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National

Court protects board members

Binds government to provide reasons for terminating them

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SUED GOVERNMENT— Mhango

The High Court Wednesday delivered a landmark verdict outlawing the tendency by government of removing people from parastatal board positions without giving them any reason.

Delivering a judgement in a case in which former Escom chairperson Chokani Mhango was challenging his removal from the position, Supreme Court of Appeal judge Dingiswayo Madise, who heard the matter as a High Court judge, has ordered government to remove that provision from its contracts to parastatal board members.

According to Madise, the law in section 43(2) of the Constitution clearly states that every person shall be furnished with reasons in writing for administrative action where his or her rights, freedoms, legitimate expectations or interests are affected.

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He said looking at the evidence and the law, the court found that the Comptroller of Statutory Corporations acted outside the law in the way Mhango was removed as Escom chairperson and made to be chairperson of the National Economic Empowerment Fund (Neef).

The judge has since ordered the government to remove the clause which says that “government reserves the right to terminate your appointment at any time before the end of the said tenure”.

The clause further says that such termination can be in writing or through a radio announcement.

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“The termination can also be through the dissolution of your board. Whatever the case, government is not bound to give reasons for its decision,” the clause says.

According to Madise, the reasons are supposed to be in writing and not via a radio announcement.

“This is no longer a one-party state. It will be an affront to the supreme law of the land if the terms of the appointment stipulated that one can be removed without giving reasons and via a radio announcement.

“If such provisions are allowed, there is room for abuse by the defendants who are public offices. I agree with the claimant that the decision to terminate his chairmanship at Escom was unfair, unreasonable, irrational and ultra vires,” the judgement reads.

The court has since invalidated Mhango’s removal as Escom chairperson.

Mhango was seeking the court’s remedy by way of Judicial Review against the decision by the Comptroller of Statutory Corporations and Secretary to the President and Cabinet (SPC) who he argued acted in violation of the constitutional principles of transparency and accountability; and acted without and in excess of their jurisdiction when they removed him from the Escom board just one year into his two-year contract.

According to Mhango, the two made a decision that was not in compliance with section 169 and 176 of the Companies Act; did not comply with the Memorandum and Articles of Association of Escom; and was not in accordance with section 164 of the Constitution and rules of natural justice.

He was appointed Escom board chairperson on October 6, 2020 for a period of two years running from September 23, 2020 to September 22, 2022.

But on June 2, 2021, Mhango received a letter from the Comptroller of Statutory Corporations informing him of his termination as Escom chairperson and board member and appointing him as Neef chairperson.

In his sworn statement, Mhango claimed that after assuming duties, a quick review of the status of Escom determined that it was insolvent and key personnel were required.

He said the finding was communicated to Vice-President Saulos Chilima in his capacity as Minister Responsible for Public Sector Reforms that time and the SPC.

According to Mhango, Escom board through a public notice called for qualified candidates to fill in the vacancies including that of Chief Executive Officer and Chief Operations Officer but that he then advised the Comptroller of Statutory Corporations and SPC to withdraw the advertisements.

Mhango then wrote to the SPC highlighting his concerns about the hostility the advert had been met with at Capital Hill.

“When the positions were re-advertised, interviews were held on 01/06/2021 and the 1st defendant (Comptroller of Statutory Corporations) suggested that the job be given to someone who had not emerged top during the interviews; he declined to accept the instruction.

“On 02/06/2021, he received a letter from the 1st defendant informing him of his termination as Escom chairperson with no reasons for removal and appointment as Board Chairperson of National Economic Empowerment Fund with immediate effect. Both the termination as Escom Chairperson and appointment as Neef Chairperson were declined by way of a letter,” the judgement says.

In July last year, Mhango wrote government challenging the decision to remove him from the Escom board.

Through his lawyers, Mhango argued that Escom is a limited liability company under the Companies Act 2013 and that directors of the company cannot be removed from office without compliance with the provisions of Section 169 of the Companies Act.

Lawyer Modecai Msisha of Nyirenda and Msisha represented Mhango in the case.

On September 23, 2020, President Lazarus Chakwera appointed Mhango as chairperson of Escom Board with seven others being members.

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