Nicol in Plea over Frozen Accounts:
Bernard James
7 August 2011
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Two months after being delisted from the Dar es Salaam bourse over financial misconduct, embattled National Investment Company Limited (Nicol) is now asking the High Court to lift an order that froze its bank accounts to save the company from total collapse.
The public company, which faces expulsion from its Raha Tower Building offices over failure to pay $ 42,000 (about Sh63 million) rent, is pleading with the court to quash a
decision by the Capital Markets and Securities Authority (CMSA) to block the sale of its shares in the National Microfinance Bank (NMB) for investment.
Its landlord has asked the company to vacate the premises by August 21 if by then the debt is not paid.
The filing of the suit comes five months after
CMSA wrote to CRDB, NMB and Exim banks instructing them to block any cash outflows from its accounts to protect the interests of Nicol investors.
Nicol says the freezing of its bank accounts has halted its operations and that it is likely to sink into more trouble if the orders which would enable it to meet its urgent financial obligations are not granted.
The company argues that the attachment of its accounts violated Section 22 of the CMSA Act which stated that such bank accounts may be attached only if they are related to proceeds actually involved in violation of any of the provisions of CMSA Act.
CMSA had, between December 2010 and January this year, carried out investigations into activities by Nicol and uncovered massive irregularities, including failure to maintain proper accounts.
The authority then suspended its board of directors and chairman Felix Mosha and ordered the company to convene an annual general meeting. The company was also scrapped from the Dar es Salaam Stock Exchange (DSE) after it failed to tell its shareholders that a pharmaceutical company in which it has a 51 per cent stake was put into receivership late last year.
In the case, which it filed last week, Nicol also wants the court to lift the CMSA directive that barred NMB from depositing its dividends into its account at Exim Bank.
The company is also asking the court to temporarily allow its chairman and board of directors to resume office and manage their affairs, including holding an annual general meeting.Nicol argues that the decision to suspend its management was prejudicial and detrimental to its interests as a public company.
Apart from Nicol, other applicants in the case are Mr Felix Mosha and Kathleen Armstrong while the second respondent is the Attorney General.
Mr Mosha says in an affidavit he swore in support of the application that the company has failed to pay its employees for five months, as well as service a loan it secured from Exim Bank, as a result of the suspension.
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"No board or shareholders' meeting can be convened as ordered by CMSA as a result of lack of funds and a lawful organ mandated to do the job," Mr Mosha says.
He further disclosed that Nicol had also failed to pay its suppliers and service providers and that the company was likely to face court action for breach of contract.
"I strongly believe that the manner in which CMSA has been handling Nicol affairs since 2009 and the decision to freeze its accounts was made mala fide [in bad faith]," he says.
Mr Mosha alleges that the delisting of the company from the bourse and the ejection of its chairman has been CMSA's agenda for a long time. "It started the campaign in 2009 when it put pressure on the Nicol board to resign and wanted the shareholders to remove the board."
Source: The Citizen 07/08/2011.