The fight for control of Caps Holdings Limited (CHL) has turned nasty, with war veteran and businessman Frederick Mutanda alleging that State security agents were involved in a plot to assassinate him.
In a letter addressed to government lawyer Addington Chinake of Kantor & Immerman dated June 10, 2021, Mutanda demanded that the State show proof that CHL requested for a financial rescue package and that government paid off debts owed by him and his companies.
Government alleged it rescued the firm through Treasury Bills in a move aimed at making the company attractive to investors.
However, Mutanda said failure to furnish him with such proof within 24 hours would leave him with no option, but to seek recourse at the courts.
He also said he was worried about involvement of State actors in a matter where he is challenging government’s involvement in the arbitration process between CHL and Caps Pharmaceutical Trust.
In a notice to file a point of in limine — lack of locus standi — submissions in the arbitration proceedings before retired Supreme Court judge Justice Ahamed Moosa Ebrahim, Caps Pharmaceutical Trust argued that: “It is common cause that the arbitration proceedings have been instituted by the shareholders’ agreement and not in respect of any other agreement. Thus, no other party (such as the government) has the locus standi to participate in the arbitration proceedings as it was and remains excluded from the contract through privity of contract. It cannot rely on another party’s right to refer a matter to arbitration neither can it enforce rights that do not accrue to it.
“In the letter from government legal representatives dated May 4 2021, which letter is attached. Reference is made to a sale of shares agreement between the government of Zimbabwe and Mr FCM Mutanda through various vehicles. It is common cause that this is an agreement that does not involve either of the parties that are now before arbitration, namely the trust and CHL. The government has not stated what interest it has in CHL simply because it has no such interest. It never acquired any shares in CHL which is why the share certificates have only two parties being the trust and CHL.
“It must also be noted that the sale of shares agreement that the government of Zimbabwe refers to, has its own dispute resolution clause which can be utilised should the government have the need to do so. The process is materially different from that outlined in the shareholders’ agreement between the trust and CHL and more importantly, it points to the fact that the government of Zimbabwe is not without recourse (in the event that it has issues with CHL or any other party).
“It is pertinent to point out that the validity of the sale of shares agreement is in dispute. However, this is a matter which can only be determined through a different forum given that the subject matter of this current dispute is the shareholders’ agreement.
“In light of the above, it is submitted that the government and indeed any other party apart from the trust and CHL, are strangers to the shareholders’ agreement and, therefore, cannot sit at the arbitration table in a matter arising from the same.”
“Sight must not be lost on the basis of the arbitration proceedings. This is abundantly clear from the shareholders’ agreement and the notice of commencement of proceedings. This dispute centres on the rights emanating from such agreement of which the government of Zimbabwe is not a party to. It must be precluded from clouding issues and prolonging the matter whereas it can present its own case without seeking to ride on the rights of another party, which rights it has no entitlement to.
“Consequently, the preliminary point must be upheld with costs being borne by the government.”
In its notice of response, government said: “It is common cause between the parties that the company fell into financial difficulties. The company was at the time listed on ZSE. Its major shareholder was Mutanda through a variety of trusts and companies that were ultimately controlled by him.
“When the company fell into difficulties, it approached the government of Zimbabwe for assistance.
“The government of Zimbabwe took the view that the pharmaceutical industry was strategic and the country should continue to have a significant manufacturer of pharmaceutical drugs and products.”
Mutanda refuted the claims that Caps asked for government’s rescue and paid off debts (both in Zimbabwe dollars and United States dollars) that he and his company previously owed locally and abroad. “I refute these claims and put you to task to prove your claims, which I submit are false and malicious, but seek to slander my person and then get me eliminated through unlawful extra-judicial assassination.”
He said key to the dispute was “absence of post-independence disarmament, demobilisation and reintegration of former Zipra combatants that led to the confiscation of ZPRA properties, Gukurahundi, a Cold War era conflict, my divestment from Caps, forfeiture of my assets, including cash and State sponsored assassination attempts.”
The letter was copied to State Security minister Owen Ncube, Central Intelligence Organisation director-general Isaac Moyo, Zimbabwe Defence Forces Commander Philip Valerio Sibanda and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya.
In a letter to the chairman of the Commercial Arbitration Centre (CAC) dated May 24, 2021, Mutanda through his lawyers from Mberi, Tagwirei and Associates, said government had no justification to be part of the arbitration processes that only involved Caps Pharmaceutical Trust and Caps Holdings Limited.
He said other parties were only cited as “parties to the proceedings”.
Mutanda said he was concerned that in spite of his position, an arbitrator was appointed without his involvement and in addition was not happy with the inclusion of other respondents, the government and Caps (Pvt) Limited.
CAC chairman Muchadeyi Masunda said: “Mutanda is an interested party, through certain corporate entities which are either beneficially owned or controlled by him and/or his family, in an arbitration case involving the Industry and Commerce ministry and eight other parties.”
Ebrahim was duly appointed as the arbitrator by the CAC, with the concurrence of the other interested parties.
“In the course of the pre-arbitration hearings which are currently being arranged prior to the commencement of the actual case in earnest in July 2021, the parties to the dispute are entitled to raise any points in limine for consideration and determination by the arbitrator. In this particular instance, Mr Mutanda is querying the locus standi of; inter alia, the RBZ,” Masunda said.
He added that the presiding arbitrator will invite the parties’ respective legal practitioners to address him on the point in limine which has been flagged by Mutanda. “There is, therefore, nothing unusual with the course of action taken by Mr Mutanda as he is well within his rights to do so. He has every right to be heard just like the other parties to the dispute.”
Mutanda is demanding that the arbitration proceedings between CHL and the trust be immediately stopped as it is not opposed to the relief that is being sought and has made this expressly clear from as far back as November 2020.
In its response filed on June 6, 2021, the government said it had a “real and substantial interest in the dispute between Caps Holdings Limited and Caps Pharmaceuticals (Private) Limited insofar as it relates to Caps (Private) Limited. -Newsday