked to hear about such an alleged pyramid scheme from those who attended last week’s AGM. “I was shocked when I heard from those who attended the AGM that the leadership of the Federation’ took money to one of the pyramid schemes,” said Makhaola.

 He added: “We may not know the aim and even the purpose of doing that, but I cannot comment further because I do not know the reason given for entering into a pyramid business.” The President of the Mafeteng District Athletics Association (MDAA), Tlotliso Ntai, also said he’s still stunned by the news about the said business.

“I am still taken aback by the gambling business by our Federation, and I think the DCEO has to investigate our Federation regarding the issue, especially because we are a non-profit organisation,” said Ntai. The MDAA boss said his organisation would not tolerate that. “We are not going to tolerate this as Mafeteng Athletics Association. I am going to talk to my colleagues about it.” Repeated attempts to get a comment from the FAL President yesterday were unsuccessful as his phones were unavailable the whole day yesterday until we went to print.