Lesotho: Matjato Moteane Convalt Energy Conflict Raises Ethics Questions

• Lesotho has signed a US$6.2 billion (R100 billion) deal with Convalt Energy for the Kobong Project, an AI data center and hydropower plant.
• Public Works Minister Matjato Moteane is a shareholder in Sekhametsi Investment Consortium, a local firm the government plans to invite to participate.
• Moteane holds shares in Sekhametsi valued at approximately M27 million and has faced previous conflict-of-interest investigations regarding other government contracts.
• The minister claims to have declared his interest to the cabinet and recuses himself from relevant discussions, though this remains unverified.
• Questions persist regarding the transparency of local partner selection, potential government equity in the project, and adherence to ethical standards.

The situation raises significant questions about political influence for private gain and casts doubt on assurances that citizens will benefit without incurring costs.

Lesotho has embarked on its most substantial foreign investment to date, a US$6.2 billion (approximately R100 billion) agreement with US-based Convalt Energy. This ambitious undertaking, known as the Kobong Project, aims to establish an AI data center and a hydropower plant, positioning the nation as a regional power exporter. However, the groundbreaking deal is now facing questions due to a potential conflict of interest involving a high-ranking government official.

At the heart of the concern is Public Works Minister Matjato Moteane, who holds a significant stake in Sekhametsi Investment Consortium, a local firm the government intends to invite as a participant in the Kobong Project. Minister Moteane is not only a co-founder and former chairperson of Sekhametsi but also a current shareholder, possessing 1,817 shares. These shares are valued at M15,000 each, bringing his total holding to approximately M27 million at current rates.

Energy Minister Lejone Mpotjoane confirmed in an August interview that a binding agreement for the Kobong Project had been signed and that local partners would be invited to participate. He specifically named Sekhametsi Investment Consortium as one of these prospective local firms, directly linking the government's plans to Minister Moteane's private interests. This connection has ignited debate over the potential for political influence to serve private gain, raising doubts about assurances that the project will benefit citizens without imposing costs.

The Kobong Project is envisioned as a transformative initiative for Lesotho, promising to elevate its status in the energy sector. The project's progression involves a year-long feasibility study, which will be followed by the formalization of implementation agreements, including crucial water-use plans. Only after these preliminary stages are completed will construction commence.

Regarding the financial structure, Convalt Energy CEO Hari Achuthan has provided assurances that the Kobong Project will be privately financed. Achuthan stated that Convalt would bear all financial risk, with no government guarantees involved, thereby ensuring Lesotho faces no financial exposure. This position was echoed by Energy Minister Mpotjoane, who previously indicated that Lesotho would not be contributing funds to the project. Financing arrangements are slated for formalization and disclosure once the feasibility study concludes.

Despite these assurances of private financing, the government's intention to include local firms introduces a layer of complexity. It remains unclear what equity stake, if any, these local participants will secure in the project. Furthermore, government spokesperson Boitelo Rabele has not yet been able to clarify whether the government itself intends to hold an equity stake, despite earlier indications to the contrary, or what role it will play in facilitating and selecting local companies. Rabele noted that the government would "advise itself on the implementation agreement" after the feasibility study. Sekhametsi CEO Lethola Mokete has confirmed that his firm has not yet been formally approached to participate.

The Matjato Moteane Convalt Energy conflict has brought the issue of public officials' private interests into sharp focus. When questioned about the potential conflict, Minister Moteane stated that he had declared his interest in Sekhametsi to the cabinet. He also affirmed his practice of recusing himself from cabinet discussions pertaining to the Convalt Energy deal, a measure he claims to apply to other relevant matters. However, the veracity of his cabinet declaration could not be independently verified.

Further complicating matters, it remains unconfirmed whether Minister Moteane has declared his interests to the Directorate on Corruption and Economic Offences, as mandated by law. Declarations made to this body are confidential, preventing public verification. The scrutiny around Minister Moteane's involvement is not unprecedented; last year, three parliamentary committees initiated an investigation into a conflict of interest and criminality linked to the M184 million refurbishment of Moshoeshoe I International Airport. This previous inquiry involved Moteane's former shareholding in Khatleli Tomane Moteane Architects, a firm included in LSP Construction's successful bid for the airport contract. Moteane maintained that he had relinquished his shareholding before assuming his ministerial position.

The journalistic pursuit of clarity on the Kobong Project Lesotho conflict has also met with resistance. When pressed about the potential conflict of interest involving Sekhametsi, Energy Minister Mpotjoane abruptly terminated an interview and subsequently blocked the reporter on WhatsApp, further fueling concerns about transparency and accountability in Lesotho government contracts ethics.

The unfolding situation surrounding the Kobong Project and Minister Matjato Moteane's ties to Sekhametsi Investment Consortium underscores significant challenges for governance and transparency in Lesotho. The lack of clear guidelines on how local partners will be selected and integrated into such a monumental project, particularly when a senior government official has a direct financial interest, raises fundamental questions about fair play and ethical conduct.

This scenario highlights the critical importance of robust anti-corruption measures and stringent conflict-of-interest protocols for public officials. The unverified nature of Minister Moteane's declarations and the lack of public clarity on the government's role in local partner selection contribute to an environment where public trust can easily erode. The R100-billion AI hydropower deal, while promising economic growth, must also uphold the highest standards of integrity to ensure its benefits are truly for the nation and not overshadowed by private interests.

Lawyers and compliance officers advising clients on investments or partnerships in Lesotho, particularly in large infrastructure or energy projects, should be aware of the heightened scrutiny on potential conflicts of interest involving government officials. This case underscores the critical need for thorough due diligence on local partners and government stakeholders to mitigate legal and reputational risks, especially concerning compliance with anti-corruption laws and declarations to bodies like the Directorate on Corruption and Economic Offences.

Source: Original reporting via MNN Centre for Investigative Journalism