A BRUISING legal battle is raging between self-exiled tycoon Mutumwa Mawere and Afaras Gwaradzimba, the government-appointed administrator of Shabanie Mashaba Mines (SMM) Holdings over the takeove
r of Mawere’s Riverridge shares by the SMM administrator.
Mawere says the seizure of his shares was unlawful.
Documents to hand show that Advocate Chris Andersen, representing Gwaradzimba, filed his heads of argument in the High Court on January 21 arguing that SMM Holdings was now the beneficial owner of shares in CFI because all of Mawere and SMM assets were now frozen after his specification.
“SMM has been placed under administration in terms of the Presidential Powers Regulation (SI 187/04) and Mawere is a specified person in terms of the Prevention of Corruption Act (Chapter 9:16),” Gwaradzimba said in his papers.
“The effect of this is that all assets of SMM and Mawere are frozen. This would include his beneficial interest in the CFI shares whether through SMM or Riverridge or any other company local or foreign as the CFI shares are within the jurisdiction of this court. First respondent (Gwaradzimba) has been tasked with the administration which would include the identification and preservation of the assets of SMM and Mawere.”
In his opposing papers, Mawere, represented by Dube, Manikai and Hwacha attorneys, said there was no legal basis whatsoever to implicate him personally in any misconduct of the companies by merely being a shareholder.
“It is common cause that Mawere is not a resident of Zimbabwe as he lost his Zimbabwean citizenship by virtue of acquiring a foreign nationality,” Mawere’s lawyers said.
“Therefore there is no legal basis for his specification in Zimbabwe. Initially when government tried to extradite Mawere, the allegations were that he had committed fraud and violated exchange control regulations and yet when he was specified the allegations were amended to corruption. What has not been clarified is to what extent are shareholders culpable for the conduct of companies they own?”
The Zimbabwe Independent understands that Section 385 of the Criminal Procedure and Evidence Act authorises the prosecution of a company chairman or director, whether executive or non-executive, for company offences in his personal capacity. There is no provision for the prosecution of a shareholder.
“Yet for the first time in corporate history the state, without the intervention of the judiciary, has lifted the corporate veil for what turns out to be motivated by intent to expropriate the concerned shareholder’s rights,” Mawere said.
He argued that Gwaradzimba was not appointed to administer the affairs of Mawere.
“Rather, he was appointed by the Minister of Justice Hon P Chinamasa as an administrator of SMM. The appointment of an investigator under the Act by the minister does not give the right to the state to strip the accused of his assets when the mere fact that an investigator is appointed means that the state has not established any case against the accused. How then does Gwaradzimba justify the extra-judicial expropriation of Mawere’s assets?”
In his papers, Gwaradzimba said the beneficial owner of the CFI shares that he acquired was South African businessman Kevin James. However, Mawere said this was unsubstantiated, arguing that the Riverridge shares had at all material times been held offshore.
“SMM is a Zimbabwean domiciled company and as such cannot acquire externally registered shares without exchange control authority. However, it seems that Gwaradzimba’s authority is above the Reserve Bank. James is not a registered owner of the external company and yet Gwaradzimba states as fact that this is the case.”