National asset faces collapse on bad deal

File pic: Coal mine

HWANGE Coal Gasification Company (Pvt) Limited (HCGC) — a joint venture between Hwange Colliery Company Limited (HCCL) and Taiyuan Sanxing of China — is on the cusp of losing property worth millions of dollars over a transport deal that went sour, the Zimbabwe Independent can reveal.

The HCGC was established under a bilateral protection agreement between Zimbabwe and China for trade promotion in May 1996.

The coking coal company went into a six-year transportation deal with Philcool Investment in October 2017 for the latter to transport 2 000 metric tonnes of coal.

Following allegations and counter allegations of fraud between the two parties, the case spilled into the courts.

A recent ruling by the High Court in Bulawayo ordered the Hwange-based coke processing entity to pay approximately US$2,8 million to Philcool Investments who were claiming damages and loss of business.

According to an extract of minutes of an extraordinary meeting held in Harare in July this year, HCGC denies any “breach, wrongdoing, actual or negligence” in the contract signed between the two companies on September 14, 2017.

“The company denies ever signing the contract provided by Philcool Investments. The company will accordingly deny any claims by Philcool Investments.”

The board authorised Guo Qiyue, as HCGC director, to represent the company in the case.

It has, however, emerged in an urgent court application by Guo that the default judgment was issued without the HCGC’s knowledge. The High Court in Bulawayo has since struck the matter off the roll of urgent matters.

In her founding affidavit, filed by lawyers Zinyengere Rupapa, Guo, applying for an order staying execution on the default judgment granted under case number HC660/22, argued that her company was not aware of the case.

According to the affidavit, Guo was only alerted by an employee of an article with an advertisement by Victoria Falls-based Msita Auctioneers where several properties were to be auctioned on July 29, 2022.

Part of the properties to be auctioned included a coke oven battery processing plant unit with 60 fitted ovens, a crude Tan processing plant unit and all fitment and pipes joining the plant.

Others include a screening plant with four conveyor belts, two front end loaders, non-runner excavator and three tipper trucks.

Guo, according to the affidavit, rushed to the sheriff in Victoria Falls to enquire on the nature of the matter while trying to obtain relevant documents since HCGC had no knowledge of the case.

“Applicant subsequently uplifted the court order, writ of execution and notice of seizure and attachment from second respondent’s office. Applicants, through its correspondent legal practitioners (Mssrs Joel Pincus Knoson & Wolhuter), also attended at the Registrar of the High Court to obtain a court record of this matter which has resulted in a default order.

“The return of service purported that service was effected and accepted by one Mr Lee. Applicant does not know anyone who bears the name Mr Lee,” read part of the affidavit.

Guo further claimed that HCGC only has an employee called Li Zhanjun who denies receiving or accepting court papers on the company’s behalf.

The matter, according to Guo, is also pending before an Arbitrator, Lovemore Madhuku, in which Philcool sued HCGC on the same matter. Guo further argued that HCGC had no knowledge of the attachment and seizure of the property to be auctioned.

“First respondent’s representative, one Tundiya, came to the applicant’s plant in Hwange in the presence of some three men who identified themselves to Li Zhanjun that they were Zanu PF officials and CIO (Central Intelligence Organisation) operatives from the President’s Office.

“The said men then forced entry into the plant and went around the plant, thereafter left the plant without any further communication. They did not leave any documentation whatsoever,” Guo argued.

She said HCGC has no doubt that Tundiya’s visit could be in connection with the notice of seizure and property attachment which was not made available to them until July 25.

Guo said HCGC was at the verge of suffering irreparable damage as some of the attached assets include the multi-million-dollar coke oven battery which is the core of its business.

There are 230 local employees working at the coke plant.

“The coke oven battery is at the centre of the Zimbabwean economy and for this reason the coke oven battery is under a Bilateral Investment Protection and Promotion Agreement between the Government of Zimbabwe and the Government of the People’s Republic of China signed on 21st May 1996,” Guo said.

Guo also argued that the immovable property cannot be auctioned as its removal from the premises includes total demolition of the coke oven battery while damaging the premises.

Guo noted that the attachment of the coke oven battery was illegal as the writ of execution instructed the sheriff to attach movable property only.

The immovable property, according to Guo, was entrusted in the custody and possession of HCGC in terms of a Built Own Operate and Transfer Agreement signed between HCCL and Taiyuan Sanxing.

Guo further submitted to the courts that between 2017 and 2018, HCGC loaded 360 tonnes of coke nuts into Phillcool trucks which were expected to be delivered to Zambia.

“However, the consignments were never delivered by the first respondent. This fraudulent act by first respondent resulted in applicant losing business and huge sums of money, tainting applicant’s business.

“First respondent had a material obligation to transport and deliver the coke nuts to the intended destination but instead elected not to perform its obligation in total disregard to the agreement and in a manner detrimental to the applicant,” Guo submitted.

The fraud case was reported to the ZRP in Hwange and currently pending under RRB number 110/03/22.

Guo accused Philcool of trying to cover up its fraudulent actions and has not explained the whereabouts of the coke nuts.

“To date, applicant has no knowledge of where the first respondent took the consignment,” Guo said.

Calling Philcool’s lawsuit as “absurd and malicious”, HCGC argued that the former had no legal right to claim further performance or alleged damages.

HCGC, according to the papers, suffered loss of 100 000 litres of diesel advanced to Philcool to transport the consignment, US$25 917,50 pre-payment, 360 tonnes of coke nuts and five sets of CDI documents worth US$18 000.

Guo also averred that a forensic examination after HCGC alleged that the agreement was forged confirmed that it was fraudulent.

Guo further argued that Philcool had hatched a plan to abandon the arbitration proceedings and forged another different agreement with different dates leading to the latest High Court case filed without their knowledge.

“It is clear the first respondent has the propensity to forge documents and misrepresent facts. It also follows that the default order was granted on serious misrepresentation and forgery …”

In a supporting affidavit, Li Zhanjun confirmed to the court that on July 7, 2022, three men forcibly entered HCGC premises and threatened security claiming to be Zanu PF officials and from the President’s Office.

“They refused to identify themselves. The said group of three men moved around in our plant without our consent. I challenged them to identify themselves or to explain the nature of their visit, but they refused to oblige,” he said.

Li said he identified Tundiya as one of the three men adding that he advised him to address his issues with Mr Guo in Harare.

He said the three men did not leave any documents or indicate that they were coming from the High Court.

The case will be heard when it is allocated a court date.

Related Topics