THE move by government to ring-fence assets of the beleaguered Premier Services Medical Aid Society (PSMAS) from seizure by enraged creditors who are owed nearly US$150 million has fallen through after Parliament refused to rubber-stamp it.
This follows President Robert Mugabe’s move in July last year to evoke the outdated Presidential Powers Temporary Measures Act to issue a Statutory Instrument (SI) stopping PSMAS’ creditors from attaching the firm’s assets over unpaid debts. The SI served to evoke the State Liabilities Act, even though PSMAS is not a State-owned business entity or a government department.
When the issue came before the House of Assembly last year, the Parliamentary Legal Committee (PLC) issued an adverse report on the Presidential Powers Regulations that had been evoked to restrict legal action against PSMAS, and since then been hanging at the bottom of the Parliamentary Order Paper.
What has compounded matters is that the SI has since lapsed after the mandatory six months period.
Legal and legislative watchdog, Veritas, last week described the failure to complete debate on the matter as “unfortunate”.
“This item has dropped to the end of the Order Paper, as item 26. Contributions by PLC members and MPs were completed months ago. What remains is a response to the report by the Minister of Health and Child Care (David Parirenyatwa), who has been severely criticised by some MPs – and a vote on whether or not to adopt the report.”
The SI was issued on July 17, 2015 and it lapsed on January 17 this year.
Parirenyatwa, who was supposed to argue the matter in Parliament, has been wearing a sackcloth of humiliation after he was sucked into the rot at PSMAS when a forensic audit fingered him as having collected an advance payment of about US$77 000 for medical services he offers to the embattled medical services group. The minister, who runs a private surgery has since repaid the money.
At the time the SI, which sought to give PSMAS a three-year breather from marauding creditors, was issued, Veritas pointed out that the move was illegal not only because PSMAS was not a State firm, but also because under the country’s new Constitution, the Presidential Powers Temporary Measures Act is no longer law.
This legal position was confirmed by the PLC in its adverse report, leaving Parirenyatwa stranded.
It is understood that in an effort to by-pass this legal technicality, government is trying to take over PSMAS, thereby making it a State entity so that it can qualify for protection under the State Liabilities Act.
The State Liabilities Act — which primarily serves to protect State assets — lays down that before anyone can sue the State, a 60-day notice must be given and also that a court cannot order the attachment of State property to pay debts owed by the State.
In 2014, Parirenyatwa told Parliament that PSMAS was a private business enterprise that was owned by members though the government has a “moral ownership” by virtue of about 80 percent of the contributors being civil servants.
The bungled move by government to protect PSMAS’ assets from seizure could have been prompted by a guilt conscience arising from the fact that government, together with its various departments and firms, are, in fact, the major defaulters in paying PSMAS’ monthly medical aid contributions.
When the SI was debated in Parliament, legislators from across the political divide roundly condemned the move, which they argued, would not only reward wanton mismanagement, but would also needlessly put additional burden on the taxpayer.
“While the adverse report does not nullify the Statutory Instrument, the SI may eventually be repealed, depending on whether the National Assembly confirms or rejects the adverse report,” Veritas said in its commentary.
Legal expert, Alex Magaisa, told the Financial Gazette in an interview at the time that even if the majority ZANU-PF legislators were forced to vote against their convictions in order for the SI to secure the necessary Parliamentary approval, this was not be end of the road for the livid PSMAS creditors who may not have the patience to endure a three-year wait before they can resume legal action against the medical services group, as they had the option of challenging the constitutionality of the law in the courts.
Magaisa, a law lecturer at the University of Kent in the United Kingdom, said the chances of success in this case were very high.
“The PLC report is correct. Use of Presidential Powers is unconstitutional. However, it does not invalidate the SI, which remains operational. Only a court of law can make a declaration of unconstitutionality and invalidity which would affect the operation of the SI,” Magaisa pointed out.
“Thus creditors can take confidence that a legal challenge against the constitutionality of the SI is likely to succeed in a court of law. In fact, if I were advising them, I would say they need to challenge the SI now. There are ample grounds to challenge it, not least the fact that government used the Presidential Powers Act, which is patently unconstitutional.”
Magaisa said even if the process is restarted to remove the illegality brought about by the use of the unconstitutional Presidential Powers, government would still sweat to justify evoking the State Liabilities Act to protect a private business entity.
Now that the controversial SI has since expired, this effectively puts PSMAS in the original vulnerable position where its creditors can move in to attach its assets.
Last week, Parliament adopted a motion calling for the prosecution of former PSMAS chief executive, Cuthbert Dube, for allegedly looting the health insurer through extraordinarily high salaries and allowances.
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