……as fleeced investors lose millions
MASVINGO – High Court Judge Sunsley Zisengwe has dashed hopes of hundreds of investors of recovering US$6m fleeced in a Ponzi scheme ran by Member Chipamba by removing Lee’s Inn Hotel from judicial management and returning it to its two shareholders.
Zisengwe removed the Masvingo-based 103-bed hotel from rehabilitation on Tuesday as 1 107 creditors are saying that they are still to be paid what they are owed.
Sitshenjisiwe Msiza who is the provisional liquidator initiated the hotel’s removal from liquidation. She approached the High Court in Masvingo and submitted that the hotel had cleared dues hence provisional liquidation must be lifted.
Her claim was buttressed by a letter written by Vusimozu Gapara the Additional Master of The High Court responsible for Insolvency and Minors which claimed that Lee’s Inn has cleared its debts.
Creditors who spoke to The Mirror expressed shock and ignorance at the development. They wondered how a company that was at the brink of liquidation a year ago is pulled out of judicial management. Lee’s Inn which was struggling like the rest of the hospitality industry was on judiciary management for the last 10 years since 2013.
Legal experts told The Mirror that a company cannot be removed from rehabilitation or liquidation without adequate notice to creditors.
Chipamba fleeced thousands of people through probably the worst pyramid scheme in the history of Zimbabwe and he bought properties in Zimbabwe and South Africa including Lee’s Inn using the money. The scheme collapsed when The Mirror broke the story in 2013 resulting in investors losing as much as US$800 000 each. The investors were promised interest of up to 300% in 30 days and this saw some selling houses and pensioners depositing their life savings to join the scheme.
Some creditors are reported to have committed suicide while others died of stress-related illnesses after losing their money.
The hotel’s two shareholders Chipamba and his wife Linda nee Dehwa have not yet started showing up at the hotel although court documents indicate that the property is now back in their hands. Sources said Chipamba was lying low for fear of renewed court fights and to manage possible public anger.
Chipamba who was recently chucked out of Cherryweek Building for failing to pay rent for a lodge he was running, refused to comment and referred The Mirror to documents at the master of High Court.
A Mirror reporter who visited the Master of High Court offices in Harare this week was shown files which legal officers described as shambolic. The files had no list of creditors, no amounts owed, no amounts paid and the 2020 file was missing. A lawyer who declined to be named said the creditors’ court case was handled poorly hence the company was removed from judiciary management. He said that creditors recouped nothing from the pyramid scheme and advised them to appeal.
Ironically Msiza told The Mirror that she will remain a judiciary manager at Lees Inn even though the High Court has lifted judiciary management. She said she will continue as judiciary manager there on behalf of another Chipamba company, McDowells International which fleeced investors.
When The Mirror pressed her to clarify her position Msiza said she had spent the whole day at a funeral and was too tired and switched off her phone.
Earlier, Msiza said she did not know how much creditors were owed by McDowells and needed to go back to the files and check. She also did not know how much the company had paid creditors.
McDowells had a number of judiciary managers and one of them Wensley Militala died when he was at the brink of liquidating the company. He argued that the hotel had no capacity to pay back creditors hence it should be sold and proceeds distributed among them.
“It is clear from the founding papers and the attachments thereto that Lee’s Inn [Private) Limited is no longer insolvent as it has cleared all its debts. It is reported to be trading normally as a going concern. It is still under provisional liquidation and without a return date as is the case now, it risks staying in provisional liquidation in perpetuity.
“In the opinion of the Master that state of affairs is undesirable as it keeps the company legally hamstrung and unnecessarily immobilized from realizing its full potential as a player on the market. There is no reason for the company to proceed to final liquidation since it has cured itself,” read part of the Master’s statement to the court.
Judge Justice Zisengwe ruled that Lee’s Inn Hotel be returned to Chipamba and his wife.
“It is ordered that; The order placing Lee’s Inn Hotel (Private) Limited under Provisional Liquidation be and is hereby discharged Sithenjisiwe Msiza be and is hereby discharged from her role as Provisional Liquidator of Lee’s Inn Hotel (Private) Limited.
“The control of Lee’s Inn Hotel (Private) Limited be and is hereby returned to its board of directors namely Member Chipamba and Linda Dehwa. Costs of this application shall be born by Lee’s Inn Hotel (Private) Limited.
The late Wensley Militala who was appointed on November 2, 2013 as a Judicial Manager to represent the two companies, McDowell’s International and Lee’s Inn Private Limited recommended that both companies be liquidated as they were insolvent.
On December 7, 2016 under HC 7258/16, Chipamba and his wife obtained an order from the High Court removing Militala as the provisional liquidator.
He was then removed on December 12, 2016, and Sitshenjisiwe Msiza was appointed the new Judicial Manager
Militala appealed against the decision but his appeal was withdrawn by his Legal Practitioners Messrs G.N Mlotshwa and Company before Chief Justice Luke Malaba on December 1 2017. The appeal was withdrawn because it was defective. The court told him to make application for condonation if he was still interested to pursue the matter.
He fell ill and died. Two years lapsed without any application being made.
The Mirror will serialize the story on who was paid and how. Don’t miss the next issue for more details.