SMM Holdings Ltd’s British lawyers, Arlingtons Sharmas Solicitors, say state-appointed administrator Afaras Gwaradzimba has “admitted for the first time” that his company is a front and that
he will hand over the firm to his principals once the reconstruction process is over.
Gwaradzimba took charge of SMM’s daily affairs at the height of government’s run-ins with group founder Mutumwa Mawere and subsequently designated AMG Global Nominees (Pvt) Ltd as the new beneficial owner and acquiring entity.
However, the move elicited resistance from the South African exiled Mawere – accused of carting away $300 billion worth of export cash – who has launched multi-faceted legal actions in Zimbabwe and the United Kingdom.
The UK action is premised on the fact that SMM Zimbabwe is a subsidiary of a British-domiciled holding firm.
“Gwaradzimba for the first time has admitted that AMG is simply a nominee company used by his firm to hold shares for his principals,” Bhadresh Gohil of the UK’s Arlingtons Sharmas firm noted.
“He confirms that although the beneficiary of the shareholding is AMG, the government of Zimbabwe paid the English administrators of T&N plc, Kroll Ltd, an amount of US$2 million for the shares, although the underlying value of the companies acquired is in excess of US$300 million.”
Gohil further states in a two-page dossier that it appears “government took a preemptive strike” in order to expropriate Mawere’s assets and that it was troubling that the state was using a private entity and front, whose relationship with the state has not been revealed.
Gwaradzimba would not comment on the issue on Wednesday, saying it was prejudicial and that “Arlingtons Sharmas are mad”.
Mawere’s lawyers said it was unclear whether a “legal instrument existed” to ensure that AMG would hand over the shares to the government of Zimbabwe after the reconstruction.
They also hint at the political implications of SMM’s takeover on Britain’s relationship with Harare, other British-owned companies, the sanctions issue and whether President Robert Mugabe is personally involved in the expropriation drive.
“We need to be sensitive to the overall political background of Zimbabwe and the UK, particularly against a background where there is a perception that the government of Zimbabwe does not respect the rule of law, in particular property rights entrenched in the Zimbabwean constitution,” Gohil said.
“To the extent that an administrator. has gone beyond… to expropriate a foreign company, this may be a precedent that would certainly affect other British-owned companies with interests in Zimbabwe. We need to explore this angle as it has international ramifications.”
Meanwhile, Gwaradzimba says he has negotiated with bankers of SMM subsidiary FSI Agricom Holdings to halt or slow down interest payments and accruals on the agricultural concern’s $20 billion debt in order for him to wind up the company smoothly.
The agricultural firm is under liquidation and many of its assets, under FSI Mechanisation and FSI Farms, are under the hammer.
Gwaradzimba told businessdigest: “We have had to negotiate with banks owed by FSI to stop charging interest on loans as it would prove difficult to pay the amounts owed, especially after they have increased with interest charges.”
He said he expected over $20 billion from the upcoming sales through auctions of farming equipment and other property, which will be used to pay off debts.
The FSI administrator said the company was over-borrowed and had been bailed out by the government to the tune of $100 billion for staff wages and working capital purposes.
“FSI employees were paid by the government and working capital for the company was also provided (in tranches of $50 billion, $21 billion, $15 billion) and the amount actually totaled $100 billion,” Gwaradzimba said.
He said FSI Cotton had failed to export any product under a deal hammered out last year due to financial constraints.
“We have failed to buy enough cotton to meet the export agreement mainly because of lack of funds, but we are currently making efforts to meet our side of the export agreement,” said Gwaradzimba.