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(NEWZIMBABWE) Supreme Court upholds company grab law

Supreme Court upholds company grab law
by Staff Reporter
03/02/2011 00:00:00

THE Supreme Court has dismissed a constitutional challenge against a controversial law used to seize firms which are indebted to state-owned companies. Businessman Mutumwa Mawere, the disputed owner of Zimbabwe’s largest asbestos mine which was seized in 2004, challenged the constitutional validity of the law.

But in a majority judgement released this week, Chief Justice Godfrey Chidyausiku ruled that Mawere’s challenge had “no merit”. Three other judges, Justice Misheck Cheda, Justice Luke Malaba and Justice Paddington Garwe, concurred.

Justice Wilson Sandura was yet to present his opinion which the court said would be availed “in due course”.

The four judges ruled that it was “nonsensical” to allege, as Mawere sought to do, that all 37 sections of the Act, including the title of the Act, were in contravention of sections 16 and 18 (9) of the Constitution.

“The cause of action is very poorly defined in this application. The applicants do not set out the impugned sections of the Act in the founding affidavit. It would be nonsensical to allege that all the 37 sections of the Act contravene Sections 16 and 18 (9) of the Constitution,” the judges ruled.

Responding to the judgement, the South Africa-based Mawere, who has been battling to regain control of his Shabanie Mashaba Mines, said the ruling “affects all property-owning people as it entrenches the right of the state to assume a superior creditor status and the powers to expropriate property”.
“Using this law, the Supreme Court has now opened the door for the government to takeover companies,” Mawere said.

“To the extent that the Supreme Court has dismissed the application challenging the constitutionality of the Reconstruction Act, it means that any company that the government may wish to take over is vulnerable as the courts will not come to its assistance.”

Mawere lost Shabanie Mashaba Mines after the government claimed the company was insolvent, having failed to settle a huge debt to the power utility, ZESA. Mawere was then accused of “externalising profits” and fraud – including the allegation that he had used company profits to finance his acquisition of the mine, rather than dividends.

Mawere denies the charges and successfully blocked an attempt by the state-appointed administrator, AMG Global Nominees Private Limited, to buy shareholding of the UK-registered SMM Holdings Limited (SMMH).

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Mawere said: “What the law says is that if one is indebted to a state-controlled entity, all the Minister of Justice has to do is to allege fraud on the part of the shareholder of the targeted company and then, using this law, give the state and not the creditor superior powers to divest the shareholders of the control and management of their company.

“As illustration, if a company is indebted to ZESA, for example, in the ordinary course of business, the Minister of Justice instead of ZESA can unilaterally place the company under reconstruction without the involvement of the courts by merely alleging that the shareholder of the debtor to ZESA has committed fraud.

“This is how ridiculous the whole situation is. This judgement is not the end of the road. There was no finding against me in this matter rather the decision of the Supreme Court affects all property owning people as it entrenches the right of the state to assume a superior creditor status and the powers to expropriate property.

“The effect of the judgment is to give perpetual life to the law and protection to state actors who may wish to target certain individuals and companies with a view to taking over their assets.

“The Court has given a green light by ruling that self help activities do not pose any constitutional violation. If this does not pose a threat to the democratic constitutional order, then what does?”

Labels: MUTUMWA MAWERE

posted by MrK @ 5:49 PM