ZCCM Investments Holdings Plc says it will appeal against the Lusaka High Court’s decision to dismiss a case in which it sued First Quantum Minerals Limited and six others for fraud involving over US$2.3 billion.
This is according to a statement issued by ZCCM-IH’s Public Relations Manager Loisa Mbatha-Kakoma, Monday.
“ZCCM Investments Holdings Plc (ZCCM-IH) intends to appeal against the ruling of the Lusaka High Court delivered on March 23, 2020 regarding a matter commenced by ZCCM-IH in 2016, against First Quantum Minerals Limited (FQM Ltd), FQM Finance Limited, Philip Pascall, Arthur Mathias Pascall, Clive Newall, Martin Rowley and Kansanshi Mining Plc. In the said matter ZCCM-IH alleges, among others, that the defendants on several occasions fraudulently engaged in transactions totaling in excess of $2 billion for the benefit of the FQM Group,” Mbatha-Kakoma stated.
“ZCCM-IH holds the view that the defendants’ conduct is detrimental to ZCCM-IH’s interests and those of the nation, and remains committed to protecting the said interests. Therefore, ZCCM-IH will be appealing against the Ruling.”
On March 23, Lusaka High Court Judge Winnie Mwenda dismissed with costs, a matter where ZCCM-IH sued First Quantum Minerals Limited and six others for fraud involving over US$2.3 billion for being an abuse of court process.
She dismissed the action for multiplicity of actions, saying the claims relating to conspiracy, deceit, dishonest, assistant and breaches of the management services agreement in the statement of claim by ZCCM-IH are the same as in the Arbitration Tribunal as evidenced by the notice of Arbitration.
ZCCM-IH in this case sued FQM Finance Limited, FQM chairman and chief executive officer Philip Pascall, directors Arthur Pascall, Clive Newall, Martin Rowley and Kansanshi Mining Plc in the High Court in November 2016 and also filed a notice of Arbitration in London.
However, Kansanshi Mining asked for an order to dismiss the matter for being an abuse of court process and multiplicity of actions.
Kansanshi Mining country manager Godwin Chinkuli argued that ZCCM-IH had sued the mining company on October 28, 2016 pursuant to the shareholders’ agreement between the two parties and ZCCM-IH within a day commenced Arbitration proceedings in London.
Chinkuli stated in the Arbitration proceedings that ZCCM-IH alleged that sometime in 2007 and 2014, cash reserves of Kansanshi Mine did not attract a commercial rate of interest when they were deposited with FQM Finance Limited being the Kansanshi’s majority shareholders treasury entity and false representations about the deposit account were made to it, namely the term of its use.
He argued that there could be no falsity as there had been regular disclosure on the deposit account through the board business and through the mine’s regularly filed accounts, which were approved each year by its board and money was paid with interest to Kansanshi mine on demand as and when it was required, and by December 2014 the full amount held in the deposit account had been repaid with interest.
Chinkuli said the Arbitration Tribunal on February 22, 2018 ruled that ZCCM-IH was required to obtain permission to bring a derivative claim on behalf of Kansanshi and it ought to have established a prima facie case showing that Kansanshi mine was not entitled to relief.
He stated that on August 9, 2019, Kansanshi filed a notice of registration of the arbitral award in the High Court principal registry.
But in its response, ZCCM-IH through its advocate Lombe Mbashi said the issues raised before the Lusaka High Court were not and could not have been raised in the Arbitral proceedings.
He said the Arbitral Tribunal only dealt with and ruled on the the issue relating to ZCCM-IH’s application for permission to commence a derivative action on behalf of Kansanshi Mine Holdings Limited which was not party to the proceedings and did not pronounce itself on any of the claims.
And judge Mwenda, in her ruling, said she could not agree with ZCCM-IH’s argument that its loss and damage arise out of deprivation of a higher rate of return on Kansanshi mining’s money and that the Arbitration matter was materially different from the case before court.
She added that there was no difference between the Arbitral proceedings and the proceedings before her.
“Kansanshi Mining’s application for an order to dismiss or dispose of an action for being an abuse of court process and res judicata has succeeded. The action is accordingly dismissed with costs to Kansanshi mine. The said costs shall be agreed or taxed in default,” judge Mwenda said.
She granted ZCCM-IH leave to appeal.