22 November 2008
THE United Kingdom Court of Appeal has dismissed with costs AMG Global Nominees (AMG)'s application to be registered as shareholders of SMM Holdings and THZ Holding in another setback to the government's bid to seal its expropriation of Mutumwa Mawere's assets.
The South African based businessman immediately hit out at the government for wasting huge sums of foreign currency on a court case it had no chance of winning when millions of Zimbabweans were going hungry.
AMG went to court arguing the Sales and Purchase Agreement between Mawere's Africa Resources Limited (ARL) and Turner and Newell (T&N), the former owners of SMMH and THZH, infringed the UK Companies Act by providing financial assistance in the transaction.
AMG said by virtue of SMM exports financing the deal, SMMH had provided financial assistance to ARL.
AMG also argued that ARL was in default on November 5, 2004 when T & N purported to sell the shares in SMMH and THZH to AMG.
ARL purchased SMMH and THZH from T&N in 1996 for US$60 million. As part of the deal, ARL were to pay the amount in 12 monthly instalments of US$5 million each, but managed to pay US$37 million leaving a balance of US$23 million.
The agreement was that the bearer share warrants would be released once all payment had been made.
But in 2004, the government put Mawere's assets under the administration of AMG boss Arafas Gwaradzimba in line with the Presidential Powers (Temporary Measures) (Reconstruction of State-indebted Insolvent Companies) Regulations of 2004.
AMG then paid US$2 million to buy the share warrants arguing that ARL had defaulted in payment and claimed it was entitled to the shares.
But in a landmark ruling on Thursday, the court ruled that the 1996 Sales and Purchase Agreement did not involve any breach of Section 151 of the Companies Act either in its formation or in its performance.
It ruled that ARL was not in default for the purpose of Clause 8 of the Memorandum of Deposit and Charge (MDC) at the time of the conclusion of the AMG agreement. This means T&N was not entitled to sell shares to AMG.
In dismissing the appeal, the court ruled that ARL has the better right to the bearer share warrants of SMMH and THZH.
Had the court ruled in AMG's favour, it would have been registered as the shareholder of SMMH and THZH, sealing the expropriation of Mawere's assets. The control of the two UK firms was the missing link in the equation.
Mawere said the judgement vindicated his stance that the seizure of his companies had no legal basis and was politically motivated.
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