AMG Global Chartered Accountants boss Afaras Gwaradzimba has come under intense fire for his role in the liquidation of Sagit Stockbrokers, amid allegations he could have inflated the asset base of the securities trading firm to get a handsome payout for his services as liquidator, to the prejudice of creditors, businessdigest has established.
Report by Clive Mphambela
This comes after a lawyer representing former clients of Sagit Stockbrokers alleged Gwaradzimba and his firm acted unprofessionally, and are now calling for an investigation into the liquidation proceedings of the stockbroking firm.
Indications are that shares worth approximately US$1 million held in trust for clients in a nominee account were moved and accounted for as assets of the stockbroking firm, despite representation from the clients who had duly laid claims over them.
In letters to the Securities and Exchanges Commission of Zimbabwe (Sec) and the Public Accountants and Auditors Board, dated April 8 2013, from Alexander Masterson, a partner at Coghlan Welsh & Guest (CWG), the legal firm representing Vest, a trust fund which held shares with the now defunct Sagit, the lawyer requested that the conduct of AMG be probed.
The law firm has been involved in a protracted legal wrangle to recover a substantial amount of shares for Vest through its nominee company, Trust Nominees (Pvt) Ltd.
According to records seen by businessdigest, a report produced by AMG on February 4, 2009 confirmed Sagit was insolvent, with its liabilities exceeding its assets by a staggering Z$24,863 billion.
Sagit’s own assets at the time amounted to only Z$400,374.
However, on September 30 2011, AMG produced a liquidation and distribution account in which Sagit was now shown to own shares worth US$1 006 814,91.
According to Masterson, these were the shares that had initially been seized by the ZSE.
It is not clear how and when Sagit and the liquidator obtained the shares that were held by Trust Nominees from the ZSE, and efforts to get clarification from the ZSE on the matter were fruitless.
According to Masterson, Vest and another pension fund, Rio Tinto Pension Fund, had duly lodged claims with the liquidator for the shares held by Trust Nominees.
However, these claims were only accepted provisionally.
RioZim Pension Fund subsequently recovered some of its shares and challenged the eventual settlement but lost the case against the liquidator on procedural grounds.
Vest sought the intervention of the High Court to re-open the liquidation account, which ordered both sides to provide respective documents in support of their claims.
However, despite having Vest having more than 150 dividend advice notes which were being received for shares held in trust by Sagit, agreement could not be reached Vest on claims.
“In normal circumstances, such difficulties between a liquidator and creditors are sorted out by the Master of the High Court, but in this case, it is apparent that the officials in the Master’s office either do not understand the factual circumstances and conduct of the liquidation or may be in collusion with the liquidator to conduct the winding up in a manner which would benefit the shareholders in Sagit, the liquidator and the Master’s office itself,” Masterson said.
Despite sitting on the clients’ claims, records show that Sagit directors or shareholders obtained US$674 833, while AMG was paid US$76 169. Master’s fees of US$17 164 were paid.
The Master’s fees were calculated at 4%, but the statutory limit is 2%, an anomaly also being pointed out by Masterson.
According to the documents, Sagit ran into trouble when certain records relating to its nominee register went missing and the ZSE seized control of the nominee shares amid fears the shares were being misappropriated.
Bussinessdigest could not establish contact with Gwaradzimba for his comment.