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SMM saga sucks in SA President

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BY MIRIAM MANGWAYA/DESMOND CHINGARANDE

FRIENDS of Shabanie and Mashava Mines Holdings (FoSMM) have filed papers at the Johannesburg High Court seeking an order to compel South African President Cyril Ramaphosa to ignore an administrator appointed under Zimbabwe’s Reconstruction of State and Insolvent Companies (Recon) Act to take charge of the Zvishavane-based asbestos miner.

In case number 21/38369, FoSMM claimed that the South African courts erred by recognising SMM administrator Afaras Mtausi Gwaradzimba in legal proceedings in that country without seeking leave of the courts.

The Reconstruction of State-Indebted Insolvent Companies Act was enacted by the late former President Robert Mugabe to reportedly protect SMM, formerly owned by Zimbabwean businessman Mutumwa Mawere, against legal action and attachment of the company’s property by local and foreign debtors.

FoSMM, a non-governmental organisation, which monitors corporate and public policy in the southern Africa region, cited Ramaphosa as the first respondent and his Trade and Industry minister Ebrahim Patel as the second respondent, in the application filed on August 12, 2021.

“This is an application to compel the first respondent in his capacity as the Chief of State, to reverse and ensure that the precedent set by the recognition and enforcement of State and Insolvent Companies Act, a law that was authored and implemented by the government of Zimbabwe in 2004 in relation to the affairs of SMM Holdings,” FoSMM said in the court application.

“The facts of this matter clearly expose the weakness of the South African judiciary to provide adequate safeguards to citizens under attacks by foreign States using laws that do not pass any constitutional muster.”

FoSMM argued that the Act was deficient in quality, and was in contravention of the South African public policy, international law, and Southern African Development Community (Sadc) Treat and Protocol on principles of democracy and rule of law.

“In this case, it is not in dispute that after failing in its attempt to extradite the shareholder using the judicial process in South Africa, the government of Zimbabwe proceeded to create special legal circumstances allowing for the executive branch of government to substitute the role reserved for the judiciary by divesting and depriving without notice, the control and management of SMM and replacing such directors with a government nominee,” FoSMM said.

Enactment of the Act followed a commercial dispute which spilled into South African courts after SMM failed  to pay Petter Trading (Pvt) Limited, a company based in the neighbouring country,  its dues for goods supplied, having been blocked by the Reserve Bank of Zimbabwe, according to court papers.

The proponent of the Reconstruction State-Indebted Insolvent Companies Act was then Justice, Legal and Parliamentary Affairs minister Patrick Chinamasa.

The Johannesburg court ruled in favour of Petter Trading, prompting the Zimbabwean government to enact the Reconstruction State-Indebted Insolvent Companies Act.

FoSMM argued that the administrators appointed by the State had no locus standi to represent the company in litigation processes in a foreign country.

According to papers filed at the courts, FoSMM approached the court after it emerged that current President Emmerson Mnangagwa seemed to be in full support of the Act, which it said, was repugnant to be recognised in South Africa.

“The law in question, to any reasonable person is pernicious and detestable as it violates some fundamental principles of justice, some prevalent conception of good morals, some deep rooted tradition of the common weal,” FoSMM
argued.

“SMM’s control and management was divested and deprived outside the four corners of judicial processes resulting in the company being converted into an organ of the State. The Reconstruction Act belongs to a class of law that is inimical to the rule of law and to the recognition of the authority of an administrator, a creature of statute, to represent the company poses so grave a threat to the rule of law in South Africa to allow the precedents to remain unresolved.”

FoSMM also sought the court’s intervention after its efforts to engage Ramaphosa and Patel were fruitless.

The organisation said it wrote to both respondents this year over the matter, but they did not respond.

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