By Peter Sinkamba
Every government of the day has a right to run state-owned enterprises according to party manifesto. And every government of the day has a right to choose which countries and institutions to partner or work with. We see this happen everywhere in the world. The on-going trade war between the Trump administration and China, including institutions like Huawei is just one example. That is fair enough.
While it is granted that a government of the day has a right to run state-owned enterprises according to the party manifesto, and party relationships, however, there must be rationality and constitutionality in doing so. This is so because Article 90 of the Constitution of Zambia Amendment 2016 provides that the Executive authority derives from the people of Zambia, and should be exercised in a manner compatible with the principles of social justice and for the people’s well-being and benefit. In exercise of the executive authority of the State, a government of the day is obliged to promote the rule of law, among other values and principles.
In relation to the matter on hand, Government had several lawful options to divorce from Vedanta. Some options were direct while others were fronting.
One direct option was invoking the Golden Share power in vesting agreements. In that instance, Government would have taken over operations of KCM in line provisions of the Shareholders’ Agreement. The Agreement stipulates steps that need to be taken to do so.
The next direct option was invoking the Mines Development Act 2015 Licencing provisions. In this instance, the Ministry of Mines would have revoked KCM mining licence if there any breaches committed by KCM which violated the license conditions. The Mines Act stipulates steps that need to be taken to do so.
The trouble with the case in hand is that instead of adopting a direct option, it instead adopted by a fronting option. In my view, the direct options were better in many ways than fronting option.
For example, through the ZCCM-IH fronting arrangement, though publicly Government claims to be taking court action, nonetheless, it is not represented by State Chambers in the action. Constitutionally, where does this omission leave State advisability when the Attorney General and Solicitor General are missing in a Government court action?
It is no wonder a lot of issues surrounding the ZCCM-IH front are not adding up. Take for instance compliance with the Securities Act No. 41 of 2016 and the Listing Rules of the Lusaka Securities Exchange (LuSE). Before court action for liquidation of KCM was commenced, I strongly believe that the Board of ZCCM Investments Holdings Plc was obliged to publicly announce the liquidation of KCM.
The Securities Act and LuSE Rules provide necessary steps that must be taken by a listed company which is in severe financial difficulty and finds itself in a situation where it has no alternative but to dispose of a substantial part of its business or issue shares for cash to meet its ongoing working capital requirements or to reduce its liabilities. The ZCCM-IH 20% shareholding in KCM is a substantial part of the ZCCM-IH business. Disposing that share through liquidation is a drastic measure requiring notice to public shareholders. This was not done by ZCCM-IH. It appears to me that ZCCM-IH did not comply with the Securities and LuSE precautionary rules. Or have disclosure rules changed?
My second point of departure on ZCCM-IH omissions is compliance with Section 134 of the Securities Act. Government officials are making statements to the effect that Government intends to “liquidate” KCM with a view sell it as a “going-concern”. Forget about the contradiction in terms. But rationally and legally, what this whole thing means is that since ZCCM-IH is the front, then practically, ZCCM-IH has embarked on the exercise to take-over KCM.
According to the Section 134, a listed company or company whose securities are registered with the Commission that proposes a takeover or merger, or is being taken over by another company, is obliged to apply to the Commission to approve the takeover or merger, in the prescribed manner and form, and accompanied by a prescribed fee. Did ZCCM-IH do so in its current bid to takeover KCM?
I once again strongly believe that Government should rethink its strategy on the KCM liquidation/takeover. Rationality and rule of law should be cornerstones of such grand decisions in the interest of social justice and for the people’s well-being and benefit.
Valid points.
This whole thing stinks
Is LAZY LUNGU really Edgar Changwa Lungu…I think Mulongoti was on something but we can not ask him now can we? No way can a lawyer be this reckless and surround himself with dullards like Amos, Freedom and Kaizer. I am surprised Freedom Sizakwe was not included on that delegation.
The Govt can always break local laws and get away with it in our Local Kangaroo Courts like Concourt. International Arbitration on KCM will have to be handled by South African Courts. There lies the Problem for ECL. He will not be able to manipulate the International Arbitrator in South African Courts. There a Spade will be called a Spade unlike in the Lungu Captured Courts. The ECL Govt clearly has breached the KCM Shareholders Agreement and has not followed proper Legal Procedures in seeking to liquidate KCM in Court. Obviously GRZ will lose the Case in Court and will have to pay Compensation and damages for mishandling this Court Case. The writing is on the Wall.
Spot on. Rules and laws of the land must be followed. No individual or entity is above the law.
What a clueless president and government. This what happens when people make populist political decisions because hh had similar ideas. Then thet fail to execute a copied idea. My mixed race son thinks that lungu is a very ignorant man for a lawyer. My son works for a magic circle law firm in London. Elisa my swiss wife and I are proud. My son is earning 78000 pounds a year as a newly qualified trainee. We are proud of him. What has lungu kids achieved? Dont get me started about my daughter
It was unnecessary hurry to make political pronouncements aimed at pleasing the mining community which may soon back fire. What do you expect from certain incompetent advisors surrounding the highest authority. Why leave out the Attorney General when dealing with such serious legal issues. Government may lose more as KCM owners have now sued at the Hague. Sad
This are VERY GOOD POINTS ,BUT THE PROBLEM NOW IS THINKERS AND INFLUENTIAL PEOPLE ARE BUSY COMPETING IN TALKING INSTEAD OF COMING TOGETHER WITH STRONG UNIFIED POSITION ON WHAT SHOULD BE DONE NOW!!By the time we will try to do the right thing,it will be too late, Vedanta will have made it’s money and the PF crooks will have eaten the rest of KCM through their usual corruption and stealing!!WHY CAN SINKAMBA,KAMBWILI,HH,Unions,Church and Mining Experts come together to chart the direction for this issue and tell the nation what these clueless PF should do!?
I smelled rubbish as someone just wants to be popular without thinking. Lungu legacy is shame. Things will really backfire heavily. So who is going to stand in court? The is no involvement of Attorney General nabajya bambi. The PF lawyer is as blank at terminology just like his boss Lungu. The lawyer doe not understand what liquidation is. He thinks liquidation is nationalisation. Ubupuba bweka bweka. Cipante pante governing.
Well put Mr. Sinkamba. The surprising thing is when ECL got Ndola Airport and was jumping up and down, he said he was going to ask the Attorney and Solicitor Generals and other lawyers to see how they could legally divorce from KCM, but what followed was an insane move taken at the crack of night involving pf cadre lawyers who never really practiced law announcing liquidation using an unsigned high court order. It makes sense why ECL as a lawyer failed to thrive in his legal practice. His expertise of winning cases was by use of the conning ex-parte orders by arranging cases to handled by equally questionable judges. He promoted the same lawyers to head the ConCourt so that if any case involving him ends up there it will ruled in his favour. Remember Kabwe, POST, and other companies that…
I propose leaving the KCM case in the hands of four Government Ministries, namely Ministry of Mines, Ministry of Commerce and Industry, Ministry of Finance and Ministry of Justice. The Republican President could play a role higher than that of Government Minister by keeping out of the discussions, debates and negotiations. If I am wrong, then I withdraw my statement. Forgive me for the misunderstanding.
Let’s wait and see who is legally correct, unless you are a trib.al.
Meantime, if I could wish Argawal away I would do it without a blink of the eye. You can’t have an idoit who does not want to pay his bills, fucn curry muncher!
I am hoping that Argawal can be spirited away Mmembe style.
Is KCM listed in Zambia or anywhere in the world? Why I ask? As much Mr Sinkamba has these points, does KCM subscribe to Luse? Its like applying the USA laws to rescue an offender under Indian laws. How can KCM benefit from legislation which does not cover them. What Mr Sinkamba is saying are benefits of being listed or the protection listed entities enjoy not every company out there. Its strange that there are comments praising Mr Sinkamba’s misplaced article.
This is the problem with F.OOLS like you. Did you not know tha ZCCM-IH is listed and it owns shares in KCM? Learn to read before you comment. It’s really hard to believe how god could concentrate so much foolishness in one country
This is the problem with F.OOLS like you. Did you not know tha ZCCM-IH is listed and it owns shares in KCM? Learn to read before you comment. It’s really hard to believe how god could concentrate so much f.00shness in one country
@ The Engineer only people who refuse to reason resort to insults. You need to read advanced accounting or seek counsel to understand shareholding. So to you if any listed company buys shares in another company that company automatically becomes listed and is covered by the rules of the stock market. I think people here can tell who a fool is between you and me.Running a country ba engineer is not like solving calculus, it goes beyond mathematics. KCM has many stakeholders and we are all waiting to see how this liquidation approach will unfold.
To you if Zambeef or Larfage buys shares in Trade Kings. Trade Kings automatically becomes listed also and whatever shareholders want to do with Trade King they should use the stock exchange rules? Think ba engineer please before you insult people.
Whatever, the collies are done…gov has in the past used compulsory acquisition law normally used on real property to grab Zamtel from the Libyans….Vadenta is gone….whatever academic legal trash