(HERALD) ‘ZMDC can't handle SMM'

‘ZMDC can't handle SMM'
Monday, 18 July 2011 02:00
By Zvamaida Murwira

THE Zimbabwe Mining Development Corporation has no capacity to lead the turnaround of the Shabanie Mashava Mines, says a parliamentary portfolio committee.

But a mediator with vast experience - the Reserve Bank of Zimbabwe, for example - should come in to mediate between the feuding parties, the committee has recommended.
The central bank had shown expertise and success in resolving challenges that rocked the banking sector in the last five years, said the committee.

The Committee on Mines and Energy has said the RBZ should recover the US$2 million that it advanced to AMG Global for the purchase of SMM Holdings equity from former owners T & N on behalf of the Government.

The bid to secure the shares flopped after a United Kingdom court dismissed an application by AMG to have it regarded as the legitimate shareholder of SMM.

Committee chairperson Mr Edward Chindori-Chininga announced this on Wednesday as he presented a report on the state of affairs for the mining giant.

"The committee, however, does not recommend the use of ZMDC as a vehicle for investment into SMM," the report said.

"The mines have great potential and the solution to resuscitation of the mines lies in finding a lasting solution of the dispute and the creation of an environment that will allow and attract massive financial investment into the mines."

Mines and Mining Development Minister Obert Mpofu recently announced that his ministry had assumed the management of SMM through ZMDC, taking over from Justice and Legal Affairs Minister Patrick Chinamasa.

The committee, said Mr Chindori-Chininga, had noted that the central bank had offered to mediate and this should be considered.

"The RBZ, after careful consideration, despecified former bank executives and authorised the closed and restricted banks to re-align, re-invest and re-open for business," said Mr Chindori-Chininga.

On the US$2 million advanced by RBZ to AMG Global, the committee noted that the money had been paid to T & N in the UK by SMM State-appointed administrator Mr Afaras Gwaradzimba for the purchase of bearer share warrants.

The Government has since lost a court case after a judge ruled that Africa Resources Limited, a company owned by South African-based Zimbabwe businessman Mr Mutumwa Mawere, had not defaulted in payment of SMMH to warrant AMG Global to make a bid for the takeover.

"The committee believes this money could have been used to pay the wages and salaries of the suffering workers at the two mines.

"These funds must be recovered to contribute to national development or priority needs," said Mr Chindori-Chininga.

In his evidence to the committee, RBZ Governor Dr Gideon Gono said the central bank should be refunded the money, as he had not seen the bearer share warrants.

The committee also noted the Reconstruction of State Indebted and Insolvent Companies Act lumped all debts owed to State entities by SMM. They felt this was not prudent as firms such as Zesa, RBZ and the National Social Security Authority had legal powers to claim any debts without the State's assistance.

"The reconstruction laws, if assigned to any authority with mischief, can result in many of our farmers and many companies in mining, manufacturing and commerce who owe or are in debt to RBZ, Zesa or NSSA being indebted to the State and being put under reconstruction," said Mr Chindori-Chininga.

The committee noted that Mr Gwaradzimba, Harare lawyer Mr Edwin Manikai and some other SMM board members were beneficiaries of a payment of at least US$700 000 from TAP Building Products, a Zambian company that had been erroneously placed under reconstruction.

"The RBZ Governor was unable to confirm to the committee whether these payments were cleared under the Exchange Control Regulations applicable at that time," he said.