VERBATIM: IDC operated without investment guidelines – Chipwende

Former Industrial Development Corporation (IDC) Chief Executive Officer Andrew Chipwende has told the Industrial Relations Court that the Corporation had no approved investment guidelines when it started negotiating the purchase of Zampalm from Zambeef.

And Chipwende said the Development Bank of South Africa (DBSA) suspected that IDC board members Dr Lawrence Sikutwa and Sylvia Banda were involved in financial crimes, but they later discovered that it was a case of mistaken identity.

Former IDC executive director operations, Paul Siame dragged the Corporation to court for illegal termination of contract and Chpwende was testifying for the respondent.

In this case, IDC is represented by Lubinda Linyama of Eric Silwamba and Company while former Attorney General Musa Mwenye State Counsel of Mwenye & Mwitwa Advocates is representing Siame.
Below is the verbatim of the continued hearing on March 14, 2018.

Below is a verbatim of the hearing:

Linyama: Please tell the court your full names.

Chipwende: My names are Andrew Chipwende.

Linyama: How old are you?

Chipwende: I’m 52 years.

Linyama: What is your occupation?

Chipwende: I’m currently working as a private consultant.

Linyama: Prior to managing a consultancy firm, where were you working?

Chipwende: Prior to that I was working as chief executive of the Industrial Development Corporation. And before that I was Director General of the Zambia Development Agency.

Linyama: When you were working as chief executive in the respondent company, what were your duties?

Chipwende: My duties were to be the overall head of the day to day operations of the IDC. That involves being the interface between the institution, members of staff and the board of directors as well as the shareholders. I was also responsible for the overall supervision of the IDC in terms of it’s staffing, financial resources and overseeing all aspects of the IDC mandate.

Linyama: When did you join IDC?

Chipwende: I joined IDC in February, 2014, initially as Executive Director in charge of operations.

Linyama: Could you tell us how you rose to that position and when you became the Chief Executive Officer?

Chipwende: I held that position until the following year in February 2015 that’s when I was promoted to Chief Executive Officer of IDC.

Linyama: Mr Chipwende we are in court in this matter, and I would like to refer to the complaint that is before the court so that you can just acquaint yourself with the notice of complaint which has been filed by the complainant, Mr Paul Siame. As a way of introduction, do you know Mr Paul Siame?

Chipwende: Yes I know Mr Paul Siame.

Linyama: Where do you know him from?

Chipwende: I know him as having served under me as an Executive Director of operations and prior to that, he worked under me as senior Investment Officer in the Zambia Development Agency.

Linyama: If you look at the notice of complaint, I know you may have worked with the complainant as executive and officer but we focus on the matters that have been brought to this court. I’m also going to refer you to the affidavit in support of this complainant. If you could quickly just browse through and then I will ask a few questions relating to those allegations in the copy.

Chipwende: (Browses through the documents…)

Linyama: Mr Chipwende, you have seen the specific contents of the allegations in that matter. The complainant has alleged that he was initially suspended and reinstated. Could you please tell the court what you know about the allegations relating to the suspension of the complainant?

Chipwende: With regard to the suspension which happened in September, 2016, this arose out of the meeting with the Finance and administration committee of the board, which had noted with concern that there was a high level squabbling amongst senior management, where senior members of staff where undermining the Chief Executive’s office.

Linyama: So what was resolved by this committee?

Chipwende: The committee resolved that the two Executive Directors stay away from the office until such time that the resolution would be made in terms of bringing the management to work in harmony together.

Linyama: Who were the two senior managers?

Chipwende: The first one was the Executive Director of operations Mr Paul Siame and the second was the Executive Director in charge of corporate affairs, Mr Charles Mate.

Linyama: Witness please tell the court how this decision was communicated to the two directors?
Chipwende: It was communicated in writing and I understand the letters were delivered to the respective directors in person by the administration staff.

Linyama: Tell the court what transpired after these letters were delivered and after this decision was made. What events followed?

Chipwende: Events that followed was that, despite having received the letter, the Executive Director of operations reported to the office, disobeying the instruction. And arising out of that disobedience, management requested the help of the security personnel to ensure that the Executive Director of operations does not enter the offices.

Linyama: Which one of the two was the Executive Director of operations?

Chipwende: Mr Paul Siame.

Linyama: What followed after that?

Chipwende: After that we were summoned for a meeting at State House by the Economic Advisor to the President. That was on 14th October, 2016 at which a directive was given among other instructions, that the two Executive Directors be allowed to resume work immediately and that senior management ensures that they work harmoniously together in order to ensure the success of the team.

Linyama: You were given this directive, what did you do with these instructions?

Chipwende: In order to confirm the instructions, and to ensure that they are documented, I wrote a letter to the Economic Advisor to the President in which I tabulated the instructions that had been given. And the letter, Your Lordship, was copied to respective committees that had met on the suspension of the two executive directors.

Linyama: I wish to refer the witness to the affidavit in reply on 1st February, 2018 particular PMS6. The exhibit PMS6. Mr Chipwende kindly confirm if that’s the document you were referring to a few moments ago?

Chipwende: (Browses through the documents…) Your Lordship I confirm this is the letter which I was referring to earlier.

Linyama: So this letter was written on the 15th October, 2016, what happened thereafter in relation to Mr Siame’s employment with IDC?

Chipwende: In relation to the employment…

Linyama: Mr Siame’s contract of employment or status with the company IDC, what transpired after 15th October?

Chipwende: After 15th October…on 11th November, 2016, the employment contract of the two executive directors, which included Mr Siame, including the Chief Executive which is myself, were terminated.

Linyama: I would like to refer the witness to the affidavit in support of notice of the complaint dated 8th February last year. There is an exhibit marked PMS6, please look at that.

Chipwende: (browses through the documents…)

Linyama: This is a letter you are looking at, that’s the letter you were referring to which resulted in the termination?

Chipwende :Your Lordship this is the letter which resulted in the termination which I was referring to.

Linyama: Mr Chipwende, before the termination of Mr Siame’s employment, I hope you are following. Put those (documents) aside so that you can listen to the question. After Mr Siame’s suspension on the 14th October, from the documents you have shown us, did you interact or what was your level of interaction with Mr Siame in the company? Between the time that letter was given to both of you and the time you had lifted it’s suspension?

Chipwende: The level of interaction, Your Lordship was one that had a high level of insubordination, disobedience of instructions given by my office as well as intimidation of staff in the organization by Mr Siame. And this included conveying information or instructions on behalf of the organization outside authorities without the authorisation of my office. This included the 17th October, 2016 incident in which Mr Siame and Mr Mate, the two executive directors came to my office and made a number of allegations and demands. This was followed by… after the 17th October, 2016, I had given instruction to Mr Siame to undertake a number of duties that included preparation of quarterly reports and operations in addition to other operational areas your lordship. And these instructions were not obeyed. Mr Siame disregarded undertaking the work. I also received a correspondence from Mr Siame instructing me, among other things, to terminate the attachment of an officer seconded from the ministry of commerce. Where Mr Siame alleged that this officer was undermining the functioning of the organization.
Linyama: You have highlighted examples of basically what you are calling insubordination and disobedience, what did you do after that?

Chipwende: What I did was on 31st October, 2016, I decided to institute disciplinary proceedings against Mr Siame. I documented the allegations or the acts of insubordination which I thought should be subjected to disciplinary process, in form of a letter which I issued to Mr Siame.

Linyama:I wish to refer the witness to the affidavit verifying the answer. In particular MCK3.
Mr Chipwende please explain to the court what MCK3 is. Mr Chipwende please look at that document and tell the court what you are looking at.

Chipwende: Your Lordship, the document that I’m looking at is the disciplinary letter which, in my position as Chief Executive, I wrote to Mr Paul Siame documenting the areas of insubordination that I thought should be subjected to the disciplinary hearing.

Linyama: I would like you to look at the last paragraph of this letter on the second page of your left, what was the reaction of Mr Siame to your letter?

Chipwende: Your lordship I did not receive, neither am I aware of a written statement being made by Mr Siame to exculpate himself to the disciplinary process.

Linyama: Who had directed the courts attention to the letter of termination, the one of 11th November, do you recall that?

Chipwende: I do recall your lordship.

Linyama: So who terminated the complainant’s employment?

Chipwende: The termination was done by the shareholders, the Minister of Finance and the secretary to the treasury on behalf of the chairperson of the board of directors.

Linyama: Why do you say it was done on behalf of chairperson of the board?

Chipwende: Because the letter indicated that the termination was on behalf of the chairperson of the board in IDC.

Linyama: Mr Chipwende I know you were not here when the complainant was testifying. The complainant told this court that he has raised several concerns to you relating to the composition of the board of directors. He stated in this court that there were people of questionable character. Could you explain to this court how this board was made of? Who constituted the board?

Chipwende: Your Lordship, the board was constituted by the chairperson of the board who is His Excellence the President. Accordingly there were seven members appointment from the private sector, three cabinet ministers and two civil servants.

Linyama: The complainant stated that he had brought some complaints to you. What concerns did he have with the composition of the board?

Chipwende: The complaints I’m aware, Your Lordship were related to the complaints that members of the board were corrupt. And that they were not properly appointed.

Linyama: In terms of the management at IDC, how does it interact with the board.

Musa Mwenye interjects: (saying the witness was no longer working at IDC).

Linyama: Let me paraphrase it, when you were at IDC during your tenure as Chief Executive Officer, how were you communicating with the board?

Chipwende: Your Lordship, all communications to the board of directors was supposed to be made or done through my office.

Linyama: Sir, there was an allegation in court made by the complainant that in fact the Development Bank of South Africa had queried certain board members of being convicts and being dishonest. Could you explain to the court what was said at the meeting with the Development Bank of South Africa, if you are aware?

Chipwende: Your Lordship, I’m aware of those concerns because they were in fact channeled through my office directly by the Development Bank of South Africa. And these related to a case where one of the IDCs subsidiaries, being ZESCO limited had applied for a loan. In accordance with the lending institutions requirements, they undertook what is known as the loyal customer exercise. And as such they had raised issues regarding two directors on the board whose names, they informed me were similar to certain individuals that were involved in suspected criminal activities outside Zambia.

Linyama: Please tell the court the names.

Chipwende: The two directors were Mr Lawrence Sukutwa and Mrs Silva Banda. Accordingly, they requested that we send copies of the two directors identification to the DBSA, that is the Development Bank of South Africa, for scrutinisation. We accordingly submitted the two directors’ copies of their passports with DBSA and they informed my office that they had confirmed that these were different individuals from the ones that were involved in criminal activities. And accordingly, the DBSA proceeded to disburse or provide that loan to ZESCO having cleared the two directors.

Linyama: Mr Chipwende, is there any thing that you would like to add to your testimony this afternoon which relates to this case which you would like to bring to the attention of the court? Please go ahead.

Chipwende: Your Lordship, I have noticed one item which is related; the complaint related to victimisation regarding a particular transaction that IDC was involved in, which as far as I can recollect, no decision had been made at the time that…

Linyama: Maybe you can set a foundation to say there was an allegation of victimisation relating to this issue, then you can now alert the court. Which allegation of victimisation is it?
Chipwende: This relates to the complaint that has been raised in the affidavit sworn by Mr Siame, that relates to an acquisition by the IDC of a company called Zampalm owned by Zambeef. I noticed an allegation that Mr Siame had raised or brought to my attention that this transaction or this company was not viable and accordingly he was being punished for having raised that complaint.

Linyama : Please tell the court your reaction.

Chipwende : From what I recall your lordship is that, at the time that I was at IDC before 11th November, 2016, this transaction was still working progress and the IDC board had not yet made a decision whether to invest in Zampalm or not. With regard to the specific allegations, I wish to state that these allegations, the issues to do with unviability of Zampalm were not brought to my attention by Mr Siame. It was issues that were raised following the request which I made as chief executive. It was raised by ZAFFICO following the request which I made through my office to ZAFFICO. As well as discussions that I had in my office with International Finance Corporation. And the issues raised were part of the input of the data that we were collecting as management to later on provide to the board to assist the board in making a decision.

Linyama: Is there anything that you wish to add.

Chipwende: Your Lordship, for now I do not have anything further to add.

Cross examination
Defence counsel Musa Mwenye: Mr Chipwende good afternoon. Now let me state some thing, you are here to help the court come to the truth and not to safeguard the interest of the IDC. Do you recognize that?

Chipwende: Your Lordship, I do recognize.

Mwenye: Now let’s start with the last part of your evidence, you indicated that the IDC had not made any decision in respect to Zampalm. You recall that?

Chipwende: I do recall that, Your Lordship.

Mwenye: Your Lordship, I’m showing the witness documents marked PMS5 in the affidavit in reply. Mr Chipwende that is the letter from yourself to Zambeef product PLC. Can you see it?
Chipwende: I do see it, Your Lordship.

Mwenye: That letter is dater 6th September, 2016. Not so?

Chipwende: I do confirm your lordship.

Mwenye: Mr Chipwende can you read the second paragraph?

Chipwende: (Starts reading…) It states “we are pleased to inform you that at the second ordinary meeting held on Tuesday 30th August, 2016. The investment committee of IDC resolved that IDC should formally confirm its intention to acquire a majority stake of 80 percent in Zampalm limited subject to successful completion of due diligence and IDC board approval.”
Mwenye: So a decision was made to purchase Zampalm subject to these issues correct?
Chipwende: I deny Your Lordship. Intention, the way I understand it, is to look at the transaction.

Mwenye: Mr Chipwende… Kindly confirm that a decision was made in respect to Zampalm?
Chipwende: I do confirm.

Mwenye: And therefore it is not true that no decision was made with regards to Zampalm?

Chipwende: Your Lordship, if I do recall, I stated that no decision to purchase had been made.

Mwenye: Mr Chipwende, as at the date of this letter PMS5, you had in fact, already been informed by ZAFFICO and the IFC that this project was not viable. This company was not viable. Correct?
Chipwende: No it’s not correct. Viability when looking at investment is a very broad term.

Mwenye: Let’s put it easier for you. Had you already received an opinion from ZAFFICO and IFC as at the date of this letter?

Chipwende: That is correct your lordship.

Mwenye: What did ZAFFICO tell you?

Chipwende: ZAFFICO’s exact words were that the Zampalm project was located outside the latitude, 16 degrees from the equator, which meant that it could require higher levels of management and attention to make it successful.

Mwenye: So what was their conclusion with regards to this project?

Chipwende: That was the conclusion.

Mwenye: Now, as at the time of this letter, the palm trees had been planted for seven years. Is that correct?

Chipwende: Again, it is incorrect because the palm plantations have plantations or trees of varying ages. Some of which are seven years, some of which are less than seven years.
Mwenye: Let me help you, where there trees which were planted seven years before this letter at that time?

Chipwende: Yes there where.

Mwenye: Mr Chipwende, isn’t it true that the experts had told you that ordinarily, these trees should have started producing fruit at four years?

Chipwende: Your Worship, I wasn’t informed of that position.

Mwenye: Now, where you aware when these palm trees should start producing fruits? You were in charge of this project. Where you aware, yes or no.

Chipwende: I wasn’t aware.

Mwenye: So before this letter, you didn’t care to find out when palm trees should produce fruits? you were investing substantial amount of money.

Chipwende: Your Lordship, we did care and that’s why in my letter which is being referred to, I did say that “this decision will be subject to completion of a due diligence”. A due diligence involves investigating and being comfortable with a state of the plantation, the finances of the organisation and other matters before a decision to invest or not can be made.

Mwenye: Now, are you aware whether any due diligence was done up to the time you were leaving?

Chipwende : We had not commissioned a due diligence because, I do recall the process of engaging the consultants was still under way. You engage consultants to undertake a due diligence on Zampalm.

Mwenye: You were CEO of IDC, isn’t it true that in fact Zambeef PLC announced on the London stock exchange that the acquisition had been consummated?

Chipwende: Your Lordship, I’m not aware of the date.

Mwenye: Isn’t it true that they announced? Forget the date.

Chipwende: I’m aware of an announcement notifying shareholders of discussions on the transactions but as regards consummation, Your Lordship, I’m not aware of such an announcement having been made.

Mwenye: Mr Chipwende, what were the reservations expressed by the IFC? You did mention in the examination that the IFC indicated reservations on your request. What were the reservations?
Chipwende: Your lordship, reservations expressed by the IFC related to the deployment of capital by Zambeef PLC in a Palm project whereby, they felt that such resources could be better deployed in other crops where Zambia was most suited.

Mwenye: In other words, Mr Chipwende, the IFC was of the opinion that the climatic condition in Zambia could not support the growing of palm trees?

Chipwende: They felt resources could be better deployed in other crops not that palm cannot be grown.

Mwenye: So the IFC where of the view that money could be better used in other crops other than Zampalm in Zambia?

Chipwende: Yes Your Worship.

Chipwende: So after being advised that, you still proceeded to start negotiations?

Chipwende: Your Lordship, we were not in negotiations. We had requested to undertake a due diligence on Zampalm and I stated that at the time that I was leaving the IDC, the engagement of consultants to undertake a number of things on behalf of IDC…

Mwenye: So your answer is that you didn’t make the decision to commence negotiations? Is that correct?

Chipwende: That is correct.

Mwenye: Mr Chipwende are you in a habit of telling lies?

Chipwende: No I’m not.

Mwenye: PMS5, could you read the last paragraph.

Chipwende: (Reads document…) “We now propose that IDC and Zambeef PLC engage to agree on possible dates to commence the price negotiations”.

Mwenye : I will ask you again, did you make the decision to commence negotiations as at the date to this letter with Zambeef?

Chipwende: We were yet to agree.

Mwenye: Did you make make the decision? You are under oath and their are consequences.

Chipwende: My understanding is, we were proposing to IDC to agree on dates when we can negotiate. They could have easily come back to us and said no.

Mwenye: You were proposing because you made the decision. Is that correct?

Chipwende: We made a decision to proceed, that’s when we were intending to proceed with the acquisition.

Mwenye: So you made a decision to proceed with negotiations? Correct?

Chipwende: To agree when we can commence negotiations.

Mwenye: Do you see any reference to negotiations in that sentence?

Chipwende: I do Your Lordship.

Mwenye: Where were you mentioning in that sentence?

Chipwende: Because we were requested to approach Zambeef so that we can agree when we can commence negotiations.

Mwenye: So you were asking and you were agreeing on dates because a decision was made to negotiate?

Chipwende: We were waiting for a response from Zambeef and then we go back to committee.

Mwenye: Mr Chipwende, did you as CEO, write a letter asking Zambeef to confirm dates for negotiations before a decision by IDC was made?

Chipwende: My letter did not ask Zambeef to confirm the dates, that’s a process.

Mwenye: I will leave that to the court to interpret. Now, you mentioned earlier on during your examination that the board had made a decision that senior management was undermining the office of the Chief Executive Officer, is that correct?

Chipwende: I have specifically said Finance and administration committee not the board.

Mwenye: You earlier said that the Finance and administration committee of the board had decided that senior management was undermining the office of the CEO, is that correct?

Chipwende: That’s correct.

Mwenye: Mr Chipwende MCK1, have you seen it?

Chipwende: Yes, Your Lordship.

Mwenye: Where in that document does it say that senior management were undermining the CEO? Where does it say.

Chipwende: Not directly, Your Lordship.

Mwenye: So it doesn’t say. Isn’t it true that the document in fact says there was disharmony in the senior management team.

Chipwende: That is correct, Your Lordship.

Mwenye: And you were part of this senior management team?

Chipwende: That’s correct.

Mwenye: Mr Chipwende; you, Mr Charles Mate who was the executive director in charge of corporate affairs and the complainant were all terminated on the same day. Correct?

Chipwende: That is correct, Your Lordship.

Mwenye: In fact, the terminations had nothing to do with any disciplinary procedure. Correct?

Chipwende: I’m not aware, Your Lordship of the reasons.

Mwenye: Where you facing disciplinary proceedings at the time of your termination?

Chipwende: No, Your Lordship, I wasn’t.

Mwenye: Was Mr Charles Mate facing any disciplinary proceedings when his contract was terminated?

Chipwende: No, Your Lordship.

Mwenye: So in fact the charge letter you had written to Mr Siame had nothing to do with the termination of his contract of employment?

Chipwende: Your Lordship, I’m not competent to answer that question. I’m not aware.

Mwenye: Wouldn’t it be correct to say that you were all terminated because of the disharmony among all of you?

Chipwende: Your Lordship, I’m not aware of the reasons for the termination.

Mwenye: Since you are the one who charged Mr Siame, isn’t it true that you would be the best person to know whether his termination was tied to the disciplinary letter?

Chipwende: I’m unable to tell the court, Your Lordship what led to the termination.

Mwenye: PMS6 in the affidavit of support. Look at that letter. Please confirm that the contents of that letter are identical to the ones that you received? You letter of termination, did it read like that one, PMS6?

Chipwende: (Reads through the documents…) Your Lordship, I don’t have it with me (his letter of termination).

Mwenye: Is there any difference?

Chipwende: (Continues reading…) Your Lordship, in the absence of the company letter, this letter does look identical.

Mwenye: Mr Chipwende you made very roving allegations about the conduct of the complainant, you recall that?

Chipwende: I do recall the allegations.

Mwenye: Isn’t it true that in fact the only allegations for which you charged the complainant were the ones contained in MCP3 in the affidavit. (Browses through documents…) In fact these allegations related specifically to the events of 17th October 2016, correct?

Chipwende: Yes, Your Lordship.

Mwenye: The complainant was in fact never charged with any other offences any other time, correct?

Chipwende: That’s correct your lordship.

Mwenye: Mr Chipwende these were merely allegations from you, correct? They were supposed to be investigated.

Chipwende: I don’t understand your question, Your Lordship.

Mwenye : You charged the complainant with particular offences and these were subject to investigations to which you will be a witness as well, correct?

Chipwende: They were subject to an exculpatory statement, Your Lordship, because these were made directly in my presence.

Mwenye: Isn’t it true that in fact you were supposed to escalate this to the board for investigations? There was a board committee that was specifically there just to look at matters such as these. Isn’t that correct?

Chipwende: That’s correct.

Mwenye: And in fact the board was supposed to investigate the matter procedural. Is that not correct?

Chipwende: No. I was in charge of personnel I was supposed to investigate and report to the board.

Mwenye: So you where supposed to charge, investigate and make the decisions to dismiss?

Chipwende: Not to dismiss but to take the matter to the board.

Mwenye: The board never dealt with this matter, is that not correct, the time that you were there?

Chipwende: That is correct.

Mwenye: At the time when you were in the IDC, when you charge employees and they don’t respond, you simply abandon the matter you don’t take it to the board?

Chipwende: We do take it to the board.

Mwenye: So Mr Chipwende these disciplinary proceedings were in fact abandoned isn’t that correct?

Chipwende: No they were not abandoned.

Mwenye: They were never furthered?

Chipwende: Before we could further them I received a letter of termination together with two executive directors.

Mwenye: Mr Chipwende you said that on the 17th of October, 2016, Mr Mate and the complainant walked into your office and made several allegations. So two people walk in your office and you only decided to charge one, the complainant?

Chipwende: Yes, Your Lordship because he is the one who raised these allegations.

Mwenye: Mr Chipwende, earlier on during examination, you said that Mr Mate and the complainant walked in the office and made several allegations, now you are saying only the complainant made the allegations. Which ones of these two statements is a lie?

Chipwende: It was the complainant who made these allegations, Your Lordship.

Mwenye: So during the examination [in chief] you lied?

Chipwende : Your Lordship, I have said Mr Siame made these allegations.

Mwenye: Now, let’s look at document marked PMS1 in the affidavit in support.

Chipwende: (browses through the documents)

Mwenye: Mr Chipwende, can you confirm that that document is a contract between IDC and the complainant, dated 11th January 2016?

Chipwende: I do confirm, Your Lordship.

Mwenye: Can you also confirm that PMS2 is a further document detailing the conditions of service of Mr Paul Siame.

Chipwende: I do confirm, Your Lordship.

Mwenye: Now, the respondent, IDC, has said in this document that Mr Siame refused to sign the contract. Wouldn’t you agree with me that that’s incorrect with the view of those documents which you have?

Chipwende: That would be correct, he came to sign them.

Mwenye: So it’s incorrect that he refuse to sign correct?. The opposition is, in view of the documents you’re looking at, IDC’s position is incorrect that Mr Siame refused to sign the contract? Let me put it another way, are you aware of any time in view of those documents that Mr Siame refused to sign the contract? It’s a simple yes or no, you don’t need to look at the document, are you aware?

Chipwende: I’m aware that there was a delay in signing.

Mwenye: There was a delay? But the contracts were in fact signed in January 2016?

Chipwende: Yes, your lordship.

Mwenye: Now, were you part of the meeting of the finance and administration committee on the 16th of September 2016?

Chipwende: (Browses through documents…)

Mwenye: Let me save you the trouble, the document shows that you were there. Let me refer you to MCK1, have you seen it?

Chipwende: I was requested to step out of this meeting

Mwenye: You were the first person to step out? So, look at item Roman numeral 3 on that document. Roman numeral 3 page 1 MCK1 in the affidavit in support of answer.

Chipwende: I’ve found it, Your Lordship.

Mwenye: Could you read it out?

Chipwende: “Executive directors have not signed their contracts which have been plainly offered to them by the IDC since March 2016”.

Mwenye: In fact that position is incorrect, is that not true?

Chipwende: Your Lordship, I wasn’t in the meeting. This position could have been correct as I left the meeting.

Mwenye: The meeting was in September 2016?

Chipwende: Yes.

Mwenye: You just told us that the contracts were signed in January 2016.

Chipwende: The contracts were dated to be January. The dates when they were signed varied, because the contracts were done, Your Lordship commencing in January, that was the commencing date.

Mwenye: Isn’t it true that the contracts were signed before the meeting of September 2016?

Chipwende: I’m not aware, Your Lordship.

Mwenye: Are you aware why only two directors were told to stay away when 3 were terminated? Why weren’t you told to stay away yourself? Are you aware?

Chipwende: I’m not aware, Your Lordship.

Mwenye: Mr Chipwende confirm that you have a vehicle ALX 1474

Chipwende: I do confirm, Your Lordship.

Mwenye: That’s a Jeep Cherokee, correct?

Chipwende: That is correct, Your Lordship.

Mwenye: When was that vehicle purchased for you by the IDC?

Chipwende: Your Lordship I can’t remember the exact date but it could have been around September 2014 if am not mistaken, I have to check, around September 2014, Your Lordship.

Mwenye: Are you aware how vehicles are depreciated in value by SOG?

Chipwende: Yes, I am aware, Your Lordship.

Mwenye: How are they depreciated?

Chipwende: There is a rate which is applied, Your Lordship, of 25 per cent per annum.

Mwenye: 25 per cent per annum. Do you have your ownership documents for this particular car? As the IDC facilitation in change of ownership is reporting?

Chipwende: No, Your Lordship., but I was given the documents of ownership which is the white book.

Mwenye: You had been called to handover?

Chipwende: They delivered the documents.

Mwenye: They delivered the documents to your home?

Chipwende: Yes, Your Lordship.

Mwenye: With respect to the IDC meeting held on the 16th of September 2016, Isn’t it true that nowhere in the resolution is the word suspension used?

Chipwende: That is correct, Your Lordship..

Mwenye: So the decision was just for the executive directors to stay away?

Chipwende: That is correct, Your Lordship.

Mwenye: Your Lordship, am referring the witness to document marked PMS3, affidavit in support PMS3.

Chipwende: (Browses through documents)

Mwenye: Now that document in front of you, nowhere in it are the reasons for this staying away contained, is that not correct? Isn’t it true that you never informed the complainant why he was being asked to stay away? Take your time to read it.

Chipwende: No reasons are given, Your Lordship.

Mwenye: In fact at no time did the IDC write to the complainant to inform him why he had been told to stay away

Chipwende: Other than this letter, Your Lordship, am not aware of any other documents.
Mwenye: Mr Chipwende, that document is very interesting. Why could you mark a document, “without prejudice”?

Chipwende: Your Lordship, I am not aware.

Mwenye: But you’re the one who has it?

Chipwende: It’s not mine.

Mwenye: Ok, it’s not yours? But confirm that it was marked “without prejudice”?

Chipwende: I do confirm, Your Lordship.

Mwenye: Let’s move on from there, PMS1, I need you to help us Mr Chipwende. Affidavit in support, I would like you to look at clause 8 at page 6 of PMS1. Have you seen it?

Chipwende: I have seen it, Your Lordship.

Mwenye: Read for us, Mr Chipwende.

Chipwende: (Reads) The way the contract is terminated before expiration of the contract. For any reason other than dismissal the employee shall be paid gratuity calculated only for that time”.
Mwenye: So, wouldn’t you agree with me that a dismissed employee is never paid gratuity by IDC? According to that clause, these particular employees. According to the contract of the complainant with IDC, if he was dismissed he was not to obtain gratuity.

Chipwende: In dismissal, there is no gratuity.

Mwenye: Now you spoke to some length about PMS6, and that is PMS6 affidavit in support. In the examination in chief you talked about the fact that Mr Siame was terminated and you testified about this letter, you recall?

Chipwende: I do recall, Your Lordship.

Mwenye: Now if you were terminated on the same day, how did you see this letter? You were all terminated on the 11th of November, how did you see it?

Chipwende: I was reading it when it was presented to me, Your Lordship.

Mwenye: So the first time you saw it was when these proceedings commenced?

Chipwende: I saw it here.

Mwenye: Here?

Chipwende: Here, Your Lordship.

Mwenye: So you were in fact not competent to speak about that letter correct?

Chipwende: That is correct, Your Lordship.

Mwenye: You mentioned that the DBSA, Development Bank of South Africa had raised certain concerns, correct?

Chipwende: That is correct, Your Lordship.

Mwenye: Do you recall that the complainant Mr Paul Siame raised the fact that there was need to vet the members of the board of directors?. He informed you that there was need to conduct security vetting.

Chipwende: I am not aware.

Mwenye: You don’t remember?

Chipwende: No, Your Lordship.

Mwenye: But it could have happened?

Chipwende: I do recall those correspondences from Mr Siame to the Secretary to the Cabinet.

Mwenye: Asking for security vetting?

Chipwende: Saying that new board members should undergo security vetting.

Mwenye: So the issue of security vetting was raised by Mr Siame?

Chipwende: For new board members.

Mwenye: You’re not sure whether he raised it to you?

Chipwende: I’m not really sure.

Mwenye: But you do confirm that it was an issue with the Development Bank of South Africa on the character of some board members, it was cleared later but it was an issue.

Chipwende: I don’t know how to answer that question, Your Lordship.

Mwenye: Answer it the best way you can.

Chipwende: What am aware of as I said, Your Lordship, they did raise concerns about some board members

Mwenye: So those concerns existed?

Chipwende: And they did confirm that it was mistaken identity that they had… because there were some people that were in court who had similar names to the two directors. The one that had a similar name with Mr Lawrence Sukutwa turned out to be an individual aged 25 who had been arrested.

Mwenye: Isn’t it true that Mr Siame had told you that you could have quickly responded if there had been security vetting done?

Chipwende: Your Lordship, am not aware of how board members were appointed as I said earlier.

Mwenye: No! Did he inform you or not?

Chipwende: There could have been quicker response by?

Mwenye: By the IDC to those issues, if you had security vetting.

Chipwende: Your lordship we responded immediately the query was raised there was no delay.

Mwenye: Did he inform you or not? I’m not talking about the response.

Chipwende: He did not inform me.

Mwenye: Do you recall when the DBSA asked for these board members, their names?

Chipwende: Your Lordship, I cannot place the exact dates but it could have been some time in 2016 if am not mistaken, as I said your lordship am not sure of the dates.

Mwenye: Now, let’s talk about, (pause)… my lord am showing [him] PMS3 in the affidavit in reply. Have you seen the document?

Chipwende: I have seen it your lordship

Mwenye: In fact those were the investment guidelines in the IDC adopted by the board in 2015.

Chipwende: Adopted, that is incorrect, Your Lordship.

Mwenye: Were these the investment guidelines?

Chipwende: Draft investment guidelines, again these were work in progress and they were to go back to the board to incorporate certain matters that were raised by…

Mwenye: Mr Chipwende, are you telling this court that the IDC had no investment guidelines as at the time you were there?

Chipwende: No approved investment guidelines as at the time I was there.

Mwenye: Do you recall a board meeting of the IDC held on the 29th of December 2015?

Chipwende: I do recall that meeting.

Mwenye: Isn’t it true that investment guidelines were in fact adopted on that day?

Chipwende: That is not correct your lordship, the investment guidelines were referred back to the investment committee because the board had raised a number of concerns that had to be incorporated before they could formerly approve it.

Mwenye: So you had no guidelines, you could invest as you wished as IDC?

Chipwende: As we wished, I don’t think that would be correct to say as we wished

Mwenye: What were your guidelines?

Chipwende: There was a process, that needed to be followed for each investment that the IDC had to make.

Mwenye: So, then acquisitions that were being made by IDC in your time as Chief Executive Officer were made with no guidelines?

Chipwende: Your Lordship, am not aware of any acquisitions which were made in my time at IDC.

Mwenye: Ok let’s rephrase that. The decision to start negotiating with Zampalm was made with no guidelines?

Chipwende: Your Lordship, the finance committee as I said had requested management…

Mwenye: Listen to my question. At the time you made the decision to commence the negotiations, there were no guidelines on how to invest?

Chipwende: Your lordship I cannot answer that question because it’s not very clear.

Mwenye: Were there guidelines at the time you wrote the letter to Zambeef in September 2016.
Chipwende: Investment guidelines?

Mwenye: Yes

Chipwende: No, they had not been approved so we had to go through a process to refer every…

Mwenye: Isn’t it true Mr Chipwende that the complainant was intimately involved in the initial due diligences that were done over Zampalm?

Chipwende: I’m not aware, Your Lordship.

Mwenye: Mr Chipwende do you recall that the complainant flew to Zampalm with Mr Carl Irwin.

Chipwende: Your Lordship, the visit to Zampalm was undertaken by board members including myself.

Mwenye: Do you recall that Mr Paul Siame flew to Zampalm with Mr Carl?

Chipwende: There were several people.

Mwenye: Do you recall that he was one of the people?

Chipwende: One of the people.

Mwenye: He was, was he?

Chipwende: One of the people, that is correct.

Mwenye: That is correct?

Chipwende: That is correct, there were several people that went.

Mwenye: Who were the other people that went?

Chipwende: There were two or three trips that were undertaken to Zampalm.

Mwenye: The one in which Mr Siame was, when was it?

Chipwende: I can’t recall the exact date.

Mwenye: Was it before the letter of the 6 September 2016?

Chipwende: Which letter is that?

Mwenye: The letter you wrote to Zampalm PMS5 in the affidavit in reply.

Chipwende: September, September 2016, I think it was before.

Mwenye: It was before? What were you going to do there? What was the IDC going to do in Zampalm?

Chipwende: To understand the operations of Zampalm

Mwenye: To understand the operations of Zampalm?

Chipwende: That is correct, Your Lordship.

Mwenye: Earlier on you told this court. Earlier on in cross examination you said you couldn’t know when palm trees produce flowers because you did nothing until the due diligence commenced, do you recall that?

Chipwende: I do recall that.

Mwenye: Mr Chipwende that was in fact a lie, wasn’t it?

Chipwende: It is not a lie, Your Lordship.

Mwenye: It is not a lie? Contrary to what you had said before, you in fact had started understanding the operations of Zampalm before you could make investment.

Chipwende: The process had began but not the due diligence.

Mwenye: The process had began?

Chipwende: Not the due diligence, they are two different processes, Your Lordship.

Mwenye: So when you were understanding the operations of Zampalm before the date of this letter, you didn’t care to find out when palm trees produce flowers or fruit?

Chipwende: That is not correct your lordship, to say I did not care, is not correct.

Mwenye: So you didn’t get down to understand it, you didn’t conduct the process of understanding the palm trees themselves?

Chipwende: Like I said, Your Lordship, the due diligence was to be commissioned before a decision could be made in case of Zampalm.

Mwenye: So you were understanding these operations of this company whose sole activity was growing palm trees, yet you did not want to understand the palm trees themselves, how they can make you money?

Chipwende: Your Lordship, I did not say we didn’t want to understand the palm trees. I said the finance committee had decided that we commission due diligence that we understand the investment, there were technical matters relating to the trees, financial matters about the company, operational matters, human resources, it is a whole collection of information that would then be brought up to the board to make a decision on whether to invest or not. Now I cannot stand and be convicted and crucified about the growth of a palm tree.

Mwenye: So as part of the process of making the decision to commence negotiations, don’t you think it was important to understand the product you were buying, the palm tree?

Chipwende: That is correct your lordship that is why we made the decision to commission due diligence of Zampalm

Mwenye: When did Mr Kaluba join the IDC. First of all do you know a gentleman called Mateyo Cresta Kaluba?

Chipwende: I do, Your Lordship.

Mwenye: Do you know that gentleman?

Chipwende: I do your lordship

Mwenye: Who is he?

Chipwende: currently?

Mwenye: Yes

Chipwende: Currently, he is the the Chief Executive Officer at the Industrial Development Corporation.

Mwenye: Is it correct that you wrote a letter on the 19th of September 2016 requesting that Mr Kaluba be seconded to the IDC from the ministry of Commence?

Chipwende: 2016?

Mwenye: Yes, 19th of September

Chipwende: I do recall requesting a secondment of Mr Kaluba from the ministry of Commence

Mwenye: Is it true that Mr Kaluba only formerly joined the Industrial Development Corporation in October 2016?

Chipwende: That is not correct

Mwenye: When did he join formerly?

Chipwende: The, Mr Kaluba was, the Ministry of Commence attached Mr Kaluba to IDC to assist with the planning

Mwenye: When did he join?

Chipwende: In 2014

Hearing continues…

         

Zondiwe Mbewe

About Zondiwe Mbewe

Zondiwe is a vibrant young Zambian journalist who has interest in writing political and current affairs on issues which affect every Zambians. She draws inspiration from journalists who stand for what is right and are not afraid to tell and show the truth to the people.
Email: zondiwe [at] diggers [dot] news

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