Business tycoon Mutumwa Mawere’s face-off with Justice and Legal Affairs minister Patrick Chinamasa over the annexation of his business empire SMM Holdings could suck in President Robert Mugabe.
This follows reports that the decision to place SMM under reconstruction was ill-advised and unconstitutional, and therefore fraudulent.
Insiders on Monday said the shaky coalition government was seized with the matter following Chinamasa’s vitriol against Mawere at the weekend.
Senior government officials on Monday confided in NewsDay Mawere had no option but to approach President Mugabe over Chinamasa’s position on the matter. He was expected to write to the President complaining of Chinamasa’s stance.
Legal experts described Chinamasa’s behaviour as unwarranted, as he tried to “justify the unjustifiable”.
They said it was in the national interest that the legal and factual issues pertaining to SMM and its owner’s specification be unpacked to restore the confidence of many non-resident Zimbabweans that their rights and interests were secure.
Mawere was not available for comment.
The clash followed revelations in NewsDay last week that the judgment used to grab Mawere’s empire could have been fraudulently obtained due to misrepresentation of facts as SMM Holdings liabilities at the time did not qualify as state loans to the company.
The reconstruction order was issued in terms of Section 4 of the Presidential Powers (Temporary Measures) Reconstruction of the state-indebted and solvent companies regulation.
But in terms of section 24.1 of the Act, the administrator, Afaras Gwaradzimba, was required to present a scheme of reconstruction to a joint meeting of creditors and members.
Insiders on Monday said this was not done as required by law.
In an apparent attack on Mawere, Chinamasa claimed after the approval of the scheme of reconstruction, Gwaradzimba has been implementing the scheme.
“The reconstruction of SMM and the implementation of the scheme have culminated in the change of ownership and control of SMM to the Government of Zimbabwe through Nickdale Investments (Private) Limited, which owns 76% of SMM’s issued share capital, with the balance of 24% being owned by SMMH, a UK-registered company.
SMM UK is in turn owned 100% by AMG Global Nominees (Private) Limited (AMG) through bearer share warrants on behalf of the Government of Zimbabwe,” Chinamasa said.
However, it turned out on Monday that Chinamasa was aware the application by AMG to be registered in the UK as a member of SMMH failed in court.
Documents at hand show that the application for rectification of the register of members was dismissed and AMG unsuccessfully appealed.
“Although AMG was the holder of the bearer share warrants as alleged by Chinamasa, such a right would be only exercisable in the jurisdiction of the UK and not in Zimbabwe.
This would not change the fact that the rightful shareholder of SMM is and has always been SMMH.
Any scheme of reconstruction as defined by the Act would have required the approval of SMM’s sole member and this was not done which fact he must know,” insiders said.
According to order number 1 201 of 2005, issued at the High Court of Justice Chancery Division, Companies Court Justice Evans-Lombe declared that Africa Resources Limited (ARL) had absolute title to the bearer share warrants relating to SMM Holdings and THZ Holdings under the terms of the Memorandum of Deposit and Charge for payment of the balance of the purchase price for the bearer share warrants and accrued interest.
“AMG did not pursuant to the share sale agreement of November 5, 2004, obtain any or any good title to the bearer share warrants; and the said warrants are to continue to be held by Reed Smith Richards Butler subject to further order . . . and not to deliver to AMG or its order. AMG for permission to appeal is refused.
It was therefore curious that Chinamasa would seek to rewrite three judgments that were handed down against AMG Global Nominees, a senior Justice ministry official said.
“AMG was represented in all the proceedings and in fact was the applicant seeking the court’s intervention to effect the shareholding change,” argued the source.
A Harare lawyer who refused to be named also argued it was factually and legally wrong to say that the scheme was approved as required by law and more importantly that AMG and government were direct or indirect shareholders of SMM.
“It is, therefore, misleading and mischievous to suggest that AMG and the government own SMM in any way and significantly that the scheme of reconstruction was approved as required by law.
If there was any doubt about the motives behind issuing the warrant of arrest and Mawere’s specification, the attempt to steal his assets through borrowing state powers makes it abundantly clear.
This undermines the rule of law and the general credibility of the state,” lawyer argued.
Another contentious issue was that Gwaradzimba is a former auditor of SMM and it is not only unethical but unprofessional for an auditor to accept a mandate to act as an administrator of his former client.
The sources said: “An Administrator must be unbiased, impartial and independent, hardly terms that can be used to describe Gwaradzimba.
Equally, as Minister Chinamasa must be offended by (lawyer Edwin) Manikai’s conduct as a professional, who is now acting against his former client.
In an interview in Harare last Friday, Gwaradzimba told NewsDay: “I do not want to present myself as an angel, but I have done my bit in getting the company to its feet.”
Government sources told NewsDay that the Justice and Legal Affairs ministry no longer had any jurisdiction over the matter.
Sources said the two Acts under which Mawere was charged, the Prevention of Corruption Act and the Reconstruction Act, were now under the jurisdiction of the Home Affairs ministry and Ministry of Finance respectively.
“It is clear that Chinamasa’s ministry no longer has the jurisdiction over the Mawere issue.
He is only relevant in as far as handover-takeover is concerned as somebody who used to deal with the matter,” sources said. “The chickens are coming home to roost.
Why is he agitated by the return of Mawere?”
Contacted for comment, Home Affairs co-minister Theresa Makone refused to shed light, while repeated efforts to contact Finance minister Tendai Biti were fruitless as his mobile phone went unanswered.