HomeBusiness DigestUneasiness over SMM takeover

Uneasiness over SMM takeover

Roadwin Chirara/Chris Goko

THE Reserve Bank of Zimbabwe (RBZ) says its November transfer of SMM Holdings Ltd (SMM)’s $30 billion loan from Financial Holdings Ltd (Finhold)’s

books to its register was in line with protection of “classified strategic investments”.

Although bank spokesman Lovemore Chitapi would not explain how the central bank had assumed Syfrets Corporate and Merchant Bank’s credit facility with SMM, a senior official said they considered the asbestos concern as key to foreign cash generation and national employment.

“The transfer was done in the feeling that the asbestos company was a strategic investment which has always enjoyed special (financial) dispensations right from the time it changed ownership,” said the official in reference to the US$60 million state guarantee given to Mutumwa Mawere when he bought out Turner and Newall plc.

About two years ago, the government reissued support linked to the KBC Bank loan and which issue was administered through the Minerals Marketing Corporation of Zimbabwe (MMCZ).

While RBZ officials said they took over the SMM debt on “solid detection” that the Africa Resources Ltd-owned company “had no capacity to repay”, SMM principals say they fully repaid the offshore funds — on which the sovereign guarantee was procured two years ago.

The loan translocation, SMM shareholders argue, was therefore irregular in that it was done after management structures were incapacitated by the appointment of an administrator at the company.

Arafas Gwaradzimba was appointed administrator as the government raised stakes in its fight with Mawere over allegations that he failed to repatriate $300 billion worth of foreign currency derived from his asbestos interests.

Mawere has since launched lawsuits to counter threats to his broad-ranging commercial interests in Zimbabwe and the latest RBZ turn comes on the back of a directive to Syfrets that the RBZ had since involved itself in the loan issue.

The order, carried in early November, was given by Winnie Mushipe, head of the productive sector facility (PSF).

The onslaught also comes at a time Legal Affairs minister Patrick Chinamasa, who appointed Gwaradzimba, has ratcheted up pressure on SMM, telling a local newspaper last week that there was no let up on the company.

Protagonists, in the meantime, say the entire SMM debacle traversed constitutionally given reclamation processes of distressed businesses, notably member-driven voluntary wind ups of insolvent companies, court and creditor sanctioned shut downs of business.

They said it was not only curious that Finhold was not the complainant, but that Syfrets has “no right of transferring the debt to third parties”.

“The state itself is not in the business of lending money,” said a representative of one of the core group of SMM owners.

“If the government is the complainant, how does a creditor then take over a company when due process (wind down) has not been followed through the courts?

“Enterprises are liable to legal obligations in properly-constituted scenarios and where people respect structures,” he said.

“At any day, the state can backdate a company’s indebtedness and this serious expropriation of property rights is being done without regard to legal procedures,” said the representative.

He said the government’s reconstruction drive contained deadly implications on investment prospects.

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