. . . regulator’s shares in Mauritian firm at stake
MASERU – The Lesotho Communications Authority (LCA) has petitioned the Supreme Court of Mauritius to cancel the May 19 enforcement and recognition of an arbitration award by South African lawyer, Vincent Maleka SC on behalf of German company Frazer Solar GmBH. Maleka was appointed an arbitrator by the Johannesburg Bar Council after Frazer fell out with the government over a botched multi-million solar project.
Frazer Solar GmBH claims to have in 2018 entered into an agreement with the government of Lesotho but said government was now dragging its feet so as to prevent implementation of the agreement. Frazer’s alleged agreement would facilitate the German company’s provision of as many as 40 000 solar water-heating systems, 20 megawatts of solar photovoltaic capacity, one million LED lights and 350 000 solar lanterns for Lesotho.
The company further claims that while the German government had agreed to finance the project, the government of Lesotho, on the other side, has failed to execute the project’s financial arrangement.
He approached the South African Bar Council seeking damages and Maleka was appointed arbitrator and ruled in favour of Frazer on January 28, 2020. The government of Lesotho was slapped with a €50 million (about R855 million) bill in damages to Frazer, with its assets around the world threatened with seizure after allegedly breaching the terms of a contract with Frazer.
Frazer Solar, which initiated legal action against the Lesotho government in 2019 claiming a series of contractual breaches, won arbitration proceedings in neighbouring South Africa, where the company was awarded the damages.
Following the arbitrator’s award in January last year, Frazer has been granted enforcement orders in South Africa, the United Kingdom and in – a similar enforcement application is pending in the United States courts.
The LCA has been sucked into the saga because of its stake in a telecommunications company in Mauritius – West Indian Ocean Cable Company Ltd (WIOCC). LCA has a five percent stake WIOCC, shares considered Lesotho government assets because it owns the regulator.
According to the court papers, Frazer solar testified at a Mauritian arbitration that Lesotho owns five percent of the West Indian Ocean Cable Company Ltd, and the LCA says it has since been served with the provisional recognition for recognition and enforcement.
This makes the LCA one of the many Lesotho institutions targeted by Frazer. But the authority argues that it is an independent institution, not subject to control by any person or authority. It contends that Frazer Solar has irregularly identified and dragged them as a party whereby the provisional recognition order would be enforced on. LCA also states it was not at any stage informed or made aware in any manner whatsoever of the arbitration proceedings filed by Frazer Solar.
“The applicant avers that it was not made aware in any manner whatsoever of the arbitration proceedings filed by respondent in South Africa and it was therefore denied any right of participation therein,” court papers say. The communications regulator says it only became aware of the dispute between government and Frazer Solar when it became public knowledge and when government instituted an urgent application in the High Court of South Africa, Gauteng Division seeking and interdiction pending instatement of the proceedings.
One Dushyant Ramdhur has been authorized to depose to an affidavit on behalf of LCA and tells the Mauritian Supreme Court that the LCA cannot be identified as a party for the purpose of any enforcement of the provisional order mainly because it is a separate entity from government. Ramdhur cites the Communications Act, No. 4 of 2012 which states that “the authority shall remain a body corporate with a common seal, perpetual succession, capable of suing and being sued and subject to this Act, capable of performing such acts as bodies corporate may, by law perform.
“The Act further states that the authority shall be independent and not subject to control by any person or authority.” Ramdhur contends that the Communications Act provides clarity that LCA is an independent corporate body and not in any way an agent of government adding that no arbitral award and or judgement has been granted against it by a tribunal and or court in any jurisdiction.
“The applicant has its own board and chairperson as well as a Chief Executive Officer and in terms of its general powers of authority, it is inter alia able to collect, retain and expend funds for purpose of performing its functions,” he adds that the independence of LCA is further confirmed by composition of its board that does not comprise of any officer appointed by government. In the papers, the LCA admits to having bought the 5.023 percent shares but says “the aforesaid shares have been pledged in favor of Citibank as pledge, to secure secured obligations of a security trust deed.” Citibank is a financial institution (bank).
It is said that the share pledge agreement has been entered by LCA for all the ordinary shares it holds in favour of Citibank. The existence of the pledge agreement, Ramdhur argues, that it makes attachment of the shares to the proceedings is irrelevant and “would be devoid of any purpose.” The authority has also asked the court to order Frazer to pay them US$50 000 (about M750 000) including value added tax in legal fees should the court rule in their favour.
Frazer’s claims have, since this saga unfolded, been falsified by local publication Lesotho Express a fortnight ago, which following investigation in Germany unearthed that the KFW-Ipex Bank, the financial institution that Frazer Solar GmbH says agreed to fund his Lesotho energy project saying they never made that undertaking and the bank doesn’t have any agreement involving Frazer Solar GmbH.
According to the publication its Berlin inquiries further revealed a hoax the €100 million the company claims is the basis for its attempted seizure of the Lesotho’s assets, and that Frazer Solar GmbH allegedly hasn’t paid tax in Germany for two years.
The Lesotho Express also claims to have seen another letter in which KFW-Ipex Bank says it never made any undertaking and the bank doesn’t have any agreement involving Frazer Solar GmbH.
Lesotho has now approached the courts in South Africa to challenge the arbitration decision and set it aside and arguments in that case will be heard in November. Frazer Solar is a global developer of nationally significant renewable energy projects, with a particular focus on developing countries in Africa. They also supply solutions including solar thermal, solar photovoltaic capacity, battery storage and a wide range of energy efficient products; for both grid-tied and off-grid applications.