Judge Nkonde signs consent declaring Post insolvent

LUSAKA High Court judge Sunday Nkonde has entered a consent judgment declaring that Post Newspapers Limited is insolvent and be wound up. In this case, five former Post employees Andrew Chiwenda, Roy Habaalu, Bonaventure Mutale, Mwendalubi Mweene, Abel Mbonzi in November 2016 filed a petition in the High Court, in which they sought an order that the newspaper be wound up for failing to pay them.

The Zambia Revenue Authority also joined the case as petitioners. The petitioners then obtained an ex parte order and appointed Mosho as a provisional liquidator.

Last week, judge Nkonde acquitted Dr Fred M’membe, Rowena Zulu and Nchito and Nchito law firm of contempt of court in order to allow Mosho complete the liquidation process. Dr M’membe had earlier predicted the outcome of the case in a letter to Chief Justice Ireen Mambilima where he said he foresaw an acquittal in the contempt case and an attempt to end the matter via a consent judgment after that.

A week after his letter, his prediction proved correct as judge Nkonde acquitted him and others of the contempt matter while Mosho, the same day, applied for a consent judgment, which has since been signed.

In the consent judgment signed by judge Nkonde, it has been adjudged that Post Newspapers Limited is declared insolvent and wound up.

“The respondent, having liabilities far much exceeding the value of its assets and having been unable to pay its debts as they fall due with no reasonable prospects of being rescued or rehabilitated whatsoever and howsoever be and is hereby declared insolvent and wound up,” the consent judgment read. “That the provisional liquidator Lewis Chisanga Mosho of Lusaka be and is hereby confirmed as the liquidator of the respondent and shall exercise all the functions and powers of the liquidator including dissolution of the respondent pursuant to the Companies Act Chapter 388 of the Laws of Zambia.”

The parties that consented to the judgment include the petitioners’ advocate Mosho and Company, Robson Malipenga and Company, Palan and George Advocates, Lewis Nathan Advocates, who were all advocates for the respondent and Zambia Revenue Authority legal counsel.

The Post Newspaper was majority owned by Dr M’membe, who was somewhat schemed out of the proceedings to facilitate the illegal liquidation that the Zambian High Court has now allowed. Recently, justice Mambilima told judge Nkonde to recuse himself from presiding over the Post Newspapers Limited liquidation case.

Her request followed the Judicial Complaints Commission finding a prima facie case against judge Nkonde in a complaint of bias and professional misconduct lodged by journalist Dr Fred M’membe, who owned Post Newspapers Limited.

“I refer to my letter to you of 20th September 2017, in which I undertook to revert to you over your complaint in the above captioned matter (Post Newspapers Limited Matters), after going through the case record,” reads the letter dated November 22, 2017 in response to Dr M’membe’s complaint.

“I did peruse the record in cause number 2016/HP/0518. The originating process on record shows that the case is a winding up petition filed by Andrew Hebert Chiwenda and four others, who described themselves as former employees of the Post Newspapers Limited. They are seeking an Order to wind up the said Post Newspapers Limited on account that it is unable to pay its debts or that it is just and equitable that it be wound up. The application was made on 1st November 2016, pursuant to Section 27(b) and 272(1)(c) and (f) of the Companies Act, cap 388 of the Laws of Zambia.”

She stated that on the same day, an ex parte summons for appointment of Mosho as provisional liquidator was filed and that judge Nkonde heard and granted the application.

“After this, there were various applications filed, including one to set aside the appointment of the Provisional Liquidator. There were other applications by other parties to join the proceedings for various reasons, and to set aside a notice of change of advocates. The captions on documents filed later show the Zambia Revenue Authority as the 6th Petitioner, Investrust Bank as the 2nd Respondent and yourself as an interested party,” justice Mambilima stated. “The record further shows that on 1st February 2017, you filed a Notice of Intention to raise Preliminary Issue pursuant to Order 14A of the White Book seeking the determination of, among other issues, ‘whether justice Nkonde should continue to hear this matter on account of bias on his part’. In the accompanying Affidavit in Support of the Notice, you made various allegations against the judge. You also stated that you complained against the Judge to the Judicial Complaints Commission (JCC) and attached a copy of your letter of complaint to the JCC.”

She told Dr M’membe that one of the issues he raised in his letter of complaint was that while in private practice, judge Nkonde initiated litigation against Post Newspapers under his law firm without instructions from Finance Bank.

Justice Mambilima stated that the application to raise preliminary issue was contested by petitioners, mainly on the ground that he lacked locus standi because he was not a party to the proceedings.

“The Judge has since delivered his Ruling on the application to raise a Preliminary Issue. He struck out the Affidavit in Support of the application and consequently also struck out the application on the ground that without an affidavit in support, it had ‘no leg to stand on’. The net result is that the substantive issue raised in the application has not been dealt with,” justice Mambilima stated.

“It is competent for a Judge, who is seized with the conduct of a case, to recuse herself or himself from adjudicating on a matter, under Sections 6 and 7 of the Judicial Code of Conduct. Upon such recusal, a case is transferred from the Judge to another. A judge can, also, under the provisions of Section 23(1) of the High Court Act, transfer a case to another Judge. The other judge must have consented to the transfer.”

She reminded Dr M’membe that his complaint to the JCC raised ethical issues.

Justice Mambilima stated that the body mandated to investigate such issues was the JCC, where Dr M’membe had already complained. She stated that in its decision of November 10, 2017, the JCC found that a prima facie case had been established against the Judge and would hear the complaint in accordance with the provisions of the Constitution.

“Against this background, I have requested Hon. Mr. Justice S. Nkonde to recuse himself from further handling Cause Number 2016/HP/0518,” stated justice Mambilima. “Upon such recusal, the matter will be allocated to another judge by the Judge in Charge, Commercial Division.”

The JCC had asked President Edgar Lungu to suspend judge Nkonde in order to pave way for investigations into how he handled the case of liquidation of The Post Newspaper.

Judge Nkonde has since obtained a stay against the JCC’s recommendation for his suspension, forcing President Lungu to write the JCC that he could not act on their advice because of the stay granted to the judge by the Kitwe High Court.

According to the consent, Mosho shall cease to act for any reason whatsoever or shall be out of jurisdiction for continuous period of four months, the official receiver shall become the liquidator for all intents and purposes and that costs be for the petitioners. The amounts due, according to the valuation undertaken by Mosho, are K12,000,000 for Unapologetic Trading (pty) Limited for loans and overdraft over secured assets purchased from Investrust, Zambia Revenue Authority Unremitted taxes (In VAT, PAYE and Income Tax) K51,569,974.21, Development Bank of Zambia loan guarantee K97,248,505.12, National Pension Scheme Authority (headquarters) unremitted contributions plus penalties K3,087,308.05, G4S Secure Solutions (Zambia) Ltd security services K66,132.14, KOBS Transport Ltd loss of business claim K678,132.00, Xinhua News Agency Lusaka Bureau for news agency retailer fees K220,800, Mumba Patience for transportation of property K1,200.00, Mount Meru Petroleum for supply of fuel K117,090.40,medical service sat University of Zambia K97,885.65, Kansam Trading Ventures for sewer services is K6,800, Zamtel telephone services at K186,862.02, Workers’ Compensation Fund Control overdue assessments at K611,677,36.36.

Other amounts due are K45,837.50 for National Assembly annual subscription of newspapers for 2016, TUCUZA Associates Limited for courier services at K3,500, HIS Zambia Limited for collocation service charges for K250,000, Gilat Satcom Globe Communications at K 336,173.00, Yeti Motors Limited for repairs of motor vehicles and purchase of spares and tyres at K371,857.19, The Kolping Society of Zambia rental for office space and containers in Kasama at K15,300.

Further, other amounts include K10,000 for Mbambara Legal practitioners (Christopher Chilongo), Zambia National Broadcasting Corporation for airtime for advertising services at K34,184.07, Hazida Motors Ltd for vehicles supplied to Post Newspapers at K1,421,717.07, Mars Logistics Worldwide for clearing and handling consignments for the company (K57,600).

The other amounts due are ZSIC General and Life Insurance (K17,709.31) and K14,360.07 respectively.

The other amounts due include K1,298,000.00 for FNB, which was offered to employees of The Post newspaper, which facilities remain outstanding and contained in the loan documentation, Zambia Postal Services Corporation K11,000, Reddy Logistics for settlement of storage for Post vehicles K748,800, NAPSA Mansa (K8,430.00), Potama Garage (K18,750), Simply Black Advertising and Consulting payments made to the Post for advertising spots (K1,091,290.3).

The consent revealed that the total amount owing was K171,646,875.46 and that the value for non-current assets at 2014 was K11,385,106.86.

“Note that non-current assets constitute land and buildings and are the only assets available for distribution against the outstanding liabilities. Also note that there are no current assets that could be included on this statement of affairs as the former directors of the Post newspapers (in liquidation) have refused to avail us any information in this regard. However, bank statements obtained from Zanaco and Indo Zambia show a combined total of K52,774.05,” the statement of affairs stated.

It also stated that all motor vehicles, furniture and fittings, Radio equipment and printing press were all seized by the Zambia Revenue Authority before the commencement of liquidation and were all disposed of in June 2016.

However, the sale of some assets of The Post were done last year by Mosho despite only being a provisional liquidator.

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