NIP fails with N$16m claim against Katiti

The Namibia Institute of Pathology (NIP) did not have evidence to prove a claim for N$16 million it instituted against its former chief executive, Augustinus Katiti, after he sued the NIP for about N$3,8 million, a High Court judge has concluded.

In a judgement delivered in the Windhoek High Court on Friday, judge Hannelie Prinsloo ordered that the NIP should pay N$2,49 million to Katiti, whose employment as chief executive of the state-owned company was terminated in August 2018.

The judge also ordered that the NIP should pay interest at an annual rate of 20% on the amount of N$2,49 million, calculated from the end of August 2018 and should pay Katiti’s legal costs in the case he filed against the NIP in May 2019.

Katiti served as the NIP’s chief executive from April 2014.

His employment contract was set to expire in March 2019.

He was initially employed with an annual salary and benefits of N$1,5 million, which had increased to N$1,9 million by the time of his dismissal.

Katiti sued the NIP based on a clause in his employment contract that stated that for a period of two years after the end of his employment with the NIP he would not be allowed to do business with any person or firm that had been a customer of the NIP and would not be allowed to be involved with the business of any competitor of the NIP.

As part of this restraint of trade clause, it was agreed that the NIP would pay Katiti the equivalent of his total pay for two years.

In its counterclaim against Katiti, the NIP alleged he allowed payments to be made to a close corporation that provided transport services to the NIP, ST Freight Services, resulting in a loss of N$3,1 million to the company.

The NIP also alleged that he caused the payment of about N$8,1 million to a company that supplied furniture and fittings for the NIP head office in Windhoek, contravening the NIP’s procurement policies.

The company further claimed Katiti decided to withdraw investments of the NIP totalling N$17,9 million in November 2017 and June 2017, resulting in a loss of interest earnings of about N$2 million and that he created three NIP staff positions that cost the NIP about N$2,7 million per year, for which the NIP also wanted him to be held liable.

According to Katiti, though, funds advanced by the United States’ President’s Emergency Preparedness Fund for AIDS Relief (Pepfar) and Centres for Disease Control and Prevention were used to make the payments to ST Freight Services and the NIP did not suffer any loss because of those payments.

He also stated that the NIP’s executive committee decided buy the furniture and fittings for which N$8,1 million was paid.

The investments that were withdrawn were requested to pay the salaries of NIP employees, and the staff positions created by him were necessary and approved by the NIP’s board, he claimed as well.

In her judgement, Prinsloo noted that the accounting firm PricewaterhouseCoopers (PwC) concluded in a report in December 2018 that senior NIP employees who had been involved in the transactions with ST Freight Services did not exercise due diligence and recommended disciplinary proceedings against the staff members.

In a second report by PwC in January 2019, the firm again did not identify any wrongdoing on Katiti’s part, Prinsloo also noted.
She concluded there was no basis to hold Katiti liable for the amounts paid to ST Freight Services.

On the payments made for furniture and fittings for the NIP head office, Prinsloo also found there was no merit in the NIP’s claim against Katiti and that he did not breach his fiduciary duties with that transaction.

The judge further found that the NIP did not suffer a loss due to the withdrawal of its investments or the appointment of three additional employees.

On Katiti’s claim against the NIP, Prinsloo said the company’s board of directors decided to dismiss him while disciplinary proceedings were in progress in an attempt to avoid having to pay him the amount stipulated in the restraint of trade clause of his employment contract.

The board of directors previously approved the employment contract, including the restraint of trade clause, Prinsloo recorded.

She found that the payment in terms of that clause would not be remuneration or other benefits, which would need to be approved in terms of the Public Enterprises Governance Act and by the minister of health and social services.

Prinsloo calculated that Katiti’s annual total guaranteed pay at the time of his dismissal amounted to about N$1,24 million and that the NIP had to pay him N$2,49 million in terms of the restraint of trade clause.

Katiti was represented by senior counsel Andrew Corbett, instructed by Rauha Shipindo.

Slysken Makando, assisted by Francois Bangamwabo, represented the NIP.