As the Green Party, we find Government position on liquidation of Konkola Copper Mines (KCM) not only stunning and contradictory but also ill-disposed. We urge Government to rethink and abandon the liquidation strategy before it is too late as it will awfully hurt the economy even more.
We say the move is contradictory in the sense that from the exparte order appointing provisional liquidator Milingo Lungu, it is stated that the liquidator has been charged with powers to carry on with the business of KCM. Carrying on the business of an entity under liquidation does not constitute liquidation.
Who is a liquidator? A liquidator is a person appointed to wind up a company. What is liquidation? Liquidation is all about dissolution of a business, not carrying on with a business. So, the role of a liquidator is not to run a business but wind it up. Winding up is the process of settling of accounts in anticipation of dissolution of a company.
In this regard, if the objective of Government’s take-over of KCM operations is to carry on with the business of KCM with a view to rescue the business from alleged insolvency, then instead of going for liquidation, ZCCM-IH should have commenced proceedings under Section 21 of the Corporate Insolvency Act No.3 of 2017. This Section provides for rescuing a business which is in a financial distress, if there is a reasonable prospect of rescuing that company from going under. Furthermore, this Section has a better human face in that when triggered, chances are very high that the company’s creditors are likely to achieve better outcomes than in a case when a company is liquidated.
A liquidator is an undertaker or a malukula. His core job is to sell assets to settle the liabilities in a manner prescribed in Section 127 of the Corporate Insolvency Act No.3 of 2017. After selling the assets, first and foremost, he must pay himself for costs and expenses incurred for winding up, including auditors and lawyers’ remunerations.
Second priority is to pay Government liabilities including environmental costs running in millions of dollars as well as taxes, duties, rents, and rates.
If there is still change remaining, the next on the priority list is local councils’ liabilities.
If any change remains, that is when workers’ liabilities can be looked at. Even then, only 3 months’ salary severance packages are eligible for payment, including, leave pay for maximum two years. If salaries were in arrears, only 3 months’ arrears are eligible for payment.
If there is any change, next on the priority list is NAPSA and Workers’ Compensation liabilities outstanding.
Thereafter, that is when contractors and suppliers liabilities can be considered. If no change is available, then contractors and suppliers totally lose out.
From our assessment of environmental and other Government liabilities, there is a likelihood that there could be no change to pay workers, contractors and suppliers if KCM assets were to be auctioned off on ‘as-is’ basis. This is why we think that liquidation of KCM is awfully irrational.
Lastly, here is why we think a liquidator of KCM cannot carry on the business of the company. First, his mandate on sale of assets is by public auction. Come to think of a scenario whereby after processing the copper, then the liquidator must auction it within KCM premises! For if he dares export the copper abroad in a ‘transparent manner’, chances are very high that it will be seized by KCM creditors abroad who obtain global execution orders.
Also, it is important to note that mining and mineral processing is dependent on suppliers and contractors for literally everything on credit running in millions of dollars. Come to think of being given an order headed “KCM (in liquidation)” to deliver goods on credit and you are aware that other creditors have not been paid for several months if not years. You must be foolish to pump in your millions in such a venture. Especially when you consider the liquidator’s payment priority list alluded to above…..
Peter Sinkamba
President
The Green Party are not wring to be fair
Thanks
BB2014,2016
Sinkamba has no clue that depending on adjudication from a supervising authority, any liquidator’s scope can be expanded.
We are looking at KCM here not a small katemba and the complexity involved can’t be limited to Sinkamba’s monolithic approach described above. While in general terms his points of reference may ensue, the actual framework and scope of reference differs.
For instance, KCM’s main products don’t have to be auctioned locally and contrary to Sinkamba’s alluding to seizure of such products if and when exported shows his complete lack of understanding operational complexities required to make this work.
To solve the above quandary, the liquidators can simply make all sales FOB Lusaka meaning not only are all payments collected by the petitioners (in this case…
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To solve the above quandary, the liquidators can simply make all sales FOB Lusaka meaning not only are all payments collected by the petitioners (in this case ZCCM-IH’s local bank accounts in FX) but also title of those products transfer to actual buyers in Lusaka.
At that point no creditors would hold claim to exports of the said products as it would be the responsibility of the buyers to handle freight beyond Lusaka as they are the owners of such products per new title requirements.
With the above scenario alone, not only does ZCCM-IH and liquidator are in control of cash flow but save themselves from legal liabilities involving sale of products beyond Lusaka.
Secondly, the liquidator can establish Lusaka Mercantile Exchange (LuME) using expanded powers to allow…
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Secondly, the liquidator can establish Lusaka Mercantile Exchange (LuME) using expanded powers to allow him to function and conclude his mandate which mandate might take years to accomplish, for instance.
The establishment of LuME may end up as a new additive to ZCCM-IH’s ability to control all mineral resources in the country in that a new law can be created whereby all such sales would have to be quoted with LuME pricing as opposed to London Metal Exchange, Chicago Mercantile Exchange or something similar.
Sinkamba’s textbook diatribe is totally and extremely flawed here as it just goes to show that he has no operational capacity to properly advise GRZ on such an extremely important aspect of business akin to the smart people of the Zambian Enterprise.
This one…
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This one is way beyond his pay grade and it would be wise for him to leave it our expertise to advise and consent accordingly.
I can cite more examples to shred his article to pieces but as of now, tweende Lungu!!! Tweende webo!!!
Let’s roll … epo mpelele,
BRM
Hello Ba Peter, long time mudala. Thank you for listening to our call. You already shaking these PF….. I like this guy Peter, thats what we call explaining clearly.
ahahahahaha ati Liquidator is a Malukula.
Clueless or inherently corrupt, incorrigible dunderheads called Permanently Fools (PF) started by a foul-mouthed Sata, who stole millions from Avondale Housing Project, a subsidiary of ZISC Limited when he was a general manager at ZISC in 80s and then nationalising Zamtel (and Zambia has to pay billions to the Libyans, lost case in London), same fate is awaiting Lungu and his thieving minions. PF is using ZCCM-IH and Napsa to steal billions and one way ticket to all Investment directors and CEOs of both institutions are already issued straight to Jail, to rot and die miserable death. Lungu and his family will be incarcerated. Long live lazy lungu who could not survive a year working as legal assistant at ZISC.
@BR Mumba your rantings may expose you to ukusabaila.
I think what you are shouting about is RECEIVERSHIP not Liquidator.
1. Liquidator is as Ba Peter put it, an Undertaker of declared dead company
2. KCM is complex as you put it, I agree. But such a complex company you give it to Amos, Kaizer and Milingo Lungu to do what you are dreaming of listing KCM at Lusaka Exchange?
@Bro Mumba withdraw your comments.
Sinkamba has a point.
The incompetence and ill motives can be clearly seen from the people appointed to handle the whole thing.
If we were truly interested in doing what was right and beneficial, the calibre of people on this project would be the likes of Oliver Saasa, and other competent people. But instead we have Kaiser Zulu calibre. And there are people still busy applauding and trying to convince us that PF know what they are doing? Anyway…
@Bro Nostra … please read through my comments again. Sinkamba’s reference are way short of all things right about the role of a liquidator here.
Liquidators have broader powers and can execute more things based on judicial review than receivers including running the actual enterprise alongside a newly board which you need when it comes to a complex company like KCM.
Liquidators focus on winding old operations and dissolution of the old corporate body but Sinkamba mistook that to closing actual operations which is another flaw in his synopsis.
I stand by my comments and both you and Sinkamba need to attend my graduate class on Corporate Restructuring & Operational Analytics 602.
Way beyond Partisan Politics 101 … it’s blue sky stuff beyond your pay grade, Bro … you’re…
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Way beyond Partisan Politics 101 … it’s blue sky stuff beyond your pay grade, Bro … you’re still the best though.
Thanks a trillion, tweende webo wesu!!! Tweende tubulu munandi yewe.
Let’s roll … epo mpelele,
BRM
Ba Mumba , Sr, I may agree with you on the complexity of this KCM issue, but you have not addressed Nostradamus’s second point, which is my main concern, honestly. Trust me, I usually agree with you point of having Zambians being in the position of power and running their own affairs than always looking to foreign investor, but these should be right and qualified for the positions. I still think that Milingo Lungu, my 2004 UNZA graduate-mate, with Amos’ and Kaizer’s backing from state-house, is the right person to lead this complex issue; he doesn’t have the experience, apart from being Lungu’s boy. Politics aside, we have the right Zambians who can handle this properly and deliver a win for Zambia. but this is a potential loss for zambia. Its like putting in weak players in a big…
LETS LIQUIDATE THE COUNTRY CHAPWA…
WHAT A JOKE
Thanks The Greens for a fair comment. You position rhymes with Mines Minister statement that government will now resort to applying the mining licencing laws instead of liquidation. Liquidation is an absurd approach and thus proceedings must be terminated forthwith
Liquidation is the best thing ever. Off course in the short term it will hurt the economy but think about the long term benefits if the mine was well managed by the Zambians in the future?
@Chipante, liquidations have never been good in Zambia. What is good about liquidated Zambia Airways and 240 other liquidated state owned enterprises? Meridian Bank? Bank of Credit and Commerce ? United Bus Company of Zambia? United Bank of Zambia? Credit Africa Bank? Lima Bank and 10 other liquidated banks? Southern Province Cooperative Union, and 8 other cooperative unions across the country? The list is endless
How are your Zambians going to run that mine after it has been striped of its assets by the liquidator? Where is your government going to find money to re-invest in the mine operations for Zambians after auctioning the mine assets first?
Which school did you go? Short term damage, many families will be ruined, Zambia will have to pay billions to Vedanta, IMF will shut its doors to Margaret and company, international trade embargo and Zimbabwe replication and kwacha going to 1000 kwacha to a dollar and crime rate skyrocketing.
Dull PF thugs using paid desktop desks.
This analysis makes more sense than the Kaiza zulu, Amos and Musukwa rantings. Even the liquidator himself was at pains to explicitly elucidate his involvement in this grand theft of worst proportions. How do you liquidate and at the same time run the business before you find an alternative investor? This is a paradox and you wonder why the so called learned technocrats have stayed away from this mischief? I said it here that the presence of Kaiza and Amos instead of the chief government spokesperson was a red flag that something was amiss. This exparte order order obtained at night from an equally incompetent judge by an incompetent lawyer will come back to bite this morons when the showdown takes place in court and it will be thrown out for lack of merit
#4 Bamwine, you must be a trib.al for your reasoning.
“This exparte order order obtained at night from an equally incompetent judge by an incompetent lawyer will come back to bite this morons when the showdown takes place in court and it will be thrown out for lack of merit”.
The same “incompetent” judge will hesr tge case and throw it out for lack of merit?
Conclusion: You are a confirmed trib.al.
Peter has missed the point, liquidation is the fastest option available to get rid of the Indian. Receivership under the Corporate Insolvency Act will just result in a prolonged process because KCM will continue to be owned by the current shareholders as only the administrator will change. Then the Law provides for investigations into the conduct of business of the company in receivership, it’s bound to fail like LPM’s Task Force because this Indian is very sophisticated. So liquidation is fast, seize the assets and sell then the new owners will quickly begin to operate and re-engage most of the same workers. Business law dictates that when a company collapses workers are the least to be considered because they are considered as accomplices to the failure either by omission or…
commission
Correctly observed….President Lungu is smart and most educated danderheads don’t understand anything concerning company law
what is the new owner going to use if the asset will be sold by the liquidator. Mr Sikamba is quoting the law as it is. Ayatolla, what you have stated is what we are all assuming but that is not what the law on liquidation state and we have a history as nation about liquidation and we all know all liquidated entities are “late” How do we confort our dear ones still at KCM? would they put in their best or professionals are looking for an open door?
@Bululu, in your opinion what’s KCM’s most treasured asset? It’s not motor vehicles and office furniture! It’s the copper ore that lies beneath the earth, that’s what investors are looking for, not scrap metal. The Indian has all these years failed to develop Konkola Deep which is the future of KCM. Read Law itself before you comment
Brother Peter; this is a nicely thought through article and I hope Government will get a leaf from your advice.
Why is the government acting with tantrums with no proper substance regarding KCM case despite having a backing from the people? If the government has evidence why not follow the proper way or doing things. Being moved by emotions is not going to help achieve much. Government is talking about Liquidation & Receivership, Why did the government fail to pay KCM $180 million dollars? To say KCM has not paid, contractors as one of reasons is weak. ZCCM should present key reasons, not immaterial reasons.
I get worried with every undertaking PF makes! Their undertakings always leaves an after-taste of gravel in the mouth! Unfortunately these PF projects excite our development deprived GRZ dependent citizens who end up as ultimate victims of PF failed projects! Let’s roll with our miserable existence as Zambianosaurs!
Remember Zambianosaurs … Ichikupempula (in this case PF) Echikulya (Is what will destroy you for lack of visionary leadership)
LETS LIQUIDATE THE COUNTRY CHAPWA…
WHAT A JOKE
We should all applaud Peter Sinkamba for having explained the issue at hand in a simple common man’s language. His analysis is reasonable – positive criticism. I am sure even some government officers are shocked at some of these facts. On the other hand, the position taken by B R Mumba, Sr, is what all of us should take. To engage in finding solutions to our problems instead of just finding faults. If Sinkamba builds up confidence, next round many people can vote for him because he comes up with solutions.
Liquidation is just a word used.Just look
At the A team put together shows there
Is more to it then liquidate.Give them one
Year and see the results.