SMM: From Chinamasa to Mpofu

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The atmosphere surrounding the transfer of the administration of SMM Holdings Private Limited (“SMM”) from Justice minister Patrick Chinamasa to Mines minister Obert Mpofu raises more questions than answers.

The Constitution of Zimbabwe has no provision for expropriation of private property although recent statements on indigenisation seem to suggest otherwise.

The purported movement of shares from Mutumwa Mawere to the government-controlled vehicles, for example, AMG Global Nominees Private Limited (“AMG) and Nickdale Investments Private Limited (“Nickdale”), is yet to be properly explained.

Although Chinamasa has represented that following the approval of the scheme of reconstruction, the implementation of the scheme has culminated in the change of ownership and control of SMM to the government through the said companies, it is not clear how the mere implementation of a scheme of reconstruction can culminate in the loss of shares by another party.

Property in the form of shares can transfer hands either voluntarily or involuntarily. In a contested matter, it cannot be the case that property held by one can be transferred to another without the consent of the affected party.

In the case of SMM, its shares prior to the reconstruction were solely held by SMM Holdings Limited (“SMMH”), a company incorporated in the United Kingdom.

For any alteration of the member register of SMM to have any semblance of legality, it would have required the consent of SMMH hence Chinamasa in his press statement published by the Sunday Mail of October 24-30, 2010 stated: “SMM UK is in turn 100% owned by AMG through the bearer share warrants on behalf of the GOZ”.

The question that then arises is whether it is factually and legally correct to state that SMM UK (SMMH) is 100% owned by AMG.

AMG did approach the UK courts to rectify the member register of SMMH pursuant to the agreement reached by the former owners of SMMH, T & N Plc, but the application was dismissed as was the appeal. In fact the court specifically ordered that AMG did not acquire any or any good title to the bearer share warrants.

Why then would Chinamasa still misrepresent the facts relating to the ownership of SMM?

The intended transfer of shares from Nickdale and AMG to ZMDC flows from the flawed logic that AMG acquired legitimate rights in the UK.

Even in the context of the disputed Reconstruction Act, the alteration of SMM’s shares requires the consent of the company’s shareholders. Who then is the legitimate shareholder of SMM?

According to the records at the Companies House in the UK, SMMH is wholly owned by Africa Construction Limited (“ACL”), a company that in turn is wholly owned by Mawere’s Africa Resources Limited.

There is no record of AMG holding any shares in SMMH as alleged by both Chinamasa and Gwaradzimba.

What is more significant is that the reconstruction laws of Zimbabwe have no extra-territorial application to permit the dismemberment of ACL as the legal owner of SMMH.

So what then was transferred by Chinamasa to Mpofu? Nickdale and AMG have no right, title or interest in SMMH and, therefore, no scheme of reconstruction could conceivably have been approved without the consent of Mawere.

How legal are the purported transfer of the control and management of SMM to ZMDC?

The answer lies in the UK where the records of SMMH are held.

Any legitimate transfer has to be effected firstly in the UK and this has not been done. AMG has no title, interest or rights to the bearer share warrants as alleged by Honourable Chinamasa.

If this is the case, the announced transfer of control and management of SMM to ZMDC represents daylight robbery and expropriation of the worst order.