By Nthakoana Ngatane
BERLIN, Germany – Former minister in the prime minister’s office Temeki Tšolo not only signed the final agreement with Frazer Solar GmbH without cabinet approval deliberately, says Robert Frazer – but he also wrote letters to German bank KfW IPEX-Bank GmbH asking for funding on behalf of Frazer before the company was even registered – yet this part Frazer doesn’t say.
Frazer Solar GmbH was registered in Germany on 12 January 2018, two months after submitting a formal proposal to Lesotho, and after signing a non-binding memorandum of understanding with the office of then prime minister Tom Thabane.
It was registered five months after the first meeting between managing director Robert Frazer and Tšolo on 3 August 2017, when Tšolo, again without consulting cabinet, allegedly assured Frazer of Thabane and government interest in the renewable energy project proposed by Frazer.
Frazer Solar has been awarded (€50million) about 850 million maloti in damages by an arbitration process in South Africa. It was awarded a default judgement on the agreement to supply 40 000 solar water-heating systems, 20 megawatts of solar photovoltaic capacity, 1 million LED lights and 350 000 solar lanterns. And now it wants Lesotho assets to pay back the money.
Incorporation documents acquired by Lesotho Express from the German commercial register department show that Stephan Fintelmann and Robert Frazer started the company with a capital of twenty five thousand euro and later amended the documents on 16 August 2018.
Frintelmann is curiously also the former managing director of KBB Kollektorbau which announced in September 2019, that it would shut down its German operations after 25 years in business, and most probably move outside Europe, because it had difficulty running a solar thermal business in Germany.
KBB’s announcement came two months after Frazer Solar decided to go to arbitration against Lesotho.
KBB is also the company that Robert Frazer told the arbitration that he approached as a new supplier of solar products, because Rheem Australia (Pty) Limited, the company that he was working for when he first conceptualised the Lesotho idea had been sold and was out of the picture.
In his affidavit to the arbitrator Robert Frazer said he “negotiated with a German manufacturer of solar technologies since 1993, KBB Kollektorbau GmbH (“KBB”) who agreed to take shareholding in Frazer Solar in exchange for granting it an exclusive supply right to distribute KBB’s solar products.”
Frazer also told the arbitrator that he had secured the interests of German export credit agency, KfW IPEX-Bank GmbH (“KfW”) to fund solar projects which involved the supply and use of KBB products with a loan to the value of €100 million repayable over a period of 10 years.
Lesotho Express has previously reported that KFW IPEX-Bank GmbH denies that it made that undertaking and says the bank doesn’t have any agreement with Frazer Solar GmbH.
Despite this, Frazer Solar told the arbitrator in South Africa that on 5 October 2017, following the initial meeting of August, no agreement with Lesotho in place, “Tšolo wrote to KfW and informed it of a potential development of a €100 million renewable energy project for Lesotho based on Frazer’s “word-of-mouth”, and invited KfW to submit an indicative term sheet for the financing of the project.”
At this point Frazer Solar GmbH was still not registered.
On 20 November 2017, still not registered, the company says it submitted a proposal to government officials in Lesotho seeking approval for installations in all government buildings and homes of public servants over a period of 4 years.
The following day, on 21 November 2017, still not registered, Frazer Solar GmbH signed an MoU with Tšolo.
The company admits that the MoU was non-binding, yet it says based on it, on 13 December 2017 KfW sent a letter to then finance minister Moeketsi Majoro and expressed its in-principle interests in funding the solar energy project to the tune of €100 million subject to certain conditions specified in that letter.
Frazer admits that that Kfw letter too did not constitute a binding commitment to fund the project, but only interest to fund it, and claims that Kfw repeated that commitment in letters written on 22 March 2018 and 28 June 2018 with a deadline of 30 September 2018.
On 12 January 2018 Frazer Solar GmbH was registered in Germany, but still didn’t have a contract with Lesotho.
Once again based on the non-binding MoU, Frazer says he hosted a workshop attended by government officials to explain the benefits of the his project. He doesn’t say who authorised it, but claims that the officials expressed support for the project and thought that it should proceed to implementation by 1 March 2018, even though there was still no binding agreement between the parties.
Frazer says when the project didn’t take off, presumably because it hadn’t been approved by the correct channels including cabinet, Tšolo again stepped in, and through his office he requested KfW to provide a detailed breakdown of the finance it was offering including timing, fees, interest rates, deposit, guarantees, so that the Lesotho government could consider them to make a final decision on the project.
And in August 2018, a year after Frazer had met Tšolo for the first time, the company had a meeting with the minister and this time then prime minister Tom Thabane was present.
Frazer says they discussed a detailed presentation of the project setting out the benefits, energy and cost savings it would bring about.
“On 1 August 2018 Minister Tsolo wrote to Mr Frazer informing him that the Lesotho Government agreed and committed itself to proceed with the project. He expressly indicated that the Office of the Prime Minister will be the primary point of contact to ensure effective and efficient communication between the parties” say the arbitration records.
But the following month on 24 September 2018 Robert Frazer says he and Tšolo finally concluded and signed a written supply agreement – Frazer on behalf of Frazer Solar, and Tšolo on behalf of Lesotho.
It is that agreement that Frazer is now using to demand damages for what it calls a breach. Tšolo denies that the signature on the final supply agreement is his, but he has yet to verify or deny Frazer’s allegations of his extensive role from the beginning of the saga.
But that still left the financing agreement to be finalised by the ministry of finance with KFW.
Frazer says Tšolo told him that the cost of the project would be included in the government budget, but that could not happen until the relevant finance offer was received from KfW through the Development Bank of Southern Africa.
According to Frazer this time instead of Tšolo talking to the bank, he updated KfW of the parties’ conclusion of the agreement and KfW updated its offer to finance the Project.
However he says KfW wanted DBSA “as a frequent lender to the government of Lesotho to provide some comfort to KfW as it minimized its investment risk profile. He says DBSA was expected to reduce KfW’s financing commitment to €85 million, while the DBSA would carry the balance of €15 million in financing the project.”
He doesn’t tell the arbitrator if there was an agreement for DBSA’s involvement or there wasn’t, and if it played a role in the final outcome. Instead he blames then finance minister Majoro and alleges he preferred another project.
When the financing agreement didn’t happen, in October 2018, Frazer Solar wrote to the ministry of finance to establish the reasons for the delay.
The current prime minister Moeketsi Majoro says as finance minister at the time he told Frazer Solar that the project required cabinet support and leadership from the ministry of energy.
According to Frazer “this support had already been confirmed by the office of the prime minister which could not explain Majoro’s refusal to execute the financial agreement.”
Five months later, in March 2019, lawyers representing Frazer Solar addressed a letter of demand to Thabane’s office calling on Lesotho to remedy a series of breaches of the supply agreement within 60 days.
When no answer was received, on 30 July 2019, Frazer Solar declared an arbitration dispute between the parties, implemented arbitration proceedings and invited Lesotho to agree to the appointment of an arbitrator within five days.
Lesotho didn’t respond, attend meetings called by the arbitrator or file a defence statement as directed, but the arbitrator had proof that emails and hard copies had been sent and delivered to the office of then prime minister, Tom Thabanie
Tšolo told the parliament’s public accounts committee that his signature had been forged and he was “set up for a fall” – but the chair of the arbitration found that “there is no suggestion at all that the signature of Minister Tsolo on the Supply Agreement is not his or amounts to fraud.”