Vicious tussle for Hwange control

ANDREW KUNAMBURA

A VICIOUS tussle for the control of Hwange Colliery Company (Hwange) in the aftermath of a High Court ruling nullifying its placement on administration has erupted, amid revelations government is preparing to appeal at the Supreme Court, while lawyers representing the ousted board want to sue administrator Bekithemba Moyo for interfering in the firm’s affairs and contempt of court.

The board’s lawyers say by continuing in office despite a subsisting court ruling, Moyo is violating the law.Hwange board members bounced back following the High Court ruling two weeks ago quashing the government’s decision to place the ailing coalminer on administration.

This came after Justice minister Ziyambi Ziyambi applied for High Court confirmation of his October 2018 reconstruction order issued in terms of the Reconstruction of State-Indebted Insolvent Companies Act.

However, the Juliana Muskwe-chaired board — which had ceased to exist by operation of law soon after the issuing of the order — contested the decision alongside other shareholders, trustees and creditors, arguing that the minister had abused his powers. High Court judge Justice David Mangota ruled that the order had violated the concerned piece of legislation and was therefore null and void.

Ziyambi, himself a lawyer by profession, however, said the court erred in arriving at the decision and his actions were lawful.“The AG is working on the appeal and it’s going to be filed soon,” Ziyambi said.

“First the court erred in concluding that my failure to attach to my founding affidavit in the written report from the Minister of Mines, which l considered at the time when I placed Hwange under reconstruction, was fatal, yet section 8 (2) (b) of the Reconstruction Act does not require the placement before the court of the exact evidence I considered in imposing the reconstruction order but, rather, merely a statement of the reasons why I placed it under reconstruction.

“Also, the court erred in concluding that the reconstruction order was premised on nothing, and that therefore the application was premised on nothing. However, the evidence before the court showed that Hwange, a state-indebted company of monumental importance to the nation, was in the financial doldrums, was unable to pay its debts and could be restored to its status as a going concern if placed under reconstruction.”

Ziyambi further said: “Also, the court erred in recognising that there was a scheme of arrangement in place when the scheme, not having been registered with the Registrar of Companies as prescribed in terms of section 191(3) of the Companies Act had not come into effect. The court also erred in finding that my failure to first apply for the setting aside of the court order granted by the High Court under HC5012/16 relating to the sanctioning of the scheme of arrangement in respect of Hwange, before placing it under a reconstruction order, was fatal to my application for confirmation when an order sanctioning the scheme of arrangement need not first be set aside in order for the court-sanctioned scheme of arrangement to cease to be operational.

“Finally, the court erred in finding that the reconstruction order violated the provisions of section 2 of the Act, when those provisions relate to a scenario where the need for the reconstruction order arises within 30 days of the making of the application for the sanctioning of the scheme of arrangement, whereas on the facts before the court aquo, the need to place Hwange under reconstruction arose well after the company had been placed under reconstruction,” he added.
However, the board members’ lawyer Charles Chinyama disputed Ziyambi’s argument, saying an appeal was not the best option.

“We wait to be served with the appeal papers. An appeal is not the best. I know the Act allows them to re-approach the High Court after dismissal with a similar application, but we are already preparing an urgent chamber application against the administrator for his interference with management. We need to enforce the law and not let chaos reign,” Chinyama said.

Calls on Moyo’s cellphone were not being answered, while messages were also not responded to. Things went awry at Hwange in 2018 when Mines minister Winston Chitando made moves to suspend the board, led by Muskwe, but faced serious resistance from shareholders.

At about that same time, Ziyambi — widely accused of working with Chitando by company officials — put Hwange under reconstruction. Board members argued that the reconstruction order was a ploy by Chitando to remove them after they had initiated a forensic audit into the company.

The subsequent audit, by Ralph Bomment Greenacre and Reynolds, found that Chitando had allegedly orchestrated shady business dealings and presided over the misuse of a US$115,5 million loan at the troubled coal-mining giant during the time he served as board chairperson.

The audit says Chitando, in cahoots with senior executives, systematically manipulated and creamed off the company between 2016 and 2017.