M74m overpayment scandal

Audit exposes massive irregularities in new Royal Palace project 

‘MATHATO SEBOKA

MASERU – The construction of Lesotho’s New Royal Palace was marred by significant financial mismanagement, including overpayments totalling over M74 million to contractors, according to Deputy Auditor General Paul Letlela.

The revelations came during a press conference held this Wednesday, where auditors detailed shocking cost escalations and contractual breaches. 

Exorbitant overpayments uncovered revealed staggering percentage increases from the original contract amounts, Palace Architects (PTY) Ltd with a 170 percent increase, Makeka Design Lab (MDL) 36 percent increase, Lethola Cost Associates 2 994 percent increase, Aurecon (Civil/Structural) 840 percent increase and Dyelec and LSP Construction (PTY) Ltd with a 225 percent increase each.

Letlela emphasized that these inflated payments lacked justification, with some contractors being paid for work that was never executed. 

The audit further found out that Palace Architects and MDL used the Republic of South Africa (RSA) contract laws instead of Lesotho’s standard terms. This included RSA-based fee calculations and architectural guidelines, bypassing local regulations. 

More alarmingly, the government lost copyright ownership of critical project documents.

“The agreement granted intellectual property rights to the architects, not the state,” Letlela said.

“If disputes arise, we may have to pay or go to court to retrieve our own documents.”

Additional financial losses incurred, as identified by the auditors include M3.3 million paid for unexecuted work, M5.9 million lost due to incorrect measurements and M3.6 million wasted in the irregular appointment of MDL.

Letlela also noted that construction began before contracts were signed, further violating procurement rules. 

In a twist, a terminated project consultant approached the Auditor General’s office in April this year, claiming to possess missing original documents – including keys to the new palace. The office of the Auditor General has secured the materials but now must re-audit the project to verify their authenticity.   

“The former consultant was then approached by our office, he had in his possession what he purported to be original project’s documentation, some of which was reported missing during the audit and they also had keys to the building, which were secured by our office,” he said.