Nyasha Stanley Kazhanje v The State

### Preamble
1
HH 289-21
HACC(A) 17/20
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NYASHA STANLEY KAZHANJE

versus

THE STATE

HIGH COURT OF ZIMBABWE

CHATUKUTA & CHIKOWERO JJ

HARARE, 27 March 2021 & 14 June 2021

Criminal  Appeal

T W Nyamakura with G Mhishi, for the appellant

B Vitto with T Mapfuwa, for the respondent

CHIKOWERO J: The appellant was convicted of corruptly concealing from a principal, a personal interest in a transaction as defined in s 173 (1)(a)(i) of the Criminal Law (Codification and Reform) Act, [Chapter 9:23] (“the Code”). He was sentenced to 3 years imprisonment of which 2 years imprisonment was suspended on the usual conditions of good behaviour, to leave an effective sentence of 1 year imprisonment. He appealed against both conviction and sentence.

The facts proved were that from 22 October 2015 to July 2018, the appellant chaired the Zimbabwe Power Company (Private) Limited Board of Directors’ meetings which deliberated on and approved a contract in relation to the engineering, procurement and construction of the 100 megawatts Gwanda Power Station Solar Project (the project) between the Zimbabwe Power Company (Private) Limited  (”ZPC”) and Intratrek Zimbabwe (Private) Limited (“Intratrek”). He did not disclose to the ZPC Board that he had, through his company Terminal Engineers (Pvt) Ltd (Terminal Engineers), rendered consultancy services to Intratrek in respect of the project before he was appointed to the ZPC Board. He had also chaired the board meetings which deliberated on Intratrek’s performance of its obligations under that contract. The court found that appellant should have declared to the Board that he had rendered consultancy services to Intratrek in respect of the project. This would have placed the Board in a position to decide whether he could be allowed to chair the meetings in so far as they related to the agenda item on the project. The court also found that his intention in not disclosing his personal interest was to deceive the Board, which was his principal.

The appellant’s defence was that, he had made the disclosure to the relevant people at the material time. Those were the ZPC Board and the Minister of Energy and Power Development (Mavhaire). The latter was said to have been in the company of his deputy (Mutezo) and the permanent secretary of the Ministry, one Mbiriri.

Seven grounds of appeal were raised against the conviction. At the hearing, four grounds of appeal against the conviction were abandoned as invalid by reason of having been couched widely.

The three remaining grounds were as follows: Firstly, the court erred in disregarding the exculpatory evidence of Saidi Sangula without setting out in detail why such evidence was not credible. Secondly, the court erred in failing to find that no evidence was led to establish the element of prejudice or deception to the principal as required by s 173 of the Code. Finally, the court erred in failing to find that the appellant was not involved in any transaction to which the principal was a party and from which he derived a benefit which he should have disclosed.

The grounds of appeal against the sentence were firstly, that the court grossly misdirected itself in not considering a fine before it imposed an effective term of imprisonment. Secondly, the appellant also sought to impugn the sentence on the basis that the court grossly misdirected itself in not considering community service when it had sentenced him to an effective term of imprisonment of less than twenty four months.

Mr Nyamakura argued that the court did not furnish detailed reasons for rejecting Sangula’s evidence. Sangula was the ZPC Board Secretary and legal advisor for part of the period covered by the charge preferred against the appellant. Counsel argued that Sangula’s evidence exonerated the appellant. It was submitted that Sangula testified that the appellant had disclosed in one of the ZPC Board meetings that the latter had rendered consultancy services to Intratrek before his appointment to the ZPC Board. The Board had considered such past association as irrelevant.

Mr Vito argued that there were sound reasons why the court made adverse findings of credibility against Sangula. This witness was neither clear nor forthright with the court despite him being aware of the requirements of disclosure of interest as espoused in s 173 of the Code, the Articles of Association of ZPC and the Corporate Governance Framework for State Enterprises and Parastatals in Zimbabwe (2010). The finding that Sangula was not a credible witness should not be disturbed on appeal, he submitted.

Counsel for the appellant submitted that the requirements of s 173 (1)(a)(i) of the Code were not proved. He argued that it ought to have been established that the appellant was involved in a transaction in which he had a personal interest in the subject matter and with a deceptive intent. It ought to have been proved that he did not disclose the personal interest to the principal’s prejudice particularly that the appellant would have derived a benefit in so doing. Counsel argued that the facts reveal the existence of two tenders in respect of the project. Both tenders were won by Intratrek. The first related to the period 2013-2014 wherein Intratrek consulted the appellant, through Terminal Engineers, to prepare a bid for submission to the State Procurement Board in response to a tender for the project. The appellant rendered the consultancy services. He had not yet been appointed to the ZPC Board as Director and Chairperson. The tender was cancelled. A second tender was flighted. Counsel argued that the facts show that in respect of the second tender the appellant did not have a contractual relationship with Intratrek. In respect of the second bid, which is contended to be the subject matter of the appeal, the appellant did not have a personal interest in that transaction as is required under s 173. As regards the element of financial gain, counsel submitted that it was common cause that on 21 January 2016, Intratrek paid US$10 000 to the appellant. This was late payment for the consultancy work.

Mr Vito referred us to Madzudzu, Chiwandamira and Bete v State HH 209/18 in arguing that s 173 of the Code creates a corporate governance offence. Counsel disagreed with Mr Nyamakura’s argument that there were two transactions in respect of the project. He argued that what was important was that it was the same project with the same specifications and the fact that the first tender for that project had been withdrawn and then reinstated did not mean that this was now a new project or transaction. The appellant, at the time he chaired the ZPC Board meetings, had a duty to disclose, to the board, his involvement in the project since it remained the same project that he had participated in as a consultant for Intratrek.

Counsel argued that the appellant had a personal interest in the project. The latter had performed consultancy work for Intratrek for which he had not been paid. The appellant did not disclose the potential conflict of interest to the Board. The appellant failed to comply with the duty to disclose, enshrined in s 173 of the Code. The Articles of Association of ZPC also required transparency on the part of the directors. The appellant was aware of this. The minutes of the board meetings proved that appellant had not disclosed to the board his personal interest in the project. A presumption therefore arose, in terms of section 173 (3)(a) of the Code, that his intention was to deceive his principal. The appellant had not adduced any evidence to rebut the presumption that he intended to deceive the ZPC Board.

DID THE COURT ERR IN REJECTING SANGULA’S EVIDENCE?

Despite the wording of what is now the first ground of appeal, it seems to me that what is being attacked is the court’s adverse finding on the credibility of Sangula, a finding based on the facts placed before that court.

As such this court should not disturb that finding unless it is shown that the magistrate’s decision on credibility was wrong. See S v Isolano 1985(1) ZLR 62 (SC) at 64A. Of Sangula, the magistrate said:

“Mr Sangula who was the Corporate Secretary and Legal Advisor would not deny that the accused person had made a declaration. One needs to refer to Sangula’s evidence in greater detail at a later stage.”

In rejecting the evidence of this witness the magistrate said:

“Sangula’s evidence should be regarded as biased. He wanted to support whatever the accused was supporting.”

The evidence of Sangula does not read well. He said that at every meeting of the ZPC Board there was a register requiring the board members to declare any conflict of interest with any item on the agenda. The examination in chief of Sangula thereafter proceeded as follows:

“Q. Did the accused ever declare his interest in Intratrek Zimbabwe (Private) Limited?

That would require that I go through the minutes and I don’t have the set of minutes in front of me to be able to say on this part there was no disclosure, on that part there was no disclosure. I would say though that I do recall in one of the meetings an issue arose involving perhaps Intratrek and at that point, at some point I consulted with these people in my previous life.

Q. Which meeting is that one?

A. As I said I don’t have the minutes and I don’t remember whether that sort of thing was minuted because it was not at that point what we would call a disclosure but it was raised.

Q. Why do you say at that point it was not a disclosure?

A. The view was that it was an issue that happened in history and if it is an issue that happened in history and it doesn’t affect the way you perhaps look at issues now, my understanding is that that wouldn’t be a conflict. I don’t know whether it was but at that time it wasn’t declared as a conflict issue.

Q. So it was not recorded in the minutes?

A. I don’t recall it being recorded. If it was then one would need to peruse the minutes but I don’t recall it being recorded.”

In response to this ground of appeal the magistrate commented that Sangula was not certain, the minutes of the meetings should have corrected him and that he was not a reliable witness.

I consider that, indeed, Sangula was not reliable. The adverse finding on credibility by the magistrate was justified. An assessment of his evidence, the material portion of which I have quoted above, bears this out. He appeared to suggest that appellant made a disclosure in a ZPC Board meeting. But he appeared to also suggest, in the same breath, that it was not in fact a disclosure but a casual reference to some obscure consultancy work having been done for Intratrek by the appellant. I consider that this “exculpatory evidence of Sangula” was properly rejected. Sangula knew what disclosure entailed. As board secretary he circulated the agenda items before every  meeting together with the declaration of interest register. He confirmed that the appellant, as well as the other Board members, were taken through the tenets of corporate governance on being appointed to the ZPC Board. The minutes of the meetings produced by the prosecution demonstrated that appellant did not declare his personal interest in the project and at the meetings of the Board. The magistrate was correct to place reliance on the minutes rather than the ambivalent testimony of Sangula.

DID THE MAGISTRATE ERR IN FAILING TO FIND THAT THERE WAS NO EVIDENCE LED TO ESTABLISH THE ELEMENT OF PREJUDICE OR DECEPTION?

Section 173 of the Code, in material part, reads as follows:

“173 Corruptly concealing from a principal a personal interest in a transaction

Any-

agent who carries out any transaction in connection with his or her principal’s affairs or business without disclosing to the principal that he or she holds a personal interest in the subject matter of the transaction-

intending to deceive the principal…..or

……..

shall be guilty of corruptly concealing from a principal a personal interest in a transaction and liable to a fine not exceeding level fourteen or imprisonment for a period not exceeding twenty years or both.

…..

If it is proved in any prosecution for the crime of corruptly concealing from a principal a personal interest in a transaction, that-

an agent –

…..

failed to disclose to his or her principal a personal interest held by him or her in the subject-matter of any transaction; the agent shall be presumed, unless the contrary is proved, to have done so intending to deceive the principal…..”

Two issues arise from the ground of appeal in light of the provisions of s 173(1)(a)(i) and (3) of the Code. The first is, whether the magistrate was correct in finding that the prosecution had proved the actus reus of the offence charged, namely that appellant had concealed from the ZPC Board that he had rendered consultancy services to Intratrek in connection with the Gwanda Solar Project. The second is, whether the magistrate was correct in effectively finding that the appellant had failed to rebut the presumption that he had not made such disclosure with the intention to deceive the ZPC Board.

I agree with Mr Vito that there was overwhelming evidence that the appellant participated in the ZPC Board meetings relating to the Gwanda Solar Project without disclosing to the Board that he had acted as a consultant for Intratrek.  This was evidenced by the minutes of the ZPC board meetings from 22 October 2015 to 8 May 2018 produced through Ms Tsomondo, the secretary who had replaced Sangula. Tsomondo testified that the appellant did not declare any conflict of interest in all the meetings that she was aware of. Her evidence was in line with the minutes of the board meetings in this regard.

In none of the minutes of the meetings is there a record of the appellant declaring an interest in the project. The Gwanda Solar Project was an agenda item in all the meetings. Further, there was also an agenda item in all the meetings requiring every Board member to declare a conflict of interest. The agenda of each meeting was circulated to every board member before the meeting. None of the Board members, the appellant included, completed the Declaration of Conflict of Interest Register in respect of the Gwanda Solar Project or declared any interest in the project.

In terms of Article 92(1) of the Articles of Association of the ZPC, the appellant was also required to declare his interest in Intratrek vis-à-vis the Project.  A copy thereof was produced at the trial. The article in question reads:

“Contracts

92(1) A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the company, shall declare the nature of his interest at a meeting of the Directors, in accordance with s 163 of the Act.”

This provision is wide. Even if one were to accept that the appellant had no direct interest in the ZPC- Intratrek contract arising from the second tender, the fact that he had been involved as a consultant for Intratrek in preparing a bid for the first tender, through his company, and had not been remunerated for such services places his personal interest in the bracket of indirect interest. He was the major shareholder in Terminal Engineers with the minority shareholders being his daughter, son and late wife. As already noted, there is no record of appellant having declared his interest in any of the meetings of the ZPC Board of Directors. The appellant was familiar with the Articles of Association of the ZPC.

Further, Article 3.20 of the Corporate Governance Framework for State Enterprises and Parastatals in Zimbabwe (2010) (“the framework”) reads as follows:

“A State Enterprise or Parastatal Director is bound to disclose in writing to the Board, the responsible Minister and the Minister of State Enterprises and Parastatals information of material effect to the State Enterprise or Parastatal’s operations, financial status or image which include, but not limited to the following issues-

Disclosure of contracts in which he or she has direct or indirect personal interest which may give rise to conflict of interest such as contracts between the 	SEP and any other company in which a Director or his/her relative has an interest.

Every Director shall withdraw from the proceedings of the Board or Committee when a matter in which he/she has an interest is considered, unless the other members decide that the member’s direct or indirect interest in the matter is trivial or irrelevant” (underling is mine).

The appellant conceded that the Framework was, brought to his attention during orientation. ZPC is a State Enterprise and the framework applies to it.  The appellant was required to make written disclosure to, among others, the ZPC Board. He was aware of this requirement. He did not make such written disclosure. The Board never got an opportunity to decide whether his interest was trivial or irrelevant.

The appellant, through Terminal Engineers, invoiced Intratrek on 16 September 2014 for the consultancy work. Payment of the US$10 000 was however required to be effected into the appellant’s personal bank account, the details of which were provided on the invoice.  Intratrek’s bank statement reflects that the US$10 000 was paid into the appellant’s personal account on 21 January 2016, at a time when he was now chairing the ZPC Board.

The appellant’s services to Intratrek, that he was not paid timeously and the fact of the eventual remuneration for services rendered, through his personal bank account, should all have been disclosed to the ZPC Board, in writing, and at the appropriate time.

In his warned and cautioned statement recorded on 12 November 2018, the appellant said:

“I deny the charge as alleged. Upon my appointment I declared conflict of interests to by then Minister of Energy Dzikamai Mavhaire who was in the company of his Deputy Munacho Mutezo and Permanent Secretary Mr Partson Mbiriri. My conflict of interest was not only in Intratrek Zimbabwe (Pvt) Ltd but the nature of my profession as an Engineer in the Energy Sector. I also deny that I proposed that ZPC do not terminate (sic) the contract with Intratrek Zimbabwe (Pvt) Ltd. Yes I received money into my personal account. The money was due to Terminal Engineers a company in which I am Managing Director after the company account had collapsed with Afrasia Bank in 2014. Terminal Engineers had done some work for Intratrek Zimbabwe around 2013 and 2014 before my appointment as a board member for ZPC”. (Underlining is mine)

Appellant admits in the warned and cautioned statement that he was conflicted. His assertions of disclosure to Mavhaire were categorically disputed by the latter. Mutezo said his memory was failing him, he could no longer remember whether the disclosure referred to in the warned and cautioned statement was made. Mbiriri said appellant only appeared at the former’s offices to “disclose” that he had rendered the consultancy services to Intratrek at a time when the media was awash with that information and Intratrek’s failure to discharge its contractual obligations under the project. That in reality was not disclosure at all. One does not disclose information already known to the receiver thereof. See S v Mutsvangwa SC 125/94; S v Martin 1993(1) ZLR 153; Stevens v The State SC 53/88. The fact that the appellant had to approach Mbiriri after the public outcry and complaints by other board members showed that there had not been disclosure at all. In addition, disclosure should have been to the Board, at a meeting discussing the project and not when the issue was now public knowledge. By claiming that he had disclosed to these three state witnesses the appellant was in essence admitting that it was necessary to disclose that he had performed consultancy work for Intratrek in respect of the Gwanda Solar Project.

The following exchanges occurred when appellant was under cross-examination:

“Q	And you don’t see anything wrong with not disclosing to the ZPC Board your prior involvement with Intratrek under the agenda item on disclosure of conflict of interest, of potential conflict of interest?

A	No, I did not your Worship

Q	You thought it was irrelevant?

A	It was irrelevant your Worship”.

Still under cross-examination the following transpired:

“Q	When you gave your warned and cautioned statement to the Police, why did you not tell the police that the disclosure was not necessary, disclosure in respect of the Gwanda Solar Project?

A	It wasn’t necessary your Worship as I mentioned earlier. My involvement was in the previous project, not the project being implemented at the time”.

The appellant admitted that he did not make the disclosure to the ZPC Board because he thought it was irrelevant. Yet in his defence outline he averred that he made the necessary disclosure to all the relevant persons at the material time. These would, in my view include the ZPC Board. There was thus a fundamental contradiction on the issue of disclosure between the warned and cautioned statement, the defence outline and the appellant’s testimony.

Overally, there was overwhelming documentary and oral evidence proving that appellant concealed his prior involvement in the Gwanda Solar Project.

My view is that the prosecution did not even need the aid of the presumption in the circumstances of this matter. All the same, I am satisfied that the magistrate was right in effectively finding that the appellant failed to rebut the presumption that the appellant’s intention in not disclosing his interest was intended to deceive the principal.

WAS THE APPELLANT INVOLVED IN ANY TRANSACTION TO WHICH THE PRINCIPAL WAS A PARTY?

The charge reads as follows:

“CORRUPTLY CONCEALING FROM A PRINCIPAL A PERSONAL INTEREST IN A 	TRANSACTION AS DEFINED IN SECTION 173(1)(a)(i) OF THE CRIMINAL LAW 	[CODIFICATION AND REFORM] ACT [CHAPTER 9:23]

In that on various occasions during the period extending from 22 October 2015 to July 2018, the 	accused being an agent that is to say an employee of Zimbabwe Power Company/Zesa Holdings 	(Private) Limited, unlawfully carried out a transaction in connection with his principal’s affairs 	without disclosing to the principal that he held a personal interest in the subject matter of the 	transaction, that is to say that, he participated in the Zimbabwe Power Company Limited board 	deliberations to consider and approve the awarding of the Gwanda Solar Power Project to Intratrek 	Zimbabwe (Private) Limited, without disclosing to his principal that he had acted as a consultant 	for Intratrek Zimbabwe (Private) Limited intending to deceive his principal, or realizing that there 	was a real risk, or possibility that his principal might be deceived.”(emphasis mine)

It was common cause at the trial that the appellant was an agent of the Zimbabwe Power Company Board of Directors not as an employee of the Zimbabwe Power Company or Zesa Holdings (Private) Limited but as a director and chairperson of the ZPC Board. The court below found that he chaired various board meetings which deliberated on issues to do with the project, beginning with approval of the contract between ZPC and Intratrek right up to the parties’ performance of their contractual obligations. The court found that he chaired these meetings without disclosing to the ZPC board that he had rendered consultancy services to Intratrek in respect of the same project.

A reading of s 173 (1) (a) (1) of the Code in line with the underlined portions of the charge appears to present the transaction as the series of meetings chaired by the appellant wherein the Gwanda Solar project was an agenda item or subject matter of those meetings. Viewed from this perspective, the offence becomes the appellant’s non-disclosure to the board that he had rendered consultancy services to Intratrek in respect of the same project. It is not the prior rendering of consultancy services which is criminalized but the non-disclosure of that involvement with Intratrek during the board meetings. In my view, Mr Nyamakura’s argument that the appellant did not render consultancy services to Intratrek in respect of the second tender for the Gwanda Solar Project and was accordingly not involved in that transaction (the second tender) misses the mark. I do not think the second tender is what was found to be the transaction. What the legislature intended to do in enacting the provisions of s 173 (1) (a) (i) of the Code was to eradicate corruption by infusing transparency, efficiency and effectiveness in the operations of state institutions. I am accordingly satisfied that the court below correctly found that by chairing the board meetings without disclosing that he had rendered consultancy services to Intratrek in respect of the Gwanda Solar Project the appellant had corruptly carried out a transaction in connection with the ZPC board’s affairs or business without disclosing to the board that he held a personal interest in the subject matter of the transaction (the agenda item on the project in the ZPC Board meetings) with the intention of deceiving the board.

Even if the transaction is viewed as the project itself I am amply satisfied that the conviction is still sound. The appellant did not disclose his personal interest in that project. It is untenable in my view to treat the cancelled tender as one transaction and the second tender as another, separate, transaction. The one and only transaction, if transaction it is, would be the Gwanda Solar Project.

THE APPEAL AGAINST SENTENCE

The two grounds of appeal against sentence were firstly, that the magistrates court misdirected itself in not considering a fine before it imposed an effective term of imprisonment. Secondly, the court misdirected itself in not considering community service when regard is had to the fact that it imposed an effective custodial sentence of less than twenty-four months.

The appellant did not file any heads of argument in respect of the appeal against sentence. At the hearing Mr Nyamakura only went as far as saying that he abided by the arguments set out in the appellant’s heads of argument in respect of the appeal against the sentence. We view this as an oversight on the part of counsel because in respect of the appeal against sentence there were no heads of argument filed by the appellant which counsel could abide by. Effectively, this meant the appeal against sentence had been abandoned. What it amounts to really is that the appellant, without necessarily saying so, conceded that there was no merit in the appeal against sentence. Otherwise, the grounds of appeal would have been developed through heads of argument and oral submissions in an endeavor to have the sentence set aside and substituted with a fine as had been prayed for in the Notice of Appeal.

Indeed, Mr Nyamakura conceded at the hearing of the appeal that a sentence of community service was inappropriate. In addition, such relief was not even prayed for in the Notice of Appeal.	Although counsel for the respondent defended the sentence imposed on the appellant it is unnecessary that we examine his arguments since the appeal against the sentence was not persisted with.

DISPOSITION

In the result the appeal be and is dismissed in its entirety.

CHATUKUTA J AGREES: …………….

Mhishi Nkomo Legal Practice, appellant’s legal practitioners

The National Prosecuting Authority, respondent’s legal practitioners