Chivayo murky deals under threat

Source: Chivayo murky deals under threat – The Zimbabwe Independent June 3, 2016

ZIMBABWE Power Company (ZPC) bosses are stepping up efforts to cancel convicted fraudster Wicknell Chivayo’s murky multi-million-dollar energy deals which have caused uproar at the company and in public, it has emerged.

By Elias Mambo

The power-generating firm also wants to cancel the US$5 million advance payment irregularly paid to the controversial youthful businessman in the US$200 million Gwanda solar project amid indications Energy minister Samuel Undenge is now under fire for sleeping on the job, ignoring the irregularities or facilitating the corrupt payment.

This comes amid indications senior government officials, some at ministerial level and others above, might have benefitted from the Zesa deals, hence their attempt to resist investigations and cancellation of the projects.
The shady power-generation projects have been inflated by more than US$500 million raising suspicions that Zesa senior managers and top government officials could have corruptly benefitted through price escalations.

However, ZPC wants to cancel Chivayo’s deals as its internal legal advisors have warned the power company could have badly damage its reputation by awarding the multi-million-dollar tenders to a dubious company whose directors are ex-convicts and drug traffickers.

A legal opinion written to the Zesa board by the group legal advisor and corporate secretary Saidi Sangula in April raised serious concerns about the damage the shady tenders have caused to the integrity of the company.

According to the documents seen by the Zimbabwe Independent, the Zesa legal department in April raised alarm over Chivayo’s conviction for fraud, validity of his appointment to the Intratrek board and his failure to disclose that he had a criminal record, among many other issues.

“Section 173 of the Companies Act provides for the disqualification for the appointment as director: Any of the following persons shall be disqualified from being appointed a director of a company — a body corporate, a minor, except with the leave of the court, any person who has at any time been adjudged or otherwise declared insolvent of bankrupt under the law in force in Zimbabwe,” lawyers said.

“Save with the leave of the court, any person who has at any time been convicted, whether in “Zimbabwe or elsewhere, of theft, fraud, forgery or uttering a forged document or perjury and has been sentenced therefore to serve a term of imprisonment without the option of a fine or to a fine exceeding level five.”

The document also states that a director of any company ceases to hold office if he has been convicted and sentenced to serve a term of imprisonment.

“The Registrar of Companies should not have allowed Chivayo to be appointed a director given his criminal record unless if there was leave from the court,” Zesa lawyers added.

“It is against this background that ZPC relied on the registration of the company as evidence of compliance with the Companies Act and chose to concentrate more on the company’s registration documents, tax compliance issues and technical issues.

“The point that Chivayo was previously convicted of fraud only came to the attention of ZPC recently after engagement of Intratrek had been completed. Intratrek and Chivayo being a significant shareholder and director should and ought to have disclosed the details of his previous convictions as information of this nature is not readily available to third parties like ZPC. They had an obligation to do so as clearly the matter revolves around dishonesty.”

ZPC, according to the documents, also demanded Intratrek provides evidence whether Chivayo had leave of the court for him to be appointed as a director.

“If there is no leave of the court for Chivayo to be appointed a director of the company in terms of the Companies Act, this effectively means: the appointment of Chivayo was in violation of section 173 of the Companies Act, the registration of Intratrek at the Registrar of Companies in October 2012 was not in compliance with the Act and therefore was void,” the lawyers said.

“The contract between ZPC and Intratrek is void ab initio (from the beginning) as it was done with a defective legal persona and therefore is terminable. (Mcford case).”

The legal team also proffered available options to ZPC.

“If the registration was faulty, ZPC can resolve to resile from the contract as the contract was void in the first instance. The contract was built on nothing and can therefore not be expected to stand. It should then engage Intratrek and advise them of ZPC’s intention to resile from the contract and the reasons for such decisions,” the lawyers said.

“If assuming the registration was proper and ZPC resolves to remain in the contract given the facts on the ground, it should ensure that the integrity concerns raised will require to be addressed in one form or the other, including stringent performance guarantees.”