Walvis Bay — RedForce debt management company has lodged an urgent application in the High Court of Namibia, after the five-year debt-collecting contract they signed with the Walvis Bay municipality was cancelled on Thursday by the council.
The Walvis Bay council is the first respondent, while the acting chief executive officer is the second respondent. Councillor Ephraim Shozi is named as the third respondent.
Shozi tabled the relevant motion in council, and it was passed unopposed.
RedForce, in the urgent application, is now seeking relief from the court by requesting it to overlook any procedural non-compliance, and hear the case urgently.
They seek to prevent the termination of their services, pending the resolution of the legal actions challenging the termination decision, and to restrain the respondents from taking any further action until the legal proceedings are concluded.
The affidavit by major RedForce shareholder Selma Nangombe stated that the company would suffer substantial financial losses as they had set up an office in Walvis Bay, went into a lease agreement for the duration of the contract, as well as acquired assets needed for the debt-collection.
"In fact, the day after the illegal termination of the agreement, RedForce's operations in Walvis Bay ground to an immediate halt.
No calls or emails were received, debtors simply say RedForce has been fired, and they refuse to cooperate with RedForce or acknowledge any validity for RedForce to continue its debt-collection services in light of the illegal termination of the agreement," Nangombe added.
She said RedForce employees stationed in Walvis Bay have been sent home pending the outcome of this application, with only one employee, acting branch manager Rachida Koch manning the office, and who can confirm the halting of the operations there. What RedForce seeks to forestall is only the unlawful motion, and resolution and implementation of the termination of a valid and binding agreement between the parties as set out above.
"The first and second respondents are simply not permitted to terminate the agreement as they purported to do, and the interim relief will most certainly not be an infringement of any of its rights. In fact, the interim relief will benefit the first respondent because it will continue to receive much-needed debt-collection services on the conditions as agreed between the parties," she noted.
The affidavit continued that at the date of termination, RedForce was actively engaged with 9 145 accounts with a combined book value of N$315 million, and was collecting an average of N$480 000 per day and N$14 million a month from the outstanding debt. The total debt outstanding from time to time increases as time passes, and more bad debts arise which are handed over to RedForce.
"The termination has devastating effects not only for RedForce, but also for the first respondent. Prior to RedForce's appointment, the first respondent was operating on a cash flow deficit of N$4.6 million. At the time of termination, the first respondent was operating at a surplus of N$45 million. In short, this application is not only brought for the survival of the applicant, but also to save the first respondent from itself," Nangombe noted in her affidavit.
"RedForce has been unable to render any services, and its staff are waiting at home to return to the office to continue with operations. I submit that the first respondent acted on the basis of an error of fact and law when it resolved to terminate the applicant's services," Redforce stated.
Councillors' outstanding debt
The affidavit also revealed that councillors Leroy Victor, Ryan Gordan, Paulus Kauhondamua also have outstanding bills and none of them disclosed this prior to the passing of the motion and subsequent resolution.
"I point out again that the motion, resolution and subsequent termination are unlawful. The standing rules were not complied with, no due process was followed, and the first respondent acted in clear violation and material breach of its contractual obligations. The decision is politically-motivated. RedForce does not accept the breach or the repudiation, and insists that the agreement remains of full force and effect", Nangombe continued.
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Invested over N$7 million
According to her, RedForce has invested more than N$7 million into its Walvis Bay operations, in line with the agreement between the parties, and in view of the five-year tenure afforded thereby.
She further stated that the municipality only employs two people for the disconnection of services, and a near-defunct debt management department while they - RedForce - already invested in IT accessories and in particular purchased 16 computers and three laptops for the sum of over N$314 000. They also purchased office furniture worth over N$270 000.
They likewise purchased two vehicles for N$575 000, and employed 28 people for the disconnection of services and pay rental fees of N$22 000 monthly.
