The Government through the registrar of companies has instituted insolvency proceedings in commercial courts against Rwandatel which is shrouded in controversy, officials said.
Registrar General, Louise Kanyonga, told Business Times that the decision seeks to liquidate the operator after audited reports found out that the company is technically insolvent with a lot of liabilities to sustain its business.
“We were in receipt of their audited financial statements for the financial year2009/2010 in which the auditing firm concluded that the company was technically insolvent.
Basing on the powers given to the Registrar General by the Insolvency law to institute insolvency proceedings, an application was made to the commercial court in Nyarugenge this morning (Monday April, 11),” Kanyonga said.
If court rules in favour of government, it means that Rwandatel will be shutdown permanently, denting its existing slim chances to remain in business. The regulator recently revoked Rwandatel’s cell phone operating licence but its fixed telephony and Internet services—which are covered by a different licence—are still operational.
The process is now entirely before the courts and they shall make a final decision on Rwandatel’s future, Kanyonga said.
The Minister of Finance and Economic Planning, John Rwangombwa, said liquidation is the only solution to protect government from investing in an insolvent company. The Ministry is keenly watching the process and will act when a decision is made.
“Based on the reports they (the registrar) got from RURA... Rwandatel’s liabilities were far bigger than their assets; we are waiting to see what that means in terms of the value of that company, in terms of the operations of that company; going forward whether it is still viable as a business,” he said.
Freezing Libyan assets
The Rwandan government has taken custody of all Libyan-owned businesses in the country including Laico Hotel. Government owns 40 and 20 percent shares in Laico Hotel and Rwandatel respectively.
The move is aimed at implementing a recent UN resolution to freeze all assets owned by the Libyan government and the family of Libyan leader, Muammar Gaddafi, as part of sanctions imposed after Gaddafi launched a crackdown on an uprising against his rule.
Rwangombwa said that even before the sanctions, Rwandatel and Laico Hotel—the only Libyan-owned companies in the country—were financially crippled.
“(They) already have their own problems beyond the UN resolutions; we had already started talking with the Libyans, and investment firms on the issue of these two companies. What we have done today is that we would not allow them to transfer money outside.”
The minister said that depending on the outcome of the court proceedings, they will have to know how to freeze the assets.