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MINISTER LOSES HWANGE COLLIERY BATTLE newsdzeZimbabweNewsdzeZimbabwe

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AN appeal lodged at the Supreme Court by Justice, Legal and
Parliamentary Affairs minister Ziyambi Ziyambi seeking approval to impose a
Reconstruction Order on coal miner Hwange Colliery Company Limited (HCCL) has
been dismissed with costs.

Prior to the latest judgment by the Supreme Court, under
reference number SC67/22, Ziyambi had initially filed an application at the
High Court on February 12, 2020, seeking confirmation of the Reconstruction
Order. The High Court dismissed Ziyambi’s application with costs, prompting him
to appeal to the Supreme Court.

The impact of the Reconstruction Order, which was announced
in an Extraordinary Gazette on October 31, 2018, resulted in the dissolution of
the enterprise’s board.

The government holds a 52% stake in the entity, whose debt
obligations stood at US$333 million owed to various creditors as at December
31, 2016.

Following the announcement of the Reconstruction Order four
years ago, Ziyambi appointed Bekithemba Moyo as the company’s administrator,
whose responsibility was to ostensibly steer the loss-making coal miner back to
profitability under the reconstruction exercise.

Great Dyke Investments chief operating officer Munashe
Shava and Mutsa Remba, former managing director at Dube, Manikai and Hwacha
Legal Practitioners, served as Moyo’s assistants.

Relating to the latest Supreme Court ruling handed down by
Deputy Chief Justice Elizabeth Gwaunza, she struck off the roll Ziyambi’s
appeal application with costs, highlighting that the minister acted “contrary”
to the relevant statute when he placed the company under reconstruction.

Justices Samuel Kudya and Nicholas Mathonsi also sat on the
Supreme Court bench.

The judgment reads: “The order which the minister issued 17
months into the scheme of arrangement no doubt violates Section 2(a) of the
Act. It is trite that an order which is issued in direct violation of the law
stands on no leg. It is a nullity.

“Similarly, an application which is premised on a nullity
cannot stand. Nothing begets nothing … It is by parity of reasoning, evident
that the application which the minister made to confirm a nullity cannot stand.
It will simply collapse.”

In passing the judgment, the Supreme Court judges
emphasised that Ziyambi’s appeal application was bound to crumble “on the basis
that the foundation upon which it is predicated does not exist. The court, in
other words, cannot confirm a nothing”.

Ziyambi, who is cited as the appellant, was represented by
Thembinkosi Magwaliba while the respondents, Juliana Muswe, Ntombizodwa Masuku,
Edward Tome and Messina Investments were represented by Thabani Mpofu.

Muswe, Masuku and Tome are board members of the embattled
company which is listed on the London and Johannesburg bourses.

Businessman Nicholas van Hoogstraten is also one of HCCL’s
major shareholders through Messina Investments.

Andrew Lawson, a chartered accountant, was the scheme
chairperson and a trustee appointed by the scheme creditors to represent their
collective interests is cited as the fourth respondent in the court case.

Prior to Ziyambi’s moves to impose a Reconstruction Order
on HCCL, the company’s shareholders and creditors had agreed on a Scheme of
Arrangement, also known as “the scheme” whose sole purpose was to raise fresh
capital, restructure management and rescheduling and settling debt. The scheme
was led by Lawson.

As part of the court case proceedings, culminating in the
judgment, the judges weighed Ziyambi’s submission premised on the view that
placing HCCL under reconstruction, in light of the operational challenges it
was facing would save the company from total collapse.

Ziyambi’s legal counsel had argued: “The scheme had failed
to turn around the fortunes of Hwange due to mismanagement for which the
directors were ultimately responsible. He was impelled by the exigencies of the
situation to act with speed to protect the public investment and a national
strategic asset.

“Being the largest shareholder and creditor, government of
Zimbabwe could not countenance the delays associated with the legal process for
the dissolution of the scheme that was specified in the trust deed to which it
was a party.”

But, the respondents countered Ziyambi’s averments, noting
that his unilateral decision to place HCCL under reconstruction was illegal and
meant to dismantle the company’s legally constituted board, thereby prejudicing
its shareholders.

“The respondents took several preliminary points a quo,
against the confirmation of the Reconstruction Order. The directors and the
fifth respondent contended that Part II of the Act violated the provisions of
Section 56(1) (the equality and right to equal protection clause), 68(1) (the
right to administrative justice clause), 69(1) (right to a fair hearing before
an independent and impartial tribunal clause) and 71(1) (the right to the
protection of private property) of the Constitution of Zimbabwe,” reads the
judgment.

“They contended that the power reposed in government of
Zimbabwe by the impugned provisions to act as both a prosecutor and a judge in
its own cause and to unilaterally circumvent the audi alteram partem rule was
inconsistent with these constitutional provisions.

“They further contended that the application did not
disclose a cause of action in the face of an extant court order sanctioning the
scheme.”

The aggrieved respondents, who opposed Ziyambi’s plans to
place HCCL under judicial management, underscored that the minister was abusing
his authority by passing orders which only favoured a single shareholder being
government.

The judgment reads: “They (respondents) also contended that
the invocation of the Act in favour of one shareholder constituted an abuse of authority.

“Finally, they argued that the appellant’s failure to make
the material disclosure of the mala fides the minister harboured against them
arising from some alleged impropriety he committed during his chairmanship of
the board between 13 May 2016 and 8 December 2017 (when he assumed ministerial
office), rendered the RO a nullity.”

After assessing the submissions by the contending parties,
the Supreme Court Justices dismissed Ziyambi’s application, citing that it
lacked merit.

“Accordingly, the following order will ensue: The appeal be
and is hereby dismissed. The appellant shall pay the first to fifth
respondents’ costs on the ordinary scale. The order of the court a quo is set
aside and substituted with the following: The application is struck off the
roll with costs,” the judgment reads.

At its prime, HCCL used to consistently supply coal to the
Zimbabwe Power Company (ZPC) for the generation of 400MW of electricity and to
commerce, industry and agriculture.

Between 2013 and 2016, due to a host of reasons
attributable to antiquated equipment and undercapitalisation, the company
suffered endemic losses that peaked at US$100 million in 2015 before tapering
off to US$87 million in 2016. Zimbabwe Independent




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