Malawi’s timber cooperatives get injunction

Mistrust and suspicion have engulfed timber businesses in Chikangawa, with seven of eight cooperatives obtaining a court order stopping some members from transacting business.

The seven of the eight timber cooperatives are Chamatete, Viphya, Zikomo, Luwawa, Chibwaka, Kalungulu and Lusangazi. They obtained an injunction on May 16 2012 against members Paul Makolosi, Tawonga Mtegha, Wilfred Tsaka and Sterling Timber International Limited—stopping them from transacting any business in the name or on behalf of Timber Millers Cooperative Union.

The bone of contention, according to sources, is a K1.8 billion (about $72 million) government-guaranteed loan for production and exporting timber.

In the 2011/12 national budget, government announced that timber had gone up from K1 100 to K10 000 per cubic metre.

This made business expensive to many; hence, a senior government official advised operators to get a loan from commercial banks. The eight cooperatives then formed Timber Millers Cooperative Union, an umbrella body, to apply for the loan.

“When union leaders went to Lilongwe for a guarantee loan letter, they were told that they could only succeed if they formed a company. It was then that they formed Sterling Timber International Limited,” said one of the cooperative members. However, members who formed the company allegedly did not inform the union about its formation.

The Nation has sourced the company’s registration copy, dated February 9 2012, bearing a date stamp from the Registrar of Companies.

The certificate contains particulars of the company’s first directors. These include accountant Hennox Mazengera, environmental biologist Professor Peter Mwanza and another accountant Alexander Makwata.

The other directors are supply chain specialist Paul Makolosi, businessperson Tawonga Mtegha, accountant Wilfred Tsaka and Paul Feston Tsoka Banda, a human resources specialist.

The cooperative members are also querying how non-members became directors and who appointed them.

The High Court in Mzuzu on Wednesday granted an injunction against Makolosi, Mtegha, Tsaka and Sterling Timber International Limited.

“It is, therefore, ordered that an injunction be and is hereby granted ordering the defendants, their servants, employees, agents or any other directors to refrain from transacting or carrying on business or dealings for, on behalf of or in the name of the plaintiffs and their umbrella union [Timber Millers Cooperative Union],” said Judge Dingiswayo Madise.

He also ordered the plaintiffs to file the main action and inter-partes summons within seven days and that hearing takes place within 14 days in Mzuzu before him.

The judge ordered Timber Millers Cooperative Union to deposit K500 000 (about $2 000) with the court.

One of the union members, Luke Malembo, from Luwawa Saw Millers Cooperative, said the union felt cheated by their fellow members; hence, the injunction.

Mwanza, one of the directors of the company, said the union misunderstood their objectives.

“The company was formed in order to export and process timber. We want forex and this company will make sure that timber produces forex for the country,” said Mwanza, who claimed that all members were consulted before the company was formed.

Mwanza said one does not need to be in a particular business, in this case timber business, to be a director of a company.