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Knives out for Madondo

Redwing Mine workers have lost confidence in the mine’s corporate rescue practitioner Dr Cecil Madondo, who is facing criminal charges, and want him immediately replaced.

The workers have lost faith in Dr Madondo’s suitability to turnaround the company and protect their interests following his arrest just over two weeks ago on allegations of fraudulent conduct.

Dr Madondo, who is the managing director of corporate rescue specialists Tudor House Consultants (Pvt) Ltd, first signed exclusivity mining agreements with a company called Probadek Investment in respect of Redwing Mine covering 132 gold mining blocks, 8 copper mining blocks and any other mining claims belonging to Redwing Mine.

Well knowing that he had already entered into an agreement with Probadek Investments, Dr Madondo allegedly entered into another agreement Prime Royal Private limited giving them the same mining block.

It is alleged that in December, another prospective investor, Betterbrands Mining, entered into agreement with Dr Madondo, giving them the same mining blocks.

Consequently, the complainant, Probadek Investment reportedly suffered a prejudice of US$260 000 in investment capital and fees paid in terms of the transaction due to Dr Madondo’s conduct.

It is against this background that workers want Dr Madondo replaced as the turnaround strategist. Metallon Corporation-owned Redwing Mine was placed under his control in July last year after an application by the workers.

Through their lobby group, Zimbabwe Diamond and Allied Minerals Workers Union, the workers have already started the process of looking for another corporate rescue practitioner.

ZDAWU secretary general Mr Justice Chinhema said in an interview with this publication that they want to replace Dr Madondo with someone who will safeguard their interests and the company’s.

“What we have agreed is that we need to look for another corporate rescue practitioner who can safeguard the interest of the workers and the company,” said Mr Chinhema.

“Our lawyer was at the office of the master of High Court looking at the list of rescue practitioners so that we can do our selection. That will probably happen on Monday.”

Chinhema said at the time the company was placed under corporate rescue management, it had 800 workers who were owed about US$14 million backdated to 2012.

“We want all the money outstanding paid in full while the security of our workers is safeguarded,” said Mr Chinhema.

Redwing Mine is located in Manicaland Province in eastern of Zimbabwe, about 20 kilometres northeast of the city of Mutare and 265 kilometres southeast of Harare. It used to be one of the largest gold producers in the country.

Its parent company, Metallon Corporation used to be the largest producer of gold in the country. Apart from Redwing, Metallon also owns How Mine near Bulawayo. Shamva mine was sold to Kuvimba Mining House, jointly owned by the Government and a private investor.

The Insolvency Act (Chapter 6:07), in line with international norms and standards prescribes two gateways to entry into corporate rescue and supervision namely voluntary procedure and compulsory produce.

In terms of S122 a company can resolve to voluntarily commence corporate rescue while in terms of S124 an affected person may apply to court for an order placing a company under supervision and corporate rescue.

Voluntary corporate rescue proceedings are launched by the company passing a resolution to begin corporate rescue proceedings and place the company under supervision.

The voluntary gateway seems to be the most important and progressive of the two as it is launched by the board which has all the information at its disposal to timeously act at the onset of financial distress as success of corporate rescue largely depends on early interventions secondly, the voluntary route is cheaper as it requires no court process and the associated pitfalls of protracted legal battles. Herald

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