Oliver Kazunga, Senior Business Reporter
THE Zimbabwe Asset Management Company (Zamco) has threatened to take legal action against Merlin (Private) Limited judicial manager Mr Cecil Madondo for “misrepresenting” facts regarding the asset management firm’s involvement in Merspin and Merlin Limited’s revival.
In a letter dated February 7, 2019 addressed to Mr Madondo, Zamco chief executive officer Dr Cosmas Kanhai expressed displeasure over a progress report in which Mr Madondo “unjustifiably” blames Zamco for the lack of progress in the resuscitation of Merlin.
“Your report to creditors emphasises Zamco’s apparent refusal to disburse the funds and goes as far as advising creditors that you have escalated the matter to the Ministry of Industry and Commerce to urgently call for a meeting with Zamco ‘to explain the reason why they have delayed in releasing $5 million as provided for in terms of section 307 (2) of the Companies Act’.
“You are fully aware of the reason why there has been no disbursement, which is, it has not been determined finally whether Merlin or Merspin is the operating entity and also that the validity of your own appointment is in question, yet you deliberately omit to advise the creditors and instead try to apportion blame on Zamco for non-disbursement and apparent violation of the Companies Act,” said Dr Kanhai.
“In the premises, we hereby demand that you immediately retract your report, which is inaccurate and misleading failing which we will instruct our legal practitioners to take appropriate action to protect Zamco’s interest.”
Zamco is a special purpose vehicle created by the Reserve Bank of Zimbabwe in 2014 to mop up Non-Performing Loans (NPLs) after an insidious culture of dishonouring credit obligations took root, choking banking institutions from providing fresh loans to the market. Since its inception, the special purpose vehicle has been assuming mortgage bonds, non-insider loans and NPLs for companies in good stead to clean balance sheets of financial institutions.
Dr Kanhai said the asset management company takes exception to Mr Madondo’s “blatant” misrepresentation of facts on what has transpired regarding Merlin/Merspin Limited and, in particular, Zamco’s involvement.
“We have at all times dealt with you in good faith, yet your report seeks to unjustifiably blame Zamco for the lack of progress in the resuscitation of the company, notwithstanding the fact that you are aware of legal proceedings being instituted that have precluded disbursement of the facility,” he said.
Sitting at the High Court in Bulawayo, Justice Martin Makonese on the 8th of November 2018, granted a provisional order under case number 2724/18, that the judgment of the court in HC 2353/11, which placed Merlin (Private) Limited under judicial management did not in any way affect the status of Merspin Limited.
In the judgment, he further highlighted that Merlin (Private) Limited be and was hereby declared a fictitious and non-existent company and ordered the respondent to pay costs of suit on an attorney-client scale.
Mr Madondo has appealed to the Supreme Court against the High Court judgment, which the Supreme Court has abandoned after he failed to follow it up within the specified timeframe.
Said Dr Kanhai: “Furthermore, we also realised that the entity that you are judicial manager of may not actually exist and/or be the actual operating entity and we could not therefore disburse Government funds without the clarity. This was and has remained the crux of the matter.
“Though you neglect to mention it you are also aware that it is when Zamco had begun the process of acquiring the company’s bank debts and also finalising disbursements of the facility that we noted anomalies regarding some of the debts, which you had been holding out as Merlin debts but had actually been disbursed to Merspin, which is not under judicial management.”
Dr Kanhai said Zamco’s position has been clear from the beginning that a final determination has to be made on which is the correct operating entity to which the facility can be disbursed.
“And we have consistently communicated the same to all the parties involved,” said the Zamco chief executive officer.
Following correspondence dated February 6, 2019, which Mr Madondo wrote to Zamco purporting to instruct the asset management company not to disburse any funding to Merspin and Merlin Limited, until the matters have been finalised, Dr Kanhai stated that Mr Madondo does not have authority or capacity to issue such an instruction to Zamco.
Meanwhile, Mr Madondo, who could not be reached for comment as his mobile phone repeatedly rang unanswered, is said to have pleaded with Merspin Limited and Merlin Limited shareholders, Maydeep Investments to withdraw court cases. Maydeep Investments executive director Mr Danisa Nkomo yesterday commented:
“(Mr) Madondo is advocating that we withdraw court case and allow him to amend the judicial management order with a fictitious company to include Merspin Limited and Merlin Limited so that he can legitimise his illegal activities that he has been doing in Merspin since 2011.
“Ironically, he is asking the shareholders to withdraw court cases against him but that he be allowed to go to court and undermine the rights of the shareholders.” — @okazunga