Maputo — In a rare case of a Mozambican court enforcing a business contract, the commercial section of the Maputo City Court has ordered the seizure of assets belonging to the Niza group of companies to pay a debt of 270 million meticais (about 9.7 million US dollars) to the mobile phone company Mcel.

The decision to seize Niza's assets was taken by judge Matilde Monjane de Almeida on 3 March and was confirmed on Monday.

Niza is owned by two prominent businessmen, Abdul Latifo Cassamo and Farzana Abdul Karim, who are regarded as the main debtors.

Since July 2005, Mcel has used the Niza group as an agent to sell its products. At first, Niza complied with the contract, regularly paying Mcel for the sales that it made. But Mcel complains that, since early 2009, Niza began violating the contract, and then collapsed into a situation of "total non-compliance".

Cheques issued by Niza bounced, and a debt of over 276 million meticais accumulated. Niza and Mcel negotiated an agreement under which 176 million meticais would be paid in four monthly instalments between August and November 2009. The remaining 100 million would be paid as from December 2009, in ways to be worked out between the two companies.

According to a report in the independent daily "O Pais", on 25 August, five days before the first instalment of the rescheduled debt was due, Niza sent a letter to Mcel saying that it would be unable to pay on time. Mcel extended the deadline by 30 days, but by the end of September, Niza had only paid nine million meticais.

In early December, Mcel called in its top legal consultant, the well-known jurist Teodoro Waty, who is also a member of the Political Commission of the ruling Frelimo Party and, since January, head of the legal affairs commission of the Mozambican parliament, the Assembly of the Republic.

He proposed a deal with Niza - Niza would promise to sell off three of its properties to raise money to pay off the debt, and in exchange Niza would maintain its status as Mcel's "super-dealer", its contract would be renewed in July 2010, and Mcel would even advance credit of 150 million meticais to Niza (three times more than the normal limit of 50 million meticais credit for distribution contracts).

Mcel found Waty's position much too favourable to Niza, and rejected his proposal. Keeping Niza as a "super-dealer" and providing it with more credit was just asking for trouble, according to the Mcel risk manager, Flavio Menete, and the head of its legal department, Mahomed Jossoub.

The two Mcel officials warned that lending more money to Niza would just make the situation worse because "they have not demonstrated any effort to honour their undertakings with Mcel".

So Mcel opted to put the matter before the courts instead. Three months later judge Almeida gave her ruling, freezing five bank accounts held by Niza and its owners, and seizing five properties, including the Niza head office, and four houses registered in the name of Farzana Abdul Karim. Also covered by the seizure are Niza's shareholdings in nine other companies.