Hubert Chiwara v Zimbabwe Power Company (Private) Limited

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/133/2021
HARARE, 19 MAY 2021
CASE NO. LC/H/27/20
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IN THE LABOUR COURT OF ZIMBABWE      JUDGMENT NO. LC/H/133/2021

HARARE, 19 MAY 2021	                              CASE NO. LC/H/27/20

AND 10 SEPTEMBER 2021

In the matter between:-

HUBERT CHIWARA						Applicant

And

ZIMBABWE POWER COMPANY				Respondent

(PRIVATE) LIMITED

Before Honourable B.S. Chidziva, Judge

For Applicant		Mr B. Magogo (Legal Practitioner)

For Respondent		Mr T.S. Manjengwa (Legal Practitioner)

CHIDZIVA, J:

The brief facts of the matter are that the Applicant was employed by the Respondent as a Finance Manager. The Applicant was eventually charged with serious misconduct in terms of section 4 (a) of the Labour (National Employment Code of Conduct) Regulations SI 15 of 2006. It was alleged that he committed various acts of conduct or omission inconsistent with the fulfilment of the express or implied conditions of his employment. A disciplinary hearing was conducted, he was found guilty and dismissed from employment. The charges are as follows:

(a).	Charge 1

In 2013 the Applicant permitted the drafting of a Request for Proposals (RFPs) for the Gwanda Solar Project without the ZPC (Pvt) Ltd having undertaken a feasibility study as outlined in paragraph 6637 of Annexture ‘A’ (Audit Report).

(b).	Charge 2

The Appellant failed to ensure that prior to payments being made to Intratek an advance payment guarantee to the company was available. This advance payment guarantee was required in terms of the contract. The Appellant therefore breached section 45 (a) and 14 (3) of the Public Finance Management Act and thus he acted in violation of his contractual obligations.

(c).	Charge 3

The Appellant allowed payment to Fruitful Communications without ensuring their proper appointment. He engaged Fruitful Communications to carry out media campaigns work without following procedures stipulated in Section 32 of the Procurement Act.  By so doing he therefore breached section 45(a) (c) of the Public Finance Management Act.

After the disciplinary hearing the Appellant has filed an appeal to this court on the following grounds.

The Disciplinary Authority erred in finding in the absence of evidence that the Respondent’s Board had resolved to discipline the Appellant.

The Disciplinary Authority erred in failing to find that there was no practice or system of holding feasibility studies prior to crafting of a Request for Proposals.

The Disciplinary Authority erred and misdirected itself in failing to find that the provision of the banking guarantee prior to payment to the contractor had been partially waived by the Substantive Managing Director following upon pressure from the relevant Minister.

The Disciplinary Authority erred in ignoring evidence that the Appellant objected to the making of payments without an advance payment guarantee.

The Authority erred in finding him guilty of a procurement process relating to Fruitful Communications when his involvement was merely of authorising payment it being common cause that the procurement process for the same was not done by him.

As regards the penalty, the Disciplinary Authority grossly misdirected itself in its exercise of discretion such that no reasonable tribunal could have arrived at such a decision by settling for the ultimate penalty of dismissal. The Authority paid lip-service to the totality of the mitigatory circumstances raised by Appellant relating inter alia, the evident ministerial pressure exerted on Appellant and his superior.

In response the Respondent submitted that:

(i).	The deponent to the Respondent’s affidavit of evidence clearly indicates that he was duly authorised to depose to the affidavit. The attachment of a board resolution is not compulsory. Where no contrary evidence has been adduced the omission of company resolutions cannot be fatal.

(ii).	In the hearing the Appellant admitted during cross examination that there was need for a feasibility study to be conducted prior to the production of the RFP document as this is the best practice. It emerged during the hearing from the employees’ side that conducting a feasibility study was the ideal best practice, however due to laxity a wrong practice had been adopted in other projects where a feasibility study would only be conducted after the drafting of the Request for Proposals resulting in irregular expenditure. A feasibility study was essential in that it would inform the respondent’s decision as to whether it was worth investing in a certain project.

(iii).	The disciplinary authority did not err in failing to find that the provision of the bank guarantee prior to the payment to the contractor had been partially involved by the Managing Director following upon pressure from the relevant Minister. The Appellant was not called to answer for the misconduct of the Managing Director. The charges relate to the payment which the Appellant authorised contrary to the express provisions of the contract between Intrateck and the Respondent. The Respondent was empowered in terms of the Public Finance Management Act to object in writing to any unlawful instruction which was likely to result in wasteful expenditure.

(iv).	The Disciplinary authority in its decision applied its mind to the alleged objection to the making of payments in the absence of an advance payment guarantee. The evidence only shows that the Appellant was simply giving a reminder of the production of the bank guarantee so as to sanitize the loophole which had been created in making payment prior to the supply of the bank guarantee. There were payments that were made before the Appellant started issuing reminders relating to the need for the bank guarantee.

(v)	The Appellant’s role was not that of merely authorising payment. The Appellant was in charge of the procurement department at the time of the engagement of Fruitful Communication. During cross examination the Appellant admitted that the engagement of Fruitful Communication was in violation of the relevant procurement provisions such that any payments which subsequently followed were irregular.

(vi)	Section 7 of the National Employment Code acknowledges the common law position that summary dismissal is ideal where one is found guilty of conduct inconsistent with express or implied conditions of employment. Payment of USD $2 000 000-00 to Intrateck in the absence of an advance payment guarantee and drafting of a Request for Proposal without a feasibility Study and the lack of diligence in the appointment of Fruitful Communications without going to tender contrary to the provisions of the Procurement Act and Regulations was a clear repudiation of Applicant’s employment contract which warranted a penalty of dismissal.

It is common cause that:

The charges against the Appellant rose as a result of the findings of an audit which was conducted at the instance of the Auditor General. This came about as a result of the request by the Government of Zimbabwe through the Ministry of Energy and power for a special audit focused on a forensic investigation into the operations of ZESA Holdings and its subsidiaries which included the employer in casu.

In 2013 the Applicant allowed drafting of the Request for Proposal (RFP) a document for the tender of the Gwanda Solar Project without the company undertaking a feasibility study.

USD $2 000 000-00 was paid to Intratek Zimbabwe (Pvt) Ltd without the contractor having provided an advance payment guarantee as required in terms of the contract signed by the Respondent and the contractor. The advance payment guarantee was for purposes of covering the pre-commencement work that should have been completed within a period of 180 days of payment.

Applicant was in charge of procurement at the time Respondent engaged Fruitful Communications to carry out Media campaigns.

What is to be decided is whether Appellant committed alleged offences or not. The Respondent in its papers filed of record had raised a point in limine to the effect that the appeal was invalid because it had been filed out of time. However, when the parties appeared for hearing Mr Manjengwa indicated that:

The late filing of response had been condoned under case number LC/H/APP/214/20.

Condonation of late filing of appeal had be granted under case number LC/H/APP/205/20.

Authority To Discipline Appellant

It is Appellant’s submission that a corporate’s authority to discipline should be done by authorised representatives of the company. The auditors in their recommendation (page 417 on paragraph 6650) recommended that:

“ZPC’s and ZESA Holdings Board were to take disciplinary action against the following employees for failure to carry out their duties effectively and or non – compliance with the laws and regulations of Zimbabwe.”

It is appellant’s submission that:

ZPC was not involved in the proceedings and thus his employer was not

involved.

There was no ZPC Board resolution. All disciplinary proceedings were carried out by ZESA Holdings (Pvt) Ltd and not the Appellant’s employer.

It was Respondent’s response that deponent to Respondent’s affidavit of evidence shows that he was authorised to depose to the affidavit. It was also further submitted that attachment of a board resolution is compulsory.

It has not been disputed that:

(i)	The auditors recommended that ZPC and ZESA Holding Board were to take disciplinary action against the appellant.

(ii)	Appellant is an employee of ZPC which has its own board.

(iii)	There is nothing on record to show that ZPC was involved in these proceedings.

(iv)	Mr Chikwenhere who represented the employer is not employed by ZPC.

In the case of Tapson Madzivire & 2 Ors v Misheck Brian Zvarivadza & 2 Ors SC 10/96 the court held that a company being a legal personae from its directors cannot be represented in a legal suit by a person who has not been authorised to do so.

In the case of Madzivire & Ors v Zvarivadzo & Ors HH 74/2006 it was also held that:

“A company, being a legal person from its directors, cannot be represented in a legal suit by a person who has not been authorised to do so. This is a well – established legal principle which the courts cannot ignore. It does not depend on the pleadings by either party. The fact that the person is the Managing Director of the company does not clothe him with the authority to sue on behalf of the company in the absence of any resolution authorising him to do so. The general rule is that directors of a company can only act validly when assembled at a board meeting. An exception to this rule is where a company had only one director who can perform all judicial acts without holding a full meeting.”

In this case there is no evidence to show that a board meeting was held to appoint Mr Chikwenhere to represent the employer  in prosecuting the disciplinary hearing. There is no evidence to show that a board meeting was held by ZESA and ZPC in which it was resolved that Mr Chiwara should undergo a disciplinary hearing.

It therefore follows that in the absence of such a resolution the Disciplinary Authority erred in finding that the Respondent ‘s Board had resolved to discipline the Appellant.

Practice of Holding Feasibility Studies

The issue to be decided is whether it was necessary to hold a feasibility study before the production of a Request for Proposal (RFP). It is Appellant’s submission that Respondent did not tender any evidence to show that there was a system of undertaking feasibility studies before Request for Proposal (RFP) before implementation. The Appellant in his Heads of Arguments listed the projects where a feasibility study was done prior to implementation of the contract but after the drafting of an RFP (Page 7 of Respondent’s Heads of Argument). One of such projects is the Dema Diesel Plant.

During the disciplinary hearing the Appellant stated that Minister’s Udenge, Mavhaire, and Mangoma had said that they did not say that a feasibility study should not be done. The following are quotes from the hearing.

HC	“They did not say that it should not happen” (Page 475).

HC	“The only thing that he Manging Director and the Minister said is that decided he wanted to do the right thing.” (Page 475).

“The Managing Director was actually giving directions and wanted to do it before the RFP” (Page 475).

TM	“So were you then with the Managing Director that the feasibility study should be done before the RFP?”

HC	“Its technical and was not necessary” (Page 476).

From the responses Applicant gave in the disciplinary hearing it is clear that the Managing Director wanted the feasibility study to be done before the RFP. However, Appellant said that it was technical and it was not necessary. The Appellant was the Finance Director of Respondent, it was his duty to ensure that there were no irregularities. It was also his duty to ensure that all internal controls like the feasibility studies were implemented. It was also his responsibility to find out whether the project was economically viable.

The auditors in their report (Pg 390 para 6575) stated that:

“Through discussions which we held with Messrs Mharadze Fambi and Chikari to obtain an understanding of the procurement procedures followed by ZPC, we gathered that ordinarily ZPC should have a feasibility study carried out by an independent consultant prior to the floating of RFP.”

In paragraph 6576 it was also stated that:

“Mr Chiwara and Engineer Fambi also stated that the by – passing of the feasibility study and its inclusion in the contract	 with Intratek Zimbabwe was not normal procedure …”

It has been established that the normal procedure that would protect the company’s finances was to carry out a feasibility study before crafting an RFP. The fact that other projects were carried out without a feasibility study does not mean that, that was the normal procedure.  It is clear that the Managing Director wanted things to be done the correct way but Applicant said that a feasibility study was technical and was not necessary. The Managing Director’s view that things should be done the correct way shows that the Disciplinary Authority did not err by finding that there was a practice or system of holding feasibility studies before crafting a Request for Proposal.

Advance Payment Guarantee

It is the Appellant’s submission that the Disciplinary Authority erred by failing to find that the provisions of the banking guarantee prior to payment to the contractor had been partially waived by the Substantive Managing Director following pressure from the relevant Minister. It is common cause that the contract that was signed by the company and the contractor stated that the company would make payments related to pre-commencement of work after the contractor had provided an advance payment guarantee. Appellant made payments amounting to US$ 2 million without complying with this condition.

The Applicant also stated that he had made the payments due to the partial waiver that was made by the Managing Director who was under undue influence from the Ministers.

There is nothing on record to prove the waiver. Even if the waiver had been put in writing it was his duty as a finance officer to protect the Respondent from any wasteful expenditure. Appellant made payment contrary to the express provision off the contract between Intratek and the Respondent.

The Public Finance Management Act [Chapter 22:19] gave him the power to object to any unlawful instructions. Section 14 (1) of the Act states that:

“(i)	If

(a)	an accounting officer is directed by a Minister or Deputy Minister to order or commit a payment which such accounting officer believes he or she is not authorised to make in terms of any enactment he or she

shall submit in writing to the Minister or Deputy Minister as the case may be, his or her objections and reasons therefore.”

Section 14 (2) goes on to state that if despite the objections the Minister insist in writing that the accounting officer should comply the officer will comply and then submit a written report to the Minister, the Accountant General and the Secretary to cabinet.

Appellant did not comply with the Public Finance Management Act. If there was any pressure exerted on him, he was supposed to object to any instruction that would result in any wasteful expenditure. The Disciplinary Authority therefore did not err in its findings on the issue of the Bank Advancement Guarantee.

Procurement Process

It is the Applicant’s submission that the Authority erred in finding him guilty of the procurement process relating to Fruitful Communications when his duty was merely of authorising payment. He submitted that he was implicated because he was just one of the signatories who would approve a transaction after it would have gone through all internal processes. During cross-examination the disciplinary hearing he also indicated that he made payments because of pressures or directive from Ministers Undenge, Mr D. Mutasa, Mr Rugare Gumbo and Tabeth Malunga

(Pg 15 – 16).

Under cross – examination Applicant admitted that the Procurement Department was under his supervision. The following minutes indicate what he said.

TM:	“So in 2013 the Procurement function was squarely within your powers.”

HC:	“Yes, I supervise on behalf of the Accounting Officer, the Managing Director” (pg 17 – 18).

Appellant also admitted that he authorised purchase orders when he very well knew that they were inappropriate. He also admitted that they were making payments without orders. Work was being done without orders and he would sign the orders after service would have been received.

The Appellant therefore admitted that the engagement of Fruitful Communications was in violation of the procurement requirements. At the relevant time he was in charge of procurement. It is therefore this court’s finding that the disciplinary authority did not err in finding him guilty of this charge.

Penalty

Appellant has also argued that the disciplinary authority erred by settling for a penalty of dismissal. In the case of Mashonaland Turf Club v Mutangadura SC 5/12 Ziyambi JA held that:

“In the absence of a misdirection or unreasonableness on the part of the employer in arriving at the decision to dismiss an employee, an appeal court will generally not interfere with the exercise of the employer’s discretion to dismiss an employee found guilty of a misconduct which goes to the root of the contract of employment.”

In its considerations the disciplinary authority was correct in finding that political pressure could only be mitigatory. The Applicant had the Public Finance Management Act to guide and protect him. He could have raised his objections and report to the Accountant General, Auditor general and the Secretary to Cabinet.

Section 86 of the Public Finance Management Act states that:

“Financial misconduct is a ground for the dismissal, or other disciplinary section prescribed under section eighty-seven against, a member or person referred to in subsection (2) or (3) notwithstanding any other enactment.”

It is clear that an employee who is found guilty of an act of financial misconduct is bound to be dismissed.

It is my view that the misconduct went to the root of the contract of employment and thus dismissal was justified.

In the result, I make the following order:

(1). The first ground of appeal is allowed.

(ii). Grounds 2, 3, 4, 5 and 6 be and are hereby dismissed with costs.

Devittie, Rudolph & Timba, applicant’s legal practitioners

Chihambakwe Mutizwa & Partners, respondent’s legal practitioners