HomeLocal NewsChinamasa, Gwaradzimba cornered

Chinamasa, Gwaradzimba cornered


Parliament and Cabinet have asked Justice Minister Patrick Chinamasa to prove that SMM Holdings Zimbabwe (SMM Zimbabwe) was indeed state-indebted and insolvent when government annexed the company from business magnate Mutumwa Mawere in 2004.

They also want him to provide evidence that he has registered government as the new shareholder of SMM UK as well as explain why SMM Zimbabwe’s mining operations, Shabanie and Mashava mines, closed down midway through state-aided reconstruction, let alone under the oversight management of a government-appointed administrator.

The queries have been prompted by recent reports suggesting Chinamasa and SMM Zimbabwe administrator Afaras Gwaradzimba may have concealed the truth about SMM Zimbabwe’s state-indebtedness and its contested shareholding.

Chinamasa has been summoned to appear before the Parliamentary Portfolio Committee on Mines and Energy today, to explain irregularities and inconsistencies unearthed in the information that he has supplied to date. Gwaradzimba, last month submitted two reports, one dated November 16.

In the report, he also attached six documents to prove SMM was indeed indebted to the state including two government guarantees.

The first guarantee was issued two years after Mawere’s African Resources Limited (ARL) signed a $60 million purchase and sale agreement with UK’s T&N to acquire SMM UK, which owned 100% of SMM Zimbabwe.

Gwaradzimba also included a copy of the minutes of an SMM board meeting of March 15, 1996 at which a special resolution to use SMM funds to pay for ARL’s commitments to T&N was made.

However, Mawere said in both guarantees, SMM Zimbabwe was the borrower in commercial transactions that did not involve government.

The KBC government guarantee, he said, was issued two years after ARL and T&N concluded the purchase and sale agreement, and for the purpose of restructuring the equity debt.

The administrator also presented two letters dated August 11 2004 and August 24 2004 in which SMM acknowledged receiving ZW$20 billion and ZW$10 billion from government.

Gwaradzimba and Chinamasa recorded the $30 billion Productive Sector Facility loan as a Zimbank advance to SMM Zimbabwe.

“The company obtained a loan under the Productive Sector Facility, amounting to $28,8 billion, through Zimbank in February 2004.

Zimbank is owned by Zimbabwe Financial Holdings Limited, which in turn is owned 47% by the National Social Security Authority and 30% by government,” Chinamasa testified in a founding affidavit filed at the High Court in November 2004.

But the Reserve Bank of Zimbabwe in a letter to Zimbank on November 3 2004 said the debt in question was not a bank loan.

“We refer to the letter from (Zimbank CEO) Mr E Mushayakarara to the governor dated 20 September 2004 regarding the disbursement of ZW$30 billion through Zimbank for the account of SMM Zimbabwe (African Associated Mines) with the first tranche of ZW$20 billion having been disbursed on 24 May 2004 and the second tranche of ZW$10 billion on 17 August 2004,” RBZ division chief for national development and productive sector facilities S Mushipe said in the letter.

“We confirm that Zimbank’s role in these disbursements was that of facilitation only and the exposure should not be recorded as a liability in Zimbank’s books.”

The other transactions done in August 2004, were concluded long after the reconstruction process had started.

Recent Posts

Stories you will enjoy

Recommended reading