Court orders huge payout for former CEO of Zambia Railways

4 June 2020 · Carmel Rickard

One of Zambia’s internationally best-known figures has been awarded huge damages by the high court following his sacking by the late Zambian President, Michael Sata. Clive Chirwa had been head-hunted by Sata to return to Zambia and take over as CEO of Zambia Railways. Just three months into the five-year contract, however, he was fired. He was told that he was being ‘retired in the public interest’. But Chirwa’s contract stipulated he was to be paid for the full five years if the contract were to be terminated for any reason other than ‘disciplinary’. The court awarded Chirwa, who has been fighting the matter since 2013, the full balance of his contract payments, plus interest.

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One of Zamibia’s most intriguing figures, Clive Chirwa – engineer, inventor, scientist, linguist and scholar with a CV as long as a judge’s robes – now has another title to add to the list. He is a successful litigator. Someone, moreoever, who has won his legal battle to be compensated for a contract offered to him, but then broken, by former Zambian President Michael Chilufaya Sata himself.

Chirwa told the court that he had been appointed chief executive officer of Zambia Railways (ZR) by the late President directly. Afterwards the appointment was adopted by ZR via an employment contract dated 11 January 2013.

In terms of that contract, his job was to run for five years. However, it was a explicit condition that, should the contract be ended by the company ‘on grounds other than disciplinary (grounds)’, Chirwa would be entitled to full payment for the remaining period of the contract.

Suspended

Barely three months after the contract was concluded, the late President suspended Chirwa from duty and put him on half salary. The action taken against him was said by Sata to be necessary to ‘facilitate investigations by the anti-corruption commission’.

However, the suspension made no specific allegations against him. It also said nothing about the nature of the investigations to be carried out by the commission.

A further three months later, Sata wrote to Chirwa and informed him that he was being retired ‘in the public interest’. Although Chirwa wrote to ask him for reasons, and to ‘inquire about his status’, he has never received a response.

According to the staff regulations and disciplinary code of ZR, Chirwa should have been charged for any offence within 48 hours of committing that offence. This did not happen. The code also states that investigations against a member of staff were to be concluded within four days. Investigations could take slightly longer, but according to the code, this had to be with the approval of the staff member’s ‘supervisor’.

Interest

Chirwa argued that his contract had clearly been ended by the company, and that it had been on ‘grounds other than disciplinary (grounds)’. He was thus due his pay for the rest of the five-year contract – well over K15-million – plus interest.

Giving evidence, Chirwa said he had been surprised to receive the ‘illegal letter’ from Sata ending his employment, when in fact he (Chirwa) had a contract with ZR, not with Sata. He said that the code provided an employee should at least ‘be interviewed’ before a contract was terminated. No such procedure was followed, however.

After his employment was ended, he was paid for the seven months he had worked, as well as some other benefits, but he claimed that in terms of the contract he was due payment for the entire five-year period that the contract should have run. This was because the contract was not ended on ‘disciplinary grounds’.

Dissolved

The human resources manager for ZR told the court during the hearing that, as CEO, Chirwa was supposed to have reported to the board. However, Sata had dissolved the board before suspending Chirwa. The witness (who was not named) said that ZR had not accused Chirwa of any offence, nor had ZR been the party that had terminated Chirwa’s employment.

The disciplinary procedure for a managing director of ZR had not been followed: among other steps it should have involved a case being made out for the CEO’s suspension by the chair of the board. However, at the time there was no such person as the board had been suspended. Since there was no board and no chair, there had been no one to charge Chirwa.

Considering the matter, Judge Gertrude Chawatama said there were several questions to answer including whether Sata acted lawfully in suspending Chirwa, and whether he had legal capacity to terminate Chirwa’s employment.

Authority

Despite the fact that the President purported to appoint Chirwa, the contract was actually with ZR and the President ‘had no authority to appoint (Chirwa) to that position.’ Equally, the President had no capacity to terminate Chirwa’s employment.

Chirwa had been paid out for the period of time served before his dismissal. This was the procedure to be followed in the case of any public servant, and there were also provisions for public servants to be ‘retired in the public interest’. However, said the judge, ‘it was wrong to treat (Chirwa) as a public servant because he was not one, so he could not be retired in the public interest.’

Since the President had no authority to terminate Chirwa’s employment, the fact that he did so was unlawful. ZR’s letter of termination to Chirwa said his services were being terminated ‘because the Republican President had retired him in the public interest’. As the President took steps to bring the contract with Chirwa to an end unlawfully, the Attorney General is liable, the judge concluded. ‘I am of a firm position that the President knew or ought to have known at the point of purportedly retiring (Chirwa) in the public interest that (Chirwa) had a valid contract of employment with (ZR).’ The suspension of Chirwa and the termination of his employment contract were both unlawful.

Breach of contract

The judge thus ordered that Chirwa be paid damages for breach of contract. She said he was to be paid in full for the balance of his five-year contract with ZR along with any other outstanding benefits for which he had not yet been paid. In addition, Chirwa was to be paid interest on the full amount due to him as well as his legal costs.

Considering the fact that the dispute dates back seven years, the interest on the full balance of his contract will be considerable.

Judge Chawatama has given the state leave to appeal, but it is not yet clear whether an appeal will be brought, and, if so, what the grounds for such an appeal would be.

Chirwa and a colleague from ZR were both tried in the Zambian magistrates court. Chirwa was charged with abuse of authority, but was acquitted. He said later that the three years of trial had been an ‘horrific experience’. The charges related to payment for accommodation when he first took office as CEO of ZR.

Carmel Rickard

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