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Controller and Auditor General (CAG) Ludovic Utuoh
By The Citizen Reporter
Posted Monday, September 15 2014 at 09:39
In Summary
The share certificate that shows the Malaysian incorporated company, Mechmar Corporation Berhad, holds 70 per cent of the IPTL and is still the registered proprietor of the shares-which have become the centre of controversy in the alleged acquisition of the Tegeta power plants by Pan Africa Power Solutions Tanzania Ltd (PAP).
Dar es Salaam. After nearly seven months since the Independent Power Tanzania Ltd (IPTL) acquisition and the escrow account saga emerged, the original Mechmar's share certificate has been presented to the Controller and Auditor General (CAG) Ludovic Utuoh, The Citizen can authoritatively reveal today.
The share certificate that shows the Malaysian incorporated company, Mechmar Corporation Berhad, holds 70 per cent of the IPTL and is still the registered proprietor of the shares-which have become the centre of controversy in the alleged acquisition of the Tegeta power plants by Pan Africa Power Solutions Tanzania Ltd (PAP).
The certificate was issued on November 5, 1994 and shows that the capital injected by the Merchmar directors was Sh5 billion-divided into 1 million shares, each valued at Sh5,000.
Just hours after the IPTL's 70 per cent share certificate certified copies were presented to CAG, Mr Utuoh sent his team of auditors to Standard Chartered Hong Kong, to verify the authenticity of the presented copies and the original one, currently in the custody of the bank.
The team of auditors, according to reliable information obtained by The Citizen, left for Hong Kong on Saturday and are expected to be back in Dar es Salaam before the end of this week.
"It is true we have received the copy, but seeing is believing… this is a very sensitive matter; that's why we're going there to verify every details before concluding our final audit report," one senior auditor who is involved in the auditing of IPTL saga told The Citizen yesterday under the conditions of anonymity because he is not authorised to disclose details to the media.
The whereabouts of the share certificate of 70 per cent IPTL share featured heavily during the CAG auditing, whereby Mr Harbinder Singh Sethi, who is the executive chairman of PAP, failed to present the certificate to prove that he truly bought the shares as claimed.
According to company laws, a share certificate is one that is issued by a the firm certifying that on the date it is issued, a certain person or persons are the registered owners of the shares in that firm. It contains names and addresses of shareholders, number of shares held, the class of shares and the amount paid or treated as paid on acquiring those shares.
Standard Chartered Bank Hong Kong (SCBHK) presented the certified copies of the original certificates, after CAG team asked for any party that claims to have legality on owning IPTL's 70 per cent to present documents as a proof of the ownership, according to details gathered by The Citizen.
Background
In 2008, SCBHK appointed Martha Kaveni Renju as receiver over the entire ordinary issued share capital of IPTL, which includes shares held by Mechmar and those of VIP Engineering and Marketing Ltd. Following her appointment, Mechmar or its directors no longer had any right to deal in the shares in IPTL.
In 2010, Ms Renju applied to the High Court in the British Virgin Islands seeking orders restraining the completion of the purported sale of Mechmar's shares in IPTL to an offshore company called Piper Link. The application succeeded. A summary judgement against Piper Link was issued on April 11, 2011.
It is alleged that Mechmar directors attempted to sell Mechmar 70 per cent ownership in IPTL to an offshore company called Piper Link in the British Virgin Island in 2010 and that this attempt was in breach of the share charge in favour of SCBHK, according to court documents seen by The Citizen.
According to the court documents, the share certificates in question were delivered by Piper to the High Court in the British Virgin Islands in accordance with an earlier freezing order and order for custody dated November 8, 2010.
In parallel proceedings in Malaysia, the High Court granted an interim injunction on October 4, 2010, preventing any dealings by Mechmar in its shares in IPTL.
This was followed by a restraining order granted by consent on August 12, 2011, preventing Mechmar from dealing in its shares in IPTL until the redemption of Standard Chartered's outstanding debt estimated to be $146 million.
Both the BVI and Malaysian jurisdictions fully recognised SCB's security over Mechmar's shares in IPTL and the legal rights of the share receiver.
But, asked by The Citizen in March, this year, how PAP could have acquired IPTL in 2010, when it had not even been registered, Chief Legal Counsel Joseph Makandege said: "Mr Harbinder Singh Sethi first came as a custodian in 2010 to rescue the IPTL after its shareholders, Mechmar of Malaysia and VIP Engineering and Marketing, got involved in a series of legal disputes.
"In the wake of the disputes, the Malaysian shareholders feared coming to Tanzania to manage their businesses. They had to find someone who would act as caretaker of their 70 per cent shares in IPTL-and that person was Mr Sethi. They gave him all the necessary documents, which he presented to the relevant Tanzanian authorities."
Mr Sethi developed an interest in acquiring IPTL in 2011 but he could not do so because of the delay in incorporating PAP.
According to Mr Makandege, the Malaysian shareholders were in a hurry to let go of their shares, though, and they chose to sell them to an offshore company, Piperlink, which was incorporated in the British Virgin Islands, before the end of 2010.
But, other documents presented to Business Regulatory and Licensing Authority (Brela), Piper Link, which used the same address as IPTL in Tanzania, is alleged to have bought 70 per cent share of Merchmar at the price of Sh6 million in September, last year.
Piper Link then sold the 70 per cent share to PAP in October, last year, at the price of $300,000 (Sh500 million)-three weeks after it allegedly bought them from Mechmar.
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