HomeBusiness DigestChinamasa admits govt messed up SMMH

Chinamasa admits govt messed up SMMH

Paidamoyo Muzulu

JUSTICE Minister Patrick Chinamasa admits that the government bungled six years ago by taking over Mutumwa Mawere’s SMMH empire without conducting a due diligence inquiry.

Chinamasa made the admission when he appeared before the Parliamentary Portfolio Committee on Mines and Energy on Monday to give oral evidence on how government placed SMM under state administration and its subsequent closure under the management of a state appointed administrator.

SMMH was placed under the state administration in September 2004 through the Reconstruction of State Indebted and Insolvent Companies Act. The conglomerate then allegedly owed state owned corporations a combined Z$115 billion.

Chinamasa said the government messed up by plunging into the company without verifying the financial position of the mines.

“If we could have had the information before this (putting SMMH under administration) we would have acted differently. This (financial position) only came to light after we had appointed an administrator,” he said.

He added that the government acted in haste to save the company from folding for two main reasons, promoting indigenisation and to save Zvishavane town.

“Government tried to stop lenders from placing SMMH under liquidation. That was why we hastened to get in. We were sucked into the situation because we could not tolerate the collapse of the mines that employed 5 600 people and supported the 60 000 population of Zvishavane,” Chinamasa said.

The minister admitted that the mines would have been liquidated in 2008 after the Reserve Bank pulled the plug on the ailing conglomerate in 2008.
“Once there was no assistance from the RBZ, it was clear that nothing was going to happen. I knew that was the end. There was no need to go there. In retrospect that was what should have happened,” conceded Chinamasa.

The minister said the mines were now in de facto liquidation without the legal processes.

The legal battles are still a long way to be settled after Chinamasa vowed not to settle outside the courts with Mawere as a compromise.

“There is no way we will settle.Let the courts decide,” Chinamasa stressed,“thereafter, we will sit and discuss. It’s too late in the day after 25 cases and we are not agreed on who is culpable for the demise of the mines.”

Chinamasa, however, said only President Robert Mugabe’s intervention could force him to abandon course.

“If the president calls me and says do this I will do it without question. In the circumstances, the finalisation of the matter in the courts (in my favour) would give me a stronger standing and push me to present a new position,” the minister said.

Chinamasa further said the ownership wrangle was keeping new investors away and the government presently prefers investors from the East because of sanctions by the European Union and the United States.

“No new investor would want to get in when the legal dust on ownership has not settled,” Chinamasa told the committee. “You will not have any  investor other than the Chinese. That is correct. The position was taken under sanctions. It’s China. China is in the East.”

Mawere is on record telling Parliament that Chinamasa’s actions were akin to commercial violence when he issued the reconstruction order in 2004.
“This was purely commercial violence,” Mawere said then. “It is very unusual for a Minister of Justice to make a defamatory allegation against someone. The first thing is to ask Chinamasa what was his frame of mind when he did all this.”

The Supreme Court is still to rule on the constitutionality of the Reconstruction of State Indebted and Insolvent Companies Act used to wrestle SMMH from him by the state. Until it makes a ruling, the wrangle will rage on.

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