How a national asset was sold in the shadows
The controversial takeover of Lesotho’s pharmaceutical crown jewel
TEBOHO KHATEBE MOLEFI
MASERU – An investigation into the acquisition of the state-owned Lesotho Pharmaceutical Corporation (LPC) by controversial businessman, Yan Xie, reveals alleged breaches of national laws, raising serious questions about political connections, accountability and the loss of a strategic asset critical to the nation’s health sovereignty.
This controversial acquisition of the state-owned LPC by the controversially government-connceted businessman is under intense scrutiny for allegedly flouting national laws and depriving the nation of a key strategic asset, an inquiry by this publication has revealed.
In the annals of Lesotho’s economic history, the rise and fall of the LPC represents a story of promise, neglect and a controversial demise. What began as a bold initiative to secure the nation’s medicine supply during the apartheid era ended with its acquisition by the powerful businessman in a deal now shrouded in allegations of illegality and a severe detriment to national development.
Established in 1977 as the Lesotho Dispensary Association, the LPC was born from a strategic necessity to ensure Basotho had access to essential medicines if South Africa closed its borders. By the late 1990s, it had evolved into a state-owned manufacturer and exporter of generic drugs, supplying anti-tuberculosis medications and other essential drugs to markets across the Southern African Development Community and beyond, including Eritrea and Somalia.
It was a source of national pride, providing affordable medicines and symbolizing Lesotho’s self-reliance. But this golden era was not to last.
The dawn of the new millennium brought with it stringent international standards that would prove to be LPC’s undoing. The World Health Organization’s (WHO) Good Manufacturing Practices (GMP) certification became a mandatory gateway for any pharmaceutical company wishing to export.
For the LPC, upgrading its facilities to meet this standard came with a daunting price tag of M22 million.
The government’s allocation of only M8 million created an insurmountable M14 million funding gap. The consequence was catastrophic.
One by one, major clients – Botswana, South Africa, eSwatini – dropped the LPC, compelled by WHO guidelines to source from certified suppliers. Revenues plummeted, production ground to a halt, and by 2007, the corporation that once fortified the nation’s health had ceased operations, a victim of underinvestment and an inability to adapt to a changing global landscape.
The story, however, does not end with a simple closure.
In 2011, the carcass of this strategic national asset was acquired by Xie, a Chinese-born entrepreneur who immigrated to Lesotho in 1990 and became a naturalized citizen in 2006.
Xie had by then built a formidable business empire in the country, with interests spanning supermarkets, construction, farming, quarries and the nation’s only slaughterhouse.
Significantly, Public Eye investigations reveal that the acquisition was conducted without a public tender process, a direct violation of the principles enshrined in Lesotho’s cornerstone financial law.
Multiple sources confirm that this acquisition was conducted without a public tender process, bypassing the very mechanisms designed to ensure transparency and fair value for public assets.
The deal, reportedly facilitated by Xie’s considerable political connections, transferred ownership of a facility built with public funds into private hands without the requisite public scrutiny.
This method of acquisition stands in direct contradiction to the principles and explicit provisions of the Public Financial Management and Accountability Act (PFMAA) of 2011, the very law designed to prevent such occurrences.
The PFMAA is the bedrock of public finance in Lesotho, mandating transparency, accountability and sound management in all dealings involving government assets. While it doesn’t have a single section on asset disposal, its requirements are clear and woven throughout the legislation.
Section 15 of the Act mandates that the Minister of Finance must include projections for significant asset disposals in the annual budget, which is then submitted to Parliament for approval via the Appropriation Act. Public Eye investigations have found no public record indicating that the sale of the LPC was ever presented to or approved by Parliament.
This suggests a major disposal occurred outside the lawful budgetary framework.
The PFMAA, in Sections 20, 38 and 45, places a firm responsibility on Accounting Officers – the heads of government ministries – to safeguard assets, prevent irregularity and loss, and ensure all transactions are properly accounted for. The alleged off-book sale of the LPC raises urgent questions about whether these officers fulfilled their fiduciary duty to the nation.
The law requires that any disposal of government property must be based on principles of economy, efficiency and value for money. The sale of multi-million-Maloti LPC facility, built over decades, without an open tender, inherently violates these principles, as it fails to demonstrate that the best possible value was obtained for the public.
The true cost of this alleged irregularity extends far beyond a simple breach of procedure. It represents a profound loss for Lesotho’s development and health security.
First, the nation lost its sovereign capability to manufacture essential medicines.
This has rendered Lesotho entirely dependent on imported drugs, making it vulnerable to global supply chain disruptions, price inflation and external political pressures – a vulnerability starkly exposed during the Covid-19 pandemic when nations scrambled for vaccines and treatments.
Second, it represented a massive loss of potential jobs, technical skills and industrial knowledge.
The LPC was not just a factory, it was a centre of expertise. Its closure and subsequent acquisition stifled any chance of reviving this knowledge base, setting back the nation’s pharmaceutical industry by decades.
Third, and perhaps most importantly, it eroded public trust. The perception that a national treasure can be sold to a connected individual without due process undermines confidence in public institutions and the rule of law.
It signals that strategic national assets are not secure from backroom deals, to the ultimate detriment of every citizen.
The silence from various Ministers of Finance and other relevant departments on the specifics of this disposal, since 2011 when Xie acquired the LPC facility, continues to fuel allegations of mismanagement.
This case serves as a stark reminder of the vital importance of stringent adherence to the PFMAA. It is not merely a technical document but a shield designed to protect the nation’s wealth from exactly this type of alleged irregularity.
As Lesotho continues to grapple with healthcare challenges and economic development, the story of the LPC stands as a cautionary tale. It underscores the urgent need for transparency, accountability, and a renewed commitment to managing public assets not for the benefit of a privileged few, but for the long-term health and prosperity of the entire nation.
Chamber demands facility return
Calls for a formal inquiry into the transaction grow louder, demanding answers and accountability for the loss of a crown jewel.
Pule Chere, secretary of the Mafeteng Chamber of Business, stated in an interview with Public Eye that the loss of the LPC facility as a thriving business centre has severely damaged the district’s economy and employment opportunities for many years.
He explained that as a law-abiding business chamber, they have repeatedly considered reclaiming the facility by force but have consistently chosen to remain calm despite their frustrations.
“Some of our members have insisted that we issue an ultimatum to the person occupying the premises. However, our civility and respect for the law have yielded no results. The unexplained transfer of this valuable national asset has pushed us to the brink,” said Chere.
He revealed that the chamber has called for a meeting with Prime Minister Ntsokoane Matekane to urge the government to facilitate the return of the LPC facility to the nation.
“We intend to forcefully persuade the government to resolve this issue. Our deadline is November this year. If no action is taken by then, we will have no choice but to consider other measures,” Chere continued.
He also recalled that former Prime Minister, Dr Moeketsi Majoro, once expressed surprise that the Mafeteng business community had “given up” the facility.
Chere responded that, as the holder of executive power, Dr Majoro should have taken action rather than expressing shock. The chamber sent an official letter of complaint during Majoro’s tenure but received no response.
With the new Revolution for Prosperity -led government in power, Chere confirmed that the Mafeteng Chamber of Commerce has arranged a meeting with Prime Minister Matekane within the next two weeks to address the matter directly.
