Zesa in nasty legal brawl rages on

Published: 03 October 2017

Zesa Holdings and Clovgate Elevator Company are involved in a nasty legal brawl after the power utility company allegedly terminated its contract with the latter and is reportedly refusing to honour an arbitral award.

The bitter war came to light in a letter dated September 29, gleaned by NewsDay and addressed to Zesa Holdings chief executive officer, Josh Chifamba by Clovgate Elevator company secretary, Stan Bezuidenhout.

"On September 14, 2017, Zesa Holdings (Private) Limited went on and cancelled its maintenance contract with Clovgate Elevator Co for the goods lift, which has been in service since its commissioning handover on July 2. The cancellation was proceeded with despite the existence of an arbitral award that restored Clovgate Elevator Co to continue works and maintain the other three elevators," he wrote.

"Zesa Holdings (Pvt) Ltd has proceeded to appoint another service provider to complete the supplying, installation and maintenance of the remaining three passenger (elevators) despite the then arbitration proceedings.

"The lack of respect for the process has been evident from the day the arbitrator called for closing submissions, as the appointment was effected before the granting of the arbitral award."

Bezuidenhout said Zesa Holdings breached their contract through cancelling it on September 8, despite knowing they were under obligation of an arbitral award granted to them on July 25 by retired High Court judge, Justice George Smith.

Clovgate said they were awarded a tender by the State Procurement Board to carry out works in 2013 and it befuddled them why Zesa had cancelled their contract and awarded it to a rival.

Zesa spokesperson, Fullard Gwasira confirmed the arbitral award, but defended their actions, saying the contract had been before various dispute resolution fora including the Administrative Court and arbitrators.

"The Administrative Court ruled in our favour, whereas the arbitrator ruled otherwise," he said.

"We have appealed against the arbitral award to superior courts and, therefore, are unable to comment publicly on a matter that is sub judice."

The arbitral award had stipulated that Clovgate be reinstated and that Zesa pays freight and tax charges and the suppliers of the equipment ordered by the company.

Further, it ordered that the outstanding contract balances be paid by Zesa within 14 days after the completion of the contract. Zesa was also ordered to reimburse Clovgate's legal fees.

Zesa and Clovgate reportedly fell out after the elevator company's managing director Colin Jeche was accused of swindling the power utility of $622 044, leading to his arrest in August.

Jeche claims he was arrested because he had asked for payments upfront.

The arbitral award found that Clovgate was facing genuine liquidity challenges in making payments to foreign suppliers and accessing funds, leading to it asking for upfront payments.

"This (liquidity challenges) forced Clovgate Elevator Co to access limited cash withdrawals from MetBank to build resources in other banks to enable the payment of foreign suppliers; with Metbank, in most cases, failing to process local real time gross settlement payments," a source close to the matter said.

The letter was copied to Parliamentary Portfolio Committee on Mines and Energy chairman, Daniel Shumba and the State Procurement Board acting principal officer, Samson Mutanhaurwa.
- newsday

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