The Makamba Empire crumbles article published in the Sunday Mail was just a piece of paper printed without proper research, accurate information and had a cause, I believe. Today on the 14th of April I had a chat with Dr James Makamba who explained how everything went on. This will definitely stop all the speculation journalism. I have tried to cut off law verbiage and law axioms.
Conflict help businesses and individuals grow and reflect on the future. But do we really have a conflict here? I want to believe we don’t have any conflict just a misunderstanding.
Who is involved?
Dr James Makamba is a businessman and a member of Kestrel Corporation (Private) Limited. Kestrel Corporation (Private) Limited, a registered company in terms of the laws of Zimbabwe. George Manyere is a businessman. Ecsponent Zimbabwe (Private) Limited is a registered company in terms is Zimbabwean law.
On 31 January 2019 Mr Manyere and Ecsponent Zimbabwe brought an ex-parte application to Bulawayo high court seeking the placement of Kestrel Corporation under provisional judicial management. The order was granted on 19 March 2019. Dr James Makamba became aware of the provisional order and the application on 27 March 2019 through his legal practitioners, who got wind of the application and immediately obtained the papers.
Why is Makamba shocked by the application and judgement?
In his words the applicants have no right to do this application. They are not creditors of the Kestrel. The alleged sum being claimed was paid to the Kestrel Corporation (Private) Limited by Brainworks Capital Management (Private) Limited. When the sale of shares agreement contemplated by Kestrel Corporation (Private) Limited and Brainworks Capital Management (Private) Limited did not materialise, the parties entered into a loan agreement dated 23 February 2016. A copy of the agreement is available and has been provided to the court. The sum is thus not due to the Ecsponent Zimbabwe but to Brainworks Capital Management (Private) Limited.
Clause 8.2 of the loan agreement provides that “No party may assign, hold in trust or otherwise transfer any rights or benefits under this Agreement, or any document entered into pursuant to this Agreement, without the prior written consent of the other party.”
Clearly, there is no basis upon which Ecsponent can seek to have the Kestrel placed under judicial management. Thus in his move Dr Makamba wants the application to be dismissed with costs.
How much is owed?
Nowhere in the founding affidavit is it alleged that the Kestrel owes the Ecsponent a certain sum of money and that that sum has not been paid despite demand having been made. It has not been alleged that Kestrel is unable to meet its debts. On this basis alone the application should fail.
Dr James Makamba said: “Kestrel Corporation is not a trading company. It is my investment vehicle. Nothing will be served by placing it under judicial management. There is nothing that the judicial manager will do or has to do which will benefit the company.”
Curiously, the applicants did not put it on record that Ecsponent Zimbabwe and Mr manyere has a pending claim against Kestrel in the Harare High Court for the sum of US$2 750 000,00. It is the same claim apparently relied upon in the Bulawayo court. The claim was defended by the Kestrel Corporation. The he pleadings were filed in court.
On 11 May 2018 the parties involved represented by their legal practitioners, held a meeting at G.N Mlotshwa and Company Legal Practitioners to discuss the High Court matter. The applicants were represented by Mr Mutevedzi of Mutamangira and Associates. It was agreed that the matter would be settled by having a new sale of shares agreement between the Ecsponent Zimbabwe, Kestrel Corporation and Dr Makamba. The purchase price for the shares was to be determined after a valuation of the shares. Dr Makamba then engaged a consultant to start the valuation exercise. The consultant attended to the exercise. Ecsponent Zimbabwe contacted the consultant and was made aware of the value of the shares. They decided to consider it and return to Dr Makamba.
What was agreed on the shares deal?
The understanding between the parties was that in the event that the parties agreed on the price for the shares, the sum advanced to the respondent by Brainworks Capital Management (Private) Limited of US$2 750 000,00, subject to completion of formalities, would be deemed to be a deposit towards the purchase price.
And then what happened next? The conditions precedent were not fulfilled much to the frustration of the Kestrel Corporation.
It was a condition of the agreement (clause referenced) that ABSA Bank Limited would provide a written confirmation releasing Dr Makamba from any liability to the bank. A memorandum of understanding was signed by ABSA, Ecsponent Zimbabwe and Dr Makamba. A copy of the memorandum was given to the court. That release was to be provided upon the applicants paying Dr Makamba’s debt to ABSA as part of payment of the purchase price. The sum was US$4 500 000,00. It was never paid. When the applicants failed to pay this sum, ABSA Bank Limited proceeded to auction my immovable properties to recover the sum owed.
The agreement shows that applicants were in partnership with Gerald Mlotshwa who was acting for me at the time. Mr Mlotshwa was also involved in all the negotiations and dealings. On 16 November 2017 Mr Mlotshwa wrote to the applicants’ legal practitioners confirming that the agreement had lapsed because of the non-fulfilment of the suspensive conditions.
On 19 February 2018 Mr Mlotshwa wrote a letter to the applicants’ legal practitioners confirming that the parties had compromised the matter and that he would now pay the sum owed by the Kestrel Corporation and Dr Makamba to the applicants. Ecsponent Zimbabwe are in possession of this acknowledgment of debt which up to minute has not been withdrawn. It is dishonest for the applicants to turn around and say that the share purchase agreements are still valid given the contents of this letter. If the agreements are valid as alleged, the question is why are the applicants not approaching the courts to enforce the agreements instead of applying for judicial management? If the agreements been valid and subsisting, the applicants would not have participated in the discussions held on 11 May 2018 for another sale of shares agreement. In fact, applicants are still considering the value of shares provided by the consultant. Applicants are thus not being honest with the court.
I asked Dr Makamba if he resigned from Telecel Zimbabwe. He said: “I did not resign from Telecel (Zimbabwe) Limited. The arrangements which we had put in place fell away when the sale agreement lapsed as a result of the applicants’ failure to perform.
Author: Gesture Chidhanguro