Mawere wins UK court battle over Zimbabwe assets

Mawere wins UK court battle over Zimbabwe assets

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By Staff Reporter
Posted to the web: 20/11/2008 17:17:37
THE Zimbabwe government has suffered a major blow in its ongoing attempt to complete the expropriation of South Africa-based businessman Mutumwa Mawere’s assets in a British court.

In a unanimous decision, the Court of Appeal in AMG Global Nominees (Private) Limited (AMG) v Africa Resources Limited (ARL), has rejected AMG’s contention that the transaction that ARL concluded in 1996 with T & N Plc, the former owner of Shabanie Mashaba Mines Private Limited (SMM), broke UK law.

AMG, a nominee company incorporated in Zimbabwe, had argued the sale of SMM to ARL infringed Section 151(2) of the UK Companies Act in its formation and or performance; and ARL had been in default under the Sale and Purchase Agreement concluded with T & N Plc and the Memorandum of Deposit and Charge (MDC) so as to entitle T & N to sell the shares to AMG in November 2004 as part of the reconstruction scheme initiated by the Zimbabwe government for the purpose of expropriating Mawere’s assets.

The ruling delivered on Thursday puts to an end proceedings that were initiated by AMG on behalf of the Zimbabwe government on January 4, 2005, seeking the rectification of the register of two companies incorporated in England, SMM Holdings Limited (SMMH) and THZ Holdings Limited (THZH) through which Mawere’s ARL held its interests in Zimbabwe pursuant to the Sale and Purchase Agreement.

The Zimbabwe government claimed to be entitled to the shares on the basis of a purchase exclusively funded by the Reserve Bank of Zimbabwe (RBZ). The Zimbabwe government contended that Mawere was no longer a factor in the SMM saga, as he no longer any interest in the assets of the company.

The Zimbabwe government argued that T & N sold as mortgagees of the shares held by ARL in the English companies in the exercise of the power of sale given by the document of security – the memorandum of deposit and charge.

In issue, in England, was the question of whether the power of sale had ever arisen under the purchase contract entitling T & N to sell the shares to AMG.

On February13, 2008, Mr. Justice Evans-Lombe, ruled that the power of sale had never arisen at the time of the purported purchase of the claims of T & N against ARL.

In addition, he rejected the contention by AMG that the Sale and Purchase Agreement infringed the Companies Act in so far as the purchase of SMMH and THZH shares was to be exclusively financed by the use of SMM’s export proceeds.

Accordingly, the two issues on appeal were: (i) Did the SPA infringe Section 151(2) of the Companies Act 1985? and (ii) Was ARL in default on 5 November 2004 when T & N purported to sell the shares in SMMH and THZH to AMG?

Mawere, who has taken South African citizenship, has previously accused the Zimbabwe government of systematically attempting to alienate him from his Zimbabwean assets using state machinery.

His problems began in May 2004 when the government unsuccessfully sought to extradite him from South Africa.

This was then followed by Justice Minister Patrick Chinamasa taking the decision to specify Mawere on July 9, 2004 and place him under police investigation on allegations of externalizing foreign currency.

On August 26, 2004, all companies deemed to be under the control of Mawere were specified, paving the way for the promulgation of a decree allowing the Zimbabwe government to assume control and management of Mawere’s companies without the involvement of the Courts.

On September 6, 2004, Arafas Gwaradzimba, a close ally of Chinamasa, was appointed as the Administrator of Mawere’s companies using draconian powers pursuant to the operations of the expropriation legislation.

However, for the government to legally assume control of Mawere’s companies the missing link was the control of the two UK companies. It was, therefore, important for the state to acquire the shares in the companies as a final measure to ensure that Mawere was no longer in the loop of control.

Speaking from London on Thursday evening, Mawere said: “Our challenge has paid off. The Court of Appeal comprising the Chancellor of the High Court who wrote the judgment and Lord Justice Hooper and Lord Justice Wilson unanimously upheld Mr. Justice Evans-Lombe’s judgment and concluded that ARL has the better right to the bearer share warrants of SMMH and THZH.

“The dismissal of the appeal with costs is a major setback for the government of Zimbabwe. This is a significant day for all Zimbabweans who are interested in knowing the true nature of how their government is now operating.”

Mawere said Zimbabwe’s future is doomed as long as the government which can barely afford to pay for food manages to find significant sums of money to “pursue anything but national interest”.

He added: “It is important to note that Minister Chinamasa who has been at the centre of the government’s assault on me is still the principal defender of the status quo ante. I never thought that after 28 years of independence I would look to England for justice against a government that purports to stand for empowerment.

“The effect of the judgment is to render all the actions that have been taken by Gwaradzimba on the premise that he was the de facto shareholder of SMM null and void.

“The law requires that the shareholders of the company placed under reconstruction approve the reconstruction scheme. After four years of going through this ordeal, the government has now been told by the English Court that they need my consent to legalise what they have already done.”
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