Brian Kazungu, 23/04/2021
In an article published by the Herald on 22 April 2021 under the title ‘SMM workers want Gwaradzimba out, Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU) were said to have applied for the removal of Gwaradzimba as Administrator of SMM.
It was also reported that they had done this through invoking Section 5(2) of the Reconstruction of State-Indebted Insolvent Companies Act (Reconstruction Act) which reads as follows:
Section 5(2) of the Act reads as follows: “The appropriate Minister, after consultation with the administrator, may at any time and in any manner, on the application of a creditor, a member of the company, the Master or any person who would have been entitled to petition for the winding-up or apply for the judicial management of the company concerned, vary the terms of a reconstruction order or cancel it by further notice published in the Gazette.”
However, Mr Tapuwa Chitambo, the Secretary General of Friends of SMM (FOSMM) highlighted that some conflicting issues around the status of SMM makes it strange for workers to seek help from the Mines Ministry.
“I find it strange that representatives of ZDAMWU would seek refuge from the Minister of Mines by seeking a remedy that is not specifically provided for in terms of the Reconstruction Act before establishing the status of SMM. Is SMM, a company as defined in the Companies Act or it is a creature that defies any legal persona?
Minister of Mines, Winston Chitando, and Minister of Finance, Mthuli Ncube, are on record having asserted that SMM is a subsidiary of the Zimbabwe Mining Development Corporation, as also confirmed by Gwaradzimba in a meeting with ZDAMWU representatives in March 2021.
Finance Minister, Mthuli Ncube, in his maiden budget included SMM on his list of companies to be privatized.
In clarifying his standpoint, Chitambo revealed that as Friends of SMM (FOSMM), they had made their own investigations and established the following facts:
1. Following the commencement of the reconstruction of SMM on 6 September 2004, Gwaradzimba’s first act was to dismiss the company’s board of directors.
2. In December 2005, the Reconstruction Order that was issued by Chinamasa without any judicial involvement was confirmed by Justice Kamocha on an ex-parte basis.
3. The records kept at the Registrar of Companies in Bulawayo show that on 12 November 2009, in terms of the CR2 form filed and signed by Gwaradzimba, shares were alloted to two companies Nickdale Investments Private Limited (Nickdale) that was issued 76% of the shares in the company with the balance of 24% being held by a company called SMM Holdings Limited (UK) whose address strangely was Gwaradzimba’s.
4. It follows that SMM could only be registered in the Records kept by the Registrar if it met the test of being a company and this precludes the involvement of the Minister of Mines in the affairs of the company.
5. A company necessarily is a creature of law and as such the Reconstruction Act creates no company but was part of a scheme to defeat the ends of justice.
Based on their findings, Chitambo added that in making an application to the Mines Minister, it is either ZDAMWU representatives know something that is not in the public domain or they just want to expose the fraud that has been a constant characteristic in the SMM saga.
He also stated that an admission by Gwaradzimba that his mandate was terminated, would follow that the application by ZDAMWU is ill-advised and should have been preceded by an application asking ZMDC to confirm its relationship with Nickdale.
Nickdale holds the majority of the shares issued by SMM, a development which makes the Minister of Mines to cease to have any legal nexus with SMM from the day shares were issued to the new shareholders.
This paper has established that a resolution was passed on 1 September 2011, ordering Gwaradzimba to hand over the Nickdale share certificates to former Minister of Mines, Dr Obert Mpofu, by the ZMDC board.
The shares were then handed over as ordered leading to Minister Chitando informing Parliament that SMM was a subsidiary of ZMDC based on the fact that the shares in Nickdale that were held by the RBZ were now held by ZMDC.
Chitambo concurred with ZDAMWU that Gwaradzimba continues to hold the Administrator’s office illegally since he relinquished this position to the ZMDC board chaired by Mr Ndlovu and thus also meaning that his purported ‘resurrection’ was unlawful and of no force and effect.
“Based on the above, it is bizarre that ZDAMWU would seek protection from a law that is no longer applicable in relation to SMM by asking the Minister of Mines to immediately replace Gwaradzimba with their nominee, Mr Taurai Changwa, when they are neither directors nor shareholders of SMM.” He said.
Mr. Frederick Kyle, a lawyer who has represented a number of companies and individuals including Mutumwa Mawere in litigations also commented on the matter.
“Mr. Gwaradzimba under oath has deposed to various affidavits asserting that SMM is a company still under his control and management yet in March 2021, he informed representatives of ZDAMWU that he was relieved of his duties in relation to SMM by Hon Mpofu.
He claimed that notwithstanding the fact that the shareholding of SMM had been altered and a new board appointed as required in terms of the Reconstruction Act, the reconstruction order needed to be cancelled in terms of s35 of the Reconstruction Act.
Mr. Chinhema on behalf of ZDAMWU said Gwaradzimba had intimated that Obert Mpofu (former Mines Minister) was responsible for the appointment of the board and new chief executive.
He, however, advised the workers’ union that he was re-appointed informally without any legal instrument providing for this clandestine appointment.
Pursuant to the operation of the ZMDC resolution, Mr Gwaradzimba was relegated to only deal with litigation brought against SMM by Mr Mawere.
However, it is not clear who Mr. Gwaradzimba reported to and still reports to since the handover of the control and management of SMM. Does the Minister of Justice continue to exercise jurisdiction in relation to a reconstructed company?
Assuming the control and management of SMM was not transferred to the restructured board that could only have been appointed by the company’s shareholders, then the records of SMM cannot be kept by the Registrar of Companies.
This begs the question as to whether the control of a company can be vested in anyone who is not its directors…. It is also curious how Gwaradzimba implemented a scheme of reconstruction without the knowledge of SMM’s previous shareholders.
Representatives of ZDAMWU have taken the approach that Gwaradzimba’s relationship with the company was not terminated as a consequence of the changed legal status of SMM from a company under reconstruction to a reconstructed company.
Ms. Janice Greaver, a member of the C2C-BOAF Corporate Literacy Initiative, said: “This matter exposes the pervasive illiteracy in our communities.
ZDAMWU members clearly believe that they now hold the position of some proxy shareholders of SMM on account of accrued wages and salaries incurred after reconstruction.
A company to me is a creature of law. It must have director to act in its name and not a Minister. This is absurd.”
Disgruntled SMM Workers Who Are Owed About US$36 Million Want ‘Incompetent’ Administrator Gwaradzimba to Be Given a Red Card
Brian Kazungu, 20/04/2021
Disgruntled workers from SMM Holdings (Pvt) Ltd who are claiming US$19 million in outstanding salaries from January 2012 to November 2017 and about US$17 million from December 2017 to date have called for the SMM Administrator to be given a red card.
The accrued dues are said to have been incurred during Gwaradzimba’s tenure wherein as SMM Administrator in terms of the Reconstruction Act, he was supposed to firstly dismiss the company’s board of directors in order for him to be vested with sole control and management of the company.
Mr. Gwaradzimba who assumed office on 6 September 2004 and was officially appointed on 14 September 2004 to be the SMM Administrator, was controversially awarded the contract without being subjected to any competition.
SMM was placed under extra-judicial reconstruction which divested and deprived shareholders and directors of the control and management of the company pursuant to an order issued by the then Minister of Justice, Legal and Parliamentary Affairs, Patrick Chinamasa.
According to information seen by this publication, SMM workers, through the Zimbabwe Diamond and Allied Mineral Workers Union have thus far sought the help of lawyers in their endeavour to have Gwaradzimba removed from the position of Administrator.
In their application which was filed with the Ministry of Justice, Legal and Parliamentary Affairs on the 13th of April this year, the union said that the Reconstruction exercise which brought about Gwaradzimba “has yielded no fruit whatsoever over the past two decades”.
They further added that the company is not benefiting anything from Gwaradzimba’s appointment as ‘apparently’ evidenced by the lack of ‘commercial production’ at the mines.
In a sworn affidavit, as a workers representative, Mr Justice Chinhema, Secretary General of the Zimbabwe Diamond and Allied Minerals Workers Union narrated the poor conditions that SMM employees have been subjected to, including lack of income and poor access to health facilities.
He said that their call for Gwaradzimba to be shown the red card stems from the plight of workers who are owed millions of United States dollars in arrear salaries and also highlighted that the same workers are exposed to terrible suffering because of evictions from their houses.
“The second respondent (SMM), under the administration of the first respondent (Gwaradzimba), has failed, neglected or refused to settle salary arrears in excess of over US$19 260 667.99 owed to current workers since January 2012 to November 2017. Salary arrears from December 2017 to date are yet to be computed.
991 ex-employees are owed US$17 676 537.50…..” Chinhema narrated.
According to details in the workers’ application to the Mines Minister, other creditors owed substantial amounts include regulatory authorities, the Mining Industry Pension Fund, NSSA and ZIMRA who collectively have an amount due totalling over US$6 million.
On behalf of SMM employees, Chinhema also argues that Gwaradzimba’s continued reign is unlawful following the transfer of the Ministerial supervision of the Administrator from the Ministry of Justice to the Ministry of Mines as directed by late former President Mugabe.
“Pursuant to that restructuring, the 1st respondent (Gwaradzimba) informed us that the administration and management of the 2nd respondent (SMM) was effectively transferred to a Board of Directors under the Zimbabwe Mining and Development Company (ZMDC) and headed by one Mr Ndlovu.
The 1st respondent (Gwaradzimba) intimated that Honourable Obert Mpofu was responsible for the appointment of the board and the new Chief Executive Officer. The 1st respondent (Gwaradzimba) admitted at that stage that his mandate was terminated.” Chinhema said.
Chinhema clarified that Ministerial oversight on SMM was transferred by the late President Mugabe to Mpofu when shares that were allotted by Gwaradzimba to a company owned by the RBZ, Nickdale Investments Private Limited, were transferred to the Zimbabwe Mining Development Corporation (ZMDC).
The shareholding scheme which was purportedly approved by shareholders and creditors is said to have been merely a gathering of people who were handpicked by Gwaradzimba who ‘fraudulently’ represented SMMH, a UK based company without its knowledge and consent.
Pursuant to this share transfer, SMM’s control and management was vested in ZMDC as a shareholder of Nickdale, leaving Gwaradzimba with no control except to handle SMM litigation matters.”
However, while commenting on the workers’ resolve to remove Mr. Gwaradzimba from his position following an application submitted to Minister Ziyambi Ziyambi, Mr. Mulaudzi of AG Mulaudzi Attorneys highlighted a number of challenges associated with the approach adopted.
“There is no provision for the removal of the administrator once appointed by the Minister. Even the Court has no jurisdiction to remove let alone cancel or vary the Ministerial order.
It would be interesting to see whether the section relied upon to impeach Gwaradzimba will come to the rescue of the union.
This Act was carefully crafted to prevent any aggrieved party from having any recourse either to remove the Administrator or vary the order without the involvement of the Administrator who has to be consulted by the Minister before any variation can take place.
While the workers accuse Gwaradzimba of incompetence and gross failure, the legal status of SMM is yet to be established and the Minister is yet to find any fault with the Administrator.
Despite the transfer of oversight, Chinhema revealed that Gwardzimba was surprisingly once again ‘informally’ tasked with administrative duties after the ZMDC Board squandered a US$16 million dollar capital injection which was splashed on purchasing of motor vehicles and salaries.
“His (Gwaradzimba) re-appointment was not in terms of the law but owing to the failure to follow the stipulated procedures in the Act, he assumed a de facto role as the administrator of the 2nd respondent (SMM).
He has continued to hold this office illegally as he had, by conduct and by fact, relinquished this position to the ZMDC board as chaired by Mr Ndlovu.” Chinhema appealed.
SMM, the once vibrant mining empire in Zimbabwe was controversially placed under the control and direction of a State appointed Administrator based on allegations that it was financially troubled and that its shareholders had externalised money and were acting with imprudence.
However, the RBZ and investigators who were tasked to do a fact finding work on the company dismissed these allegations and advised against placing SMM shareholders under specification and warned against the continued subjection of the company under the Reconstruction Act.
Regardless of the controversies surrounding the SMM Administrator’s appointment, the then Minister of Justice, Legal and Parliamentary Affairs, Patrick Chinamasa was adamant that his choice in Gwaradzimba was for the good of all the stakeholders.
When he was interrogated by legislators such as Job Sikhala and Mr Madzimure in a Parliamentary Debate on the 20th of July 2005 under the motion “Economic Challenges Facing Zimbabwe”, Chinamasa said “the government had to intervene because workers had spent 3 months without pay”.
Sikhala also warned against constitutional breaches that were inherent in the Reconstruction Act and queried the special interest that was being shown in the company by the Government Executive who were disregarding the rule of law in handling the matter.
Chinamasa then defended Gwaradzimba’s appointment by saying “So the government had to intervene in the national interest in order to rescue the company in order to ensure that the company continues to be a leading foreign exchange earner in our country.”
However, interestingly, the situation at SMM has seriously worsened in almost two decades and yet the same Administrator who was brought in as a saviour is still in charge of the sinking ship thus raising eyebrows on the real motivations which were behind the unceremonious ‘company grab’ by the government.
SMM’s Administrator, Afaras Gwaradzimba Struggles to Provide Answers on Mawere’s Mount Pleasant House after 17 Years of Being in Charge
Brian Kazungu, 28/03/2021
Afaras Gwaradzimba, the State appointed Administrator for Zimbabwe’s Shabani Mashava Mines (SMM) which was placed under Reconstruction in 2004 is struggling to provide answers on the status of a house in Mount Pleasant, Harare which belongs to Mutumwa Mawere.
When asked about an update, after 17 years of being in charge of the house which was earning rentals from tenants, Gwaradzimba expressed ignorance on how under his authority, SMM was collecting rentals on a private property belonging to someone else.
He confirmed that even though SMM did not have the house’s title deeds, the company was actually receiving rentals for the property and paying the related rates.
In an effort to treat this potentially criminal case with a civil approach and make good the anomaly, Gwaradzimba made instructions to the effect that a Trust Account be created so that money can be properly accounted for.
“I am advised by Mr. Mutumwa Mawere himself that he holds the title deeds for the Mt. Pleasant house, and the Deeds are in his name. I will ask him to send me a copy of the deeds.
I there kind (sic) ask that you create a Trust Account under SMM, transfer all the rentals that have been received from the lease of the house, into that Trust Account and then charge against the account, all expenses paid by SMM in respect of the house, including management fees payable in accordance with the Estate Agents Act.” Gwaradzimba instructed SMM Management
He could however not explain how the current arrangement came to be and referred further correspondence to the Dube, Manikai and Hwacha (DMH) law firm which is the company’s legal representative.
Mawere who bought the house when he was still in the United States of America said that he never made an arrangement with SMM to manage his personal property since there was a tenant paying rent subject to management by an estate agent.
He questioned how the property ended up being managed by SMM under Gwaradzimba’s authority and yet state power was only limited to the affairs of the company and not to the private property of the owner.
“SMM was my company. Mnangagwa/Chinamasa, using Gwaradzimba/Manikai used state power to introduce a decree that had the effect of divesting and depriving the shareholders and directors of the company of the right to control and direct the company.
The control and management was then vested with Gwaradzimba. Prior to this, I had a relationship with the company and after this, by law, I ceased to have any relationship with the company.” Mawere said
According to the law, as per the reconstruction of SMM, state power was limited to the affairs of the company and not to the private property of the owner.
The reconstruction of SMM came after Mawere was allegedly accused of foreign currency externalisation which was however proved to be lacking substance according to a report on the findings of the investigation.
In the report, it was stated that “Following extensive and exhaustive investigations, it was established that the allegations of externalisation against Mr. Mawere were unfounded and baseless. It was also established that Mr. Mawere was neither a director nor shareholder of SMM. There was no direct legal and factual nexus between him and the company.”
Mawere was then specified after a failed attempt by the government of Zimbabwe to extradite him from South Africa and his company was subsequently placed under reconstruction.
According to the same report, the purpose of the specification was to further investigations on the activities of Mawere’s business empire.
The report also reveals that Gwaradzimba and Manikai who is part of the law that has been tasked with the issue, both had a previous relationship with SMM before the specification and reconstruction of this entity that had asbestos mining interests in Zvishavane and Mashaba.
It states that “Mr. Gwaradzimba was the auditor of SMM during 1996 through 2001. Mr. Manikai was the legal advisor of SMM and ARL from 1996 through 2004. Notwithstanding, Mr. Gwaradzimba was appointed Administrator of a company that he once audited.
Mr. Manikai is now acting against his former client. This raises serious legal and ethical questions that need to be addressed at the appropriate time. However, it is the considered opinion of the Investigators that the appointment of Gwaradzimba and Manikai was ill considered and, therefore, inappropriate.”
Various political and economic experts have reiterated that the issue of the rule of law and property rights posed a serious challenge on the economy especially when it comes to attracting both local and international investors into the country’s ailing economy.
Zimbabwe’s economy is currently mired in serious challenges characterised by lack of employment, poor infrastructure, industrial closures and rampant corruption across the sectors.
In separate investigations and findings, while still being the Governor of Zimbabwe’s Central Bank, Dr Gideon Gono castigated the procedural anomalies adopted in handling the SMM matter and cautioned of Gwaradzimba’s probable selfish personal interests in the whole saga.
Gono pleaded with President Mugabe to respect the rule of law for the economy’ sake and for the good image of the country by recommending the de-specification of Mawere and for the return of his companies and assets back to him.
“Though there is reference to the Fifth Table of the Seventh Schedule of the Companies Act, which sets the payment levels for liquidators and administrators, the fact still remains that Mr
Gwaradzimba, the Administrator is getting payments set at 6% of gross proceeds, of all
SMM companies which is even more lucrative than shareholders themselves, let alone revenues to Government.
Your Excellency, there is genuine need for the relevant sections of the
Companies Act to be modified. The Administrator’s activities also seem to have entrenched interests of needlessly permanently dispossessing all Mr Mawere of his assets.
…….It is also recommended that Your Excellency approve the de-specification of Mr Mawere and his companies so as to pave way for a new beginning, particularly in the context of investment promotion and empowerment in Zimbabwe.” Wrote Dr Gono.
Five (5) Important Types of Capital That You Must Have As an Entrepreneur
Munyaradzi Chikomba, 27/03/2021
Many people across the world definitely want to venture into business but the biggest challenge which is stopping them from starting their own enterprises is lack of capital.
It is because that reason that I want to highlight that Start-up Capital does not only mean liquid capital or money.
Yes indeed, you may not possess cash at the moment and yet you may have the following forms of capital which you can actually use to advance your entrepreneurial ambitions.
Relational/Social capital – A relation is defined as the way in which two or more people, groups, and countries, talk to, behave toward, and deal with each other.
In life, you talk to many people and as a business person, you should learn to establish strategic business relationships which will eventually help you in the near future. You should strive to establish, nature and cultivate good relations so that you can in turn also benefit from them.
Good business relations have the capacity to advance your life for the better.
If you borrow money for no interest or ask for a favor from a colleague without paying for it, you would have actually used what is called social capital.
Social capital can also link you to new customers and give you more visibility without incurring serious advertising costs. In business, good relationships are very important, because without them, you will quickly go out of business.
Intellectual capital – Intellect is defined as the capacity for rational or intelligent thought especially when highly developed.
You must always understand that information or knowledge is power and as such, if you can use information to advance your ventures, it will bring you a great return on investment. You actually trade in the knowledge that you have in exchange for liquid capital.
For example, if you are very knowledgeable in a certain field, you can decide to offer tutorials or consultancy in that regard and people will give you money (liquid capital).
Intellectual capital can also save you money especially when it comes to doing some things on your own instead of paying someone to do it on your behalf.
When you lack information, you may end up paying for things that can be possibly be done for free like online applications or submissions for certain documents which other peopl can charge you if you ask them to do it for you.
Skills capital – A skill is a learned power or dexterity of doing something competently: a developed aptitude or ability.
There are those things which you are able to do with utmost easy and yet they have a monetary value.
You may be so good at doing these things to such an extent that it is almost impossible for people to forget you. Such an ability on its own is a form of capital which you exchange for money. It is therefore very important for you to develop your skills.
If you can design fliers on your own, you will not pay for that service and hence you would have saved a few dollars. Your skills capital can save you some money which you can then use for other more important things in your business.
Emotional capital – An emotion is a conscious mental reaction (such as anger or fear) subjectively experienced as strong feeling usually directed toward a specific object and typically accompanied by physiological and behavioral changes in the body.
Your ability to face what life throws at you is part of your capital because remember an emotionally unstable individual can’t make sound decisions and yet business is all about making sound and profitable decisions daily.
Emotional capital is very important because it defines and determines the effectiveness of every other type of capital mentioned above.
Management of emotions is a fundamental aspect in business because if you can’t manage your emotions, you will make irrational decisions which are detrimental to your company and thus negatively affecting all the other forms of capital.
People who are familiar with stocks (shares) and investments will tell you that good management of your emotions is very important since it enables you to make sound decisions.
Spiritual capital– The word spirit is defined as a force within a person that is believed to give the body life, energy, and power.
Spirituality in simple terms is knowing oneself deeply and relating it to your daily routine and calls.
This type of capital calls for you to invest in your inner being so that you can be in sync with your creator or beliefs despite your faith.
Spiritual capital is beyond religion because you can be very spiritual but not inclined to any religion. Spiritual capital is very important because it makes you to believe even when there is no or little hope and it keeps you going even in dire situations.
Yes, business may not be anchored on spiritual beliefs since its runs on the laws of commerce but you must understand that businesses are run by people who are subject to spiritual realities.
If you take some time to study the lives of some leading business people around the world, you discover that they have a certain level of spirituality which influences their decisions.
Definitions in this article are taken from the Merriam-Webster Dictionary.
Munyaradzi Zindi Chikomba (The Social Architect) is a Co-founder & Executive Chairperson of Shanduko Foundation. He is a content creator and serial columnist who writes articles on social commentary and social affairs. He is passionate about building and shaping society through digital advocacy and media. He is an Editor In Chief at Peach Media Trust.
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