Richard Musukwa, the Minister of Mines, says the Zambian government will not fold its arms waiting for the court process on the bidding process for its sale of Konkola Copper Mines.
“We are very aware that the court processes are taking place but we have a government to run and we have to protect our people. If I used my traditional cousins’ language, I would say ifikala chimbwi tefikala inama ikata. We cannot fold our hands to wait for court process, which we respect. And for your own information, we have a strong case against them and even if they took us anywhere on earth, we will still win the case,” says Musukwa. “But are inclined to think that our legal system in Zambia are adequate to deal with the KCM issue. We enjoy jurisdiction, we enjoy sovereignty, and only scared people because of their evil activities would be running from one point to another. Otherwise we think that court processes in Zambia are able to provide credible judgment and as a government we are on firm ground that we have a strong case and that’s why in the background we have proceeded to ensure that these processes go on uninterrupted. The bidding process is going to start once companies that have expressed interest finish with the due diligence on the company and we are hoping that this could be done in a couple of weeks. Where we are now is that companies are conducting due diligence on KCM. Slowly we have started to dismantle those arrears that are owed to suppliers but this is $2.5 billion. We can’t pay it in a day but we are committed to ensuring that this huge indebtedness is liquidated.”
What type of logic is this? Just because you think you have a strong case then you can’t wait for legal processes to be completed! If all who believe they have strong cases acted in this way what would become of our court processes?
Here they are acting like thieves who have run out of time to conclude their mission. How does one explain this rush by Edgar Lungu and his lieutenants involved in he KCM saga? That one who even brags about being an excellent lawyer can run like this gives the law fraternity in the country a very bad name.
Selling Konkola Copper Mines before the court processes have been concluded will have very serious legal implications for Zambia.
Embarking on a process of selecting a buyer for KCM undermines the stand or credibility of our already tainted courts.
This case is not as simple and straightforward as Musukwa has been made to believe. They have embarked on a very complicated process.
And this carelessness will soon prove to be very costly.
What is wrong with doing things the right way?
What they are trying to do will leave the government with gigantic claims for damages by Vedanta.
The sale of KCM can only legally be undertaken after a winding-up order has been made.
They can easily manipulate the court processes in Zambia and get the outcome they want but it won’t be able to do that with the arbitration and court processes in South Africa.
Anyway, they don’t seem to care about such things. Impunity has become part of their political character. As Elias Chipimo correctly observes, “the actions of the Patriotic Front administration are not only reckless and dangerous but give rise to concerns about a growing pathological criminality – the type that takes full root when there is a feeling of complete impunity amongst the leaders of a nation. Let us all be clear, it is only the provisional liquidator (someone appointed after a petition has been filed but no final winding-up order has been made yet), the liquidator (the person appointed after a winding-up order has been made) or the Official Receiver (essentially a government official either appointed by the court or who assumes office by the operation of law) that can legally manage a liquidation procedure.
The steps the government is taking to progress the asset sale (appointing negotiators and directing matters from behind the scenes) amount to an illegal interference of the liquidators powers (see section 74(4) of the Insolvency Act) and are likely to be a factor in an inevitable compensation claim that will no doubt form part of the arbitration proceedings. Any members of any such illegal government committee will also face claims for any allowances they might receive from KCM (or from any other official source) for participating in this process without the backing of the law.
In addition, given that the arbitration will be between Vedanta and ZCCM-IH, Vedanta will have a viable basis to lodge a separate claim against the government in respect of the violation of its property rights under the Constitution. What has essentially happened is that the government has sought to carry out a compulsory acquisition without paying compensation to an investor perceived legitimately by the majority to have failed to live up to its expectations. So what should government have done, given the challenging situation presented by KCM? Two things, simultaneously: (a) ZCCM-IH should have triggered the arbitration procedure under its agreement with Vedanta; and (b) government should have started compulsory acquisition procedures. There are those that advocated either the appointment of a receiver or the application of the business rescue procedure under the Insolvency Act. Unfortunately, none of these options were viable for the simple reason that: (i) the appointment of a receiver can only be triggered by a secured or preferential creditor; and (ii) the business rescue procedure would have required KCM as a company to pass a special resolution, meaning the consent of Vedanta would have been required. It is highly unlikely that this would have been forthcoming.
The Chinese have a saying: ‘May you live in interesting times’. This can be read as either a blessing or a curse. Sadly, for many Zambians living under the tyranny of the current regime, it tends to only be read as the latter. Any costs arising from the PF administration’s careless approach to resolving the KCM challenge will be borne by innocent Zambian taxpayers already burdened by debilitating debt, whose repayment will outlive many of them. But then again, does concern for public interest and future generations really concern the PF? Apparently, not one bit.”