LFM announces new retrenchments

Financial crisis deepens, directors’ liability and dividend failures questioned

RETHABILE MOHONO

MASERU – Fear and uncertainty grip the workforce of Lesotho Flour Mills (LFM) following a shocking management announcement of plans to retrench approximately 25 employees.

The move, delivered to staff recently, marks the second round of job cuts in just six months, shattering hopes that previous retrenchments would stabilize the beleaguered company.

Employees, who spoke on condition of anonymity, report being left in the dark about the criteria for selection, compounding their anxiety.

“We are all in fear,” one worker said.

“We are stressed and fear we will soon add to the country’s already high unemployment statistics.”

Attempts to secure comment from Chief Executive Officer, Fourie Du Plessis, were unsuccessful. He declined an interview without board authorization, stating that discussions are ongoing and a meeting is yet to be held.

This new wave of job cuts exposes the severity of LFM’s long-standing financial turmoil. The company has struggled for years to meet its obligations, with insiders citing crippling competition from local millers and deep-seated structural issues.

Notably, it has been revealed that LFM has failed to declare dividends to the government – which holds a 49 percent stake – for over two decades, raising serious questions about corporate governance and accountability.

Analysts point to alleged mismanagement, boardroom greed, and incompetence as primary drivers of the company’s decline. Under the Companies Act No 18 of 2011, directors can be held personally liable for losses suffered by the company and its shareholders due to a failure in their duties.

To date, no LFM director has been held accountable.

The competitive landscape presents a dire challenge. Unfortified mealie-meal from other millers is sold at rock-bottom prices, making it impossible for LFM to compete profitably. “After buying produce for three months, we are unable to sell it at a standard price and make profits,” a source revealed.

The financial strain is allegedly worsened by the practices of its majority shareholder, Seaboard Corporation (51 percent). Insiders claim Seaboard or its subsidiaries allow delayed payments for imports, while local farmers demand immediate cash, burying LFM under a mountain of debt.

“Seaboard allows us to pay after three months, but we must pay local farmers now. We are stuck with loans and wouldn’t be surprised if we get shut down tomorrow,” an insider stated, noting that this pressure already forced the recent retrenchment of over 20 staff.

Further allegations suggest that funds earmarked for supporting the Ministry of Agriculture in crop production, as per the company’s Dividends Policy, are routinely diverted to other, unrelated ministerial expenditures.

Once a pillar of Lesotho’s agribusiness, established in 1979 to commercialize agriculture and support local farmers, LFM’s future is now precarious. After the government sold a controlling stake to Seaboard in 1998, the company expanded into sugar packaging and animal feed.

Now, with employees living in fear and management searching for answers, the survival of this national institution hangs in the balance.