ZCCM Investment Holdings PLC has told the Lusaka High Court that since Konkola Copper Mines began operations, it has only paid US$58 million dividends to government and it has been involved in tax evasion schemes.
Yesterday, the Lusaka High Court granted ZCCM-IH an order to appoint Milingo Lungu of Messrs Lungu Simwanza and Company as provisional liquidator of Konkola Copper Mines PLC.
High Court judge Anessie Banda Bobo signed the order, granting the liquidator the following powers: carry on the business of KCM so far as is necessary for the beneficial winding up, make any compromises or arrangements with creditors, make any agreement on all questions in any way relating to or affecting the company or its assets and take possession, custody and control all the assets of the Respondent.
Lungu will also have powers to bring or defend any action or other legal proceedings in the name and or on behalf of the Respondent, dispose assets by pubic tender or the most transparent manner under the circumstances and sell the real and personal property and things in action of the Respondent by public auction, public tender or private contract.
In a Winding Up petition, ZCCM-IH told the court that KCM had not been paying dividends.
“Since the company commenced operations in 2004, it has only declared total dividends of US$58 million out of which it has refused, neglected or ignored to pay around US$10 million which was declared sometime in 2013 despite the sun having been accounted for in the financial statements. The company has failed to develop the mining areas in Chingola and Chililabombwe and carry out mining operations with due diligence in accordance with the program of mining operation in breach of Section 35(1)(b) of the Mines and Minerals Development A t 2015,” read the petition.
“The company is being managed in a manner detrimental to the interests of the Petitioner…the company is engaged in massive tax evasion through transfer mis-pricing and other unscrupulous means.”
And in an affidavit in support of application to appoint provisional liquidator, acting ZCCM CEO Mabvuto Chipata stated that KCM had not been declaring dividends and had neglected to clear its debts.
“From 2004 when Vedanta took control of the company, it has only declared dividends in the years ended 2007, 2008, 2009, 2012 and 2013. Though the company declared a dividend in the year ended 2013, it has refused, neglected or ignored to pay the dividend without justifiable cause or excuse. The company has not declared dividends for the last 5 years without justification or excuse. Vedanta’s management practices have led to the company being technically insolvent and financially distressed as it is failing to pay debts as and when they fall due. In particular, the company failed to pay an electricity bill amounting to US$40 million leading to the partial cut of power supply. Despite numerous undertakings by Vedanta to invest in the company, Vedanta has not provided any funds for recapitalization and operating capital,” read Chipata’s affidavit.
“The company has been notified by the Director of Mines of his intention to revoke its license and the company has been given a period of 60 days to show cause why it should not be revoked on the ground that the company has failed to adhere or meet the targets set in its program of mining operations. The company operations are not environmentally friendly or sustainable and to this effect, the company has polluted or continues to pollute water sources in and around the mining area and in particular the Kafue River.”