African Sun Embroiled in Payment Legal Battle

ZSE-listed African Sun is embroiled in a legal battle with a group of local architects who claim that they were not paid for work they did for the hospitality group in Equatorial Guinea.


In a case which could unravel business relations between government and the private sector in Equatorial Guinea, Corisco Design Team (Codet), a consortium of local construction companies, has filed a US$16 million claim against African Sun after the hotel group allegedly failed to pay for services rendered.

 

The consortium says the regional leisure group engaged its services orally to act as consultants to design and develop buildings for the operation of a hotel in Corisco, Equatorial Guinea.

African Sun however says that the government of Equatorial Guinea has not paid for the project and therefore the contractors cannot be paid.

After signing a memorandum of understanding after its drafting in 2007, African Sun has not yet signed the agreement.

African Sun (then Zimsun)’s foray into the West African country is a spin-off from close political ties between President Mugabe and President Teodoro Obiang Nguema Mbasogo of Equatorial Guinea after Zimbabwe intercepted a plane-load of men, allegedly hired guns en route from South Africa to stage a coup in the west African country.

Zimbabwe has since established diplomatic ties with Equatorial Guinea and the local private sector was invited to invest in the country. Zimsun grabbed this initiative when its senior executives were part of a government delegation that visited Equatorial Guinea in 2006.

African Sun in documents to hand confirms the existence of an agreement with Codet.

The documents read: “In terms of the verbal agreement, the mandate stated in paragraph (4) hereof was extended to cover two other construction projects, namely Mongomo and Moca projects, on the same terms and conditions.”

Codet says African Sun sought its services to prepare architectural, engineering designs, technical documentation, and project designs for a hotel project and a hospitality school.

African Sun also agreed to cover the project costs relating to the development of the hotels while Codet agreed to adhere to set deadlines for the completion of the respective processes.

Documents read: “It was a further term of agreement that plaintiff would be responsible for its costs, which include, but are not limited to travelling, food and accommodation expenses, until such time when the construction project had been approved by the government of Equatorial Guinea,”
The consortium says it performed its mandate in “proper workmanlike manner”.

Following a meeting in April of 2007, African Sun gave the company the green light to proceed to the next phase.

Documents show that “on or about” June 2 2008, construction drawings were submitted for the Mongomo Project, and construction work commenced on site immediately.

“Two site visits were consequently made by the members of Codet, on the 12th-17th March 2008, and the 8th-12th April 2008. The construction work in respect of the Mongomo project is being undertaken by China Dalian (Pvt) Ltd,” read the documents.

According to Codet, US$10 million went into the Corisco project while US$6 million went into Mongomo and Moca projects.

When Codet sought payment in April this year, Zimsun did not effect payment.

All three projects were approved and construction has already commenced in respect of the Mongomo project.

The consortium made up of Manyara Design Civil Consult (Pvt) Ltd, Structural Design Partnerships Promecs Consulting Engineers, Exclusive Engineering Consultants, Mthupa Practice Architects and Marsden Consultants Africa — is also seeking 6% interest per annum from the April 2009.

African Sun has spread its tentacles across Africa but this is the group’s first venture to be mired in controversy. Informed sources say the hotel project came about as a result of President Nguema’s visit here in 2004 when he stayed at the Elephant Hills hotel in Victoria Falls in 2004. He immediately fell in love with the hotel and intimated that he wanted a similar property built in his country.

After Zimbabwe’s interception of the plane and 70 hired gunmen in 2004, relations between the two countries became cordial and led to investment delegations being sent to the west African country to scout for business opportunities.

African Sun CEO Shingi Munyeza was part of the delegation that met Nguema, who insisted at the meeting that he assemble a team of architects to begin preparatory work for the construction of the Corisco Hotel.
At the same meeting Munyeza told Nguema that the hotel needed to be complemented by a hotel school, a point the leader agreed to.

On his return to Zimbabwe, Munyeza is said to have engaged local construction experts who formed Codet to carry out the task in Equatorial Guinea. Funding for the construction of the project should have come from the Equarorial Guinea government. Munyeza in a letter to Codet in April said  Nguema’s government had not paid for the project. — Staff Writer.