Monday March 20 2017

From Zambia to Uganda: Shs1.5b lawsuit follows Villa’s Misagga

Mr Ben Misagga, the the SC Villa chairperson

Mr Ben Misagga, the the SC Villa chairperson and director Plinth Technical Works. Photo by JB Ssenkubuge 

By Mark Keith Muhumuza

Kampala. Uganda political connections are perhaps the bedrock of some businessmen across the world.
Mr Ben Misagga (Joseph Muguluma Mbazzi until 2012), the SC Villa chairperson and director, Plinth Technical Works, is finding himself in a web of both political and business undertones that can be traced back to Zambia.
His political connections earned him contracts in the electricity and road sectors of Zambia.
In the regimes of Mr Levi Mwanawasa (RIP) and Mr Rubia Banda, his company Plinth Technical Works was getting contracts in the mentioned sectors.

By end of 2012 though, the situation started to change when Mr Michael Sata (RIP) came into power and started breaking up contracts in an effort to clean up the system.
It was at the time that Mr Misagga left Zambia and made a return to Uganda.
Three years later, one of the suppliers followed him to Uganda in attempt to recover about $0.436m (Shs1.5b) for products supplied to Plinth.
At the heart of the case is Techniserve, an electrical products supplier based in Zambia that is attempting to recover money from Misagga and his business partner, Mr John Bosco Kasasira.

The lawsuit
In its lawsuit through AF Mpanga Advocates, Techniserve has made a host of allegations, key among them that Plinth Technical Works Zambia was a shell company with no known assets in Zambia.
“The company, Plinth Zambia, was formed for fraudulent purposes, used as an instrument of deception by the defendants and was a shell company with no known assets in Zambia or elsewhere,” reads court documents submitted by Techniserve.
Techniserve PTY had in 2013 supplied equipment for a rural electrification project to Plinth Zambia valued at $0.634m (Shs2.3b).

According to the court files, Techniserve did deliver the equipment and received partial payments from Plinth. Court documents show the goods supplied by end of 2013 totalled $0.887m (Shs3b).
Plinth paid $0.457m (Shs1.79b) of the total amount, leaving a balance $0.436m.
By then, Misagga’s troubles with the government had started to emerge and he had long left Zambia, leaving a company stuck with some assets.

It is at this point that Techniserve sued Plinth Zambia to recover the $0.439m.
“Plinth Zambia was, however, a shell company with no known assets and has since gone into liquidation and is not possible to pay the amounts outstanding,” the suit reads.
Adding, “…to complete the fraudulent scheme and avoid any liability, the defendant’s run away from Zambia and returned to Uganda leaving behind an empty corporate shell that cannot meet its liabilities.”
This is where the point of contention appears in what Misagga’s lawyers’ M/S Luzige, Lubega, Kavuma and Co. Advocates, describe as a “mudslinging campaign” intended to bring down the “first defendant who is a prominent businessman and sports personality in the country.”

Plinth Zambia had two Ugandan shareholders and three Zambian shareholders.
In 2014, once the directors of Plinth had left Zambia, creditors including Techniserve sued the company in order to recover the money outstanding.
The high court ordered for properties belonging to Plinth to be attached as the company was placed into receivership.
Most of the attached property included trucks for construction work and company vehicles.
According to Luzige, for Techniserve to be able to sue Plinth means this was not a shell company.
“It shall further be averred that the plaintiff company sued Plinth Technical Works in the Zambian High Court, attached its various properties and its debt was fully satisfied,” the response to the suit reads.

In Zambia, Plinth has had contracts with the Ministry of Education, Ministry of Local Government, Rural Electrification Agency and Zambia Revenue Authority.
It is also operational in Uganda where it is working on several roads like the Mbale Municipality road project funded by the World Bank.
In Uganda, the name Joseph Mbazzi Muguluma was largely obscure and unknown. It is Ben Misagga that is the most common name, synonymous with the football club, SC Villa, where he is the president.
In Zambia, Misagga had on his legal documents the name Joseph Mbazzi Muguluma.
It was until June 2012 that Misagga changed his name to match the Zambian one.

On one hand, Techniserve alleges that the name change was part of the fraudulent process since he continues to use the Misagga name.
However, Misagga’s lawyers argue that the name change was lawful.
The case has dragged on in court since it first came up in 2015. The court is yet to set a date for the defendants to present their case.
The case is being heard in the Commercial Court and last month, a judge threw out an application by the defendants to have the plaintiff pay a security deposit because they were not based here and that money would be used to cover the costs of the suits, just in case they win the case.