Fresh row rocks DW

reports it might not have fully paid for the 51 percent equity it owns in the embattled textile company.
Former David Whitehead judicial manager Mr Cecil Madondo says an independent inquiry should be undertaken to determine if majority shareholders Elgate Investments paid for the 51 percent stake in the firm, as claimed.

Mr Madondo was the judicial manager at the time Elgate bought into David Whitehead in 2007.
He said when he resigned, Elgate had only paid US$3 million for a 28 percent stake.
But it then sought an order from the High Court – subsequently granted – to empower the Master of the High Court to fully enforce the shareholders’ agreement between Elgate and DWTL.

This implied that the Master of the High Court, Mr Charles Nyatanga, was to ensure Elgate paid the remaining US$2,4 million to assume a controlling stake of the textile giant.
But Mr Nyatanga has confirmed that the outstanding US$2,4 million was paid.
Last year, Secretary for Justice and Legal Affairs Mr David Mangota wrote a letter to Police Commissioner- General Augustine Chihuri to institute an investigation to establish if Elgate fully discharged its obligations to DWTL.

Mr Wenseley Militala, appointed the company’s judicial manager for the second time last year, is of the opinion the money was not fully paid.
“In terms of the Share Subscription Agreement entered into between Elgate Holdings and DWTL, Elgate was entitled to 51 percent of the issued share capital in DWTL,” said Mr Madondo in a written response to Business Herald.
“This translated to US$5,4 million wholly payable to DWTL, and not to the judicial manager. Senior management of DWTL, thus general managers of administration and finance, Mr George Maulidi and Ernest Chivaura, respectively confirmed after their verification that Elgate had paid US$3 060 317,13.

“Based on these recommendations, we then wrote a letter to the First Transfer Secretaries on 20 December 2007 requesting that share certificates with an equivalent value of 28 percent or amounting to 220 758 030 shares be issued in favour of Elgate. In their audited financial statements for the financial reporting year ended December 31 2007, the external auditors confirmed that the new investor had been allotted 220 758 030 ordinary shares in proportion to the funds the investor had contributed as at that date.”

Asked why he left the company before Elgate had fully discharged its share subscription agreement with DWTL, Mr Madondo said the new investors and some shareholders were no longer happy with him and to express their displeasure, Elgate even stopped further injection of funds into the company.
“After some lengthy impasse we wrote a letter of resignation to our principal, the Master of the High Court, in April 2008. In the letter we chronicled our challenges but recommended that the issued share certificates worth 28 percent of the issued share capital were subject to external audit.”

However, Mr Nyatanga recently wrote to the Judicial Service Commission acknowledging that the outstanding amount was fully paid to the management.
“As far as I am concerned, I had to get confirmation of the balance of US$2,4 million,” said the Master of High Court.

“This was tendered to me on or about May 30 2008 by the then chief executive officer, Mr Maulidi.
“I had no reason to doubt his letter since he is the same chief executive who received and acknowledged the US$3 million on behalf of Mr Madondo.

“If anyone other than Mr Maulidi acted for Mr Madondo on this US$3 million, I request Mr Madondo to name such a person,” said Mr Nyatanga in his letter to the secretary of the Judicial Service Commission on June 20 this year.

Mr Nyatanga said Mr Mangota and Mr Madondo’s motive to report him to police was intended to have him arrested. He also denied Mr Mangota’s claims that he was supposed to oversee the injection of US$5,4 million when the US$3 million had been accounted for when Mr Madondo was still the judicial manager.

“If any of the interested parties had complained to me about the non-fulfilment of the share agreement, I would have taken action,” said Mr Nyatanga.
“One wonders what the motive was for both the secretary (Mr Mangota) and Mr Madondo to lie to the Commissioner- General.

“Obviously, it was meant to get me arrested because I was a stumbling block in Mr Militia’s efforts of wanting to sell DWTL for a song to some people whom I shall not mention.
“I view the letter to the Commissioner-General of the police as interference of my quasi-judicial powers. The law is very clear on how the Master’s decisions should be challenged.

“A deviation from the approach by Mr Militala and Mr Madondo is an attempt to conceal their failures at DWTL and shift blame. I reaffirm my position that the two have condemned DWT to the cemetery of dead companies.”

DWTL was first put under judicial management in May 2005 before the management order was cancelled in May 2008. It continued struggling until it was placed under a similar reconstruction plan in December last year.

The company’s factories in Kadoma, Chegutu and Gweru are currently closed, after Kithra Enterprises, a company renting the factories, pulled out under unclear circumstances.
The company used to be the largest textile manufacturer in Zimbabwe, employing no less than 3 000. But it has been severely disadvantaged by the unfriendly investment, political and economic environment.