Five years on, govt seeks fresh advice on Seaboard exit
- 2019 Due Diligence Report warned of ‘rich’ fees and side-lined government
- As ministers now stonewall questions on inaction
MOTSAMAI MOKOTJO
MASERU – In a move that has raised eyebrows and questions about governmental follow-through, the Cabinet has decided to re-engage the African Legal Support Facility (ALSF) for advice on terminating its troubled partnership with Seaboard Overseas Management, the majority shareholder in the Lesotho Flour Mills (LFM).
The decision is astounding because the ALSF provided a comprehensive and highly critical Due Diligence Report in 2019 that explicitly recommended the government cut ties with the American company.
The revelation casts a shadow over half a decade of apparent inaction, during which LFM – a vital national asset – has consistently failed to pay dividends to its government shareholder, despite a lucrative management contract for Seaboard.
The 2019 ALSF report, a hard-hitting document obtained by this publication, pulled no punches. It insisted the Management Agreement “should have a time-horizon” and that LFM Company “should not be obliged to retain Seaboard Overseas Management as management company in perpetuity.”
It flagged the annual management fee – a figure adjusted for inflation and currently standing at over US$533 265 – as “appear(ing) rich.”
This raises a critical question: Why is there a need for a similar report now, nearly five years later, and what actions, if any, were taken based on the initial damning assessment?
Minister of Trade, Industry, and Business Development, Mokhethi Shelile, has previously confirmed that the exit is on Seaboard’s agenda.
“We held an Annual General Meeting… where Seaboard raised the issue that they are working on ways of pulling out,” Shelile told Public Eye. He indicated a sense of urgency, adding, “We are going to meet again this month (May this year) regarding the management contract.”
Minister Shelile did not hide his dissatisfaction with Seaboard’s performance.
“Those people’s performance hasn’t inspired confidence. When I was still an employee at Lesotho National Development Corporation, they were received by me, yet they haven’t given dividends to governments,” he stated, strongly suggesting that severing ties would be “soon.”
However, when contacted recently for an update on the progress since the 2019 report, an irate Minister Shelile refused to engage, declaring he would no longer take calls from this publication “after what you wrote about me.” He stated, “we have nothing to discuss.”
This resistance to scrutiny is not isolated. The Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane, whose ministry has a representative on the LFM board, has warned reporters from this publication from contacting her. This followed an article detailing her role in the contentious M960 million Ha Ramarathole Solar PV Park Phase II project.
Similarly, the Minister of Agriculture, Marketing, and Food Security, Thabo Mofosi, remained silent despite repeated attempts to seek comment. His personal secretary, who identified himself only as Maseka, initially indicated an interview would be scheduled, but no communication followed.
This pattern of ministerial stonewalling leaves the public in the dark regarding the management of a key national enterprises.
At the heart of this issue is the state of LFM itself. Established as a strategic asset to ensure food security and foster local economic participation, the LFM’s failure to declare dividends to the government represents a significant loss of potential revenue for the nation.
Despite the government’s shareholding and Seaboard’s collection of a substantial annual management fee, the national coffers have seen no return on this investment for years.
This failure directly impacts national economy, as funds that could support public services, infrastructure, or social programmes are not materializing from a company that should be a thriving contributor to the economy.
The 2019 ALSF report detailed a relationship heavily skewed in Seaboard’s favour, to the direct detriment of the government and LFM. The key concerns, which appear to remain unresolved, include an unfettered right to sell – the report critically highlighted that “Seaboard has an unfettered right to sell its entire 50 percent interest… to an affiliate company without being subject to the right of first refusal.”
This clause strips the government of any say or first option to buy back its own shares, potentially forcing it into a partnership with an unknown and possibly undesirable third party chosen by Seaboard.
The report also found that the quorum for directors’ meetings could be formed by Seaboard-appointed directors alone, effectively allowing the company to make crucial decisions without a single government representative present. The ALSF explicitly recommended this be changed to require at least one minority shareholder’s director to be present – a best-practice protection the government seemingly never secured.
The Management Agreement required LFM to indemnify Seaboard “without limitation,” even covering non-contracting parties. The ALSF advised that this dangerous clause “should either be deleted or amended to provide for mutual indemnities in defined circumstances.”
Perhaps most critically for a shareholder, the report noted that the Shareholders Agreement “does not regulate the declaration of dividends,” explaining the government’s lack of leverage in demanding its share of the profits.
The report also questioned the transfer of 100 shares to a “Doctor (Angus Yeats)” from Saxonvale, noting, “Confirmation is required whether the government approved such a transfer of shares,” pointing to a lack of transparency and oversight in the company’s ownership structure.
The government has a fundamental duty to protect national assets and ensure fair and equitable agreements that benefit the people of Lesotho, and the 2019 ALSF report provided a clear roadmap to rectify a bad deal.
The fact that the government is only now, in 2025, re-engaging the ALSF on the same matter suggests a profound and concerning failure to act decisively. The public deserves urgent answers: What discussions took place after the 2019 report? Why were its recommendations not implemented immediately? Who is accountable for this five-year delay, which has prolonged potential prejudice to the country’s economic interests?
This situation is more than a simple business negotiation, it is a test of governance, transparency, and the state’s ability to act as a diligent custodian of the nation’s wealth.
The silence from the highest offices is deafening and unacceptable. The milling of Lesotho’s flour should not come at the cost of milling its citizens’ patience and trust.
