When justice visits no man’s land

Darlington Musarurwa Business Editor
FOR the best part of 15 years, since 2004, swashbuckling businessman Mr Mutumwa Mawere ran, ducked and dived from the clutches of Zimbabwean authorities who sought to bring him to account for more than R18 million externalised from asbestos miner, Shabanie Mashaba Mine (SMM).

As fate would have it, the clichéd long arm of the law has caught up with him: SMM has instituted sequestration proceedings in the South African High Court to recover the R18 million owed by Messrs Mawere and Parmanathan Mariemuthu, his fellow director. The company’s pursuit for justice hinges on an October 11, 2012 ruling made by then South African High Court judge Justice Nigel Willis that made the duo liable for prejudice suffered by SMM.

Though the SA-registered companies that were central to the transfer of funds from SMM’s Zimbabwe shareholders – Southern Asbestos Sales (SMM’s marketing unit in South Africa) and Petter Trading, an equipment supplier – were liquidated in 2005, the judgment was made in line with Section 141(1) of the Companies Act, which makes “reckless” directors accountable to victims of their actions”.

Justice Willis described the suit as “one of the most unpleasant civil cases in which I have presided in my 14 years on the bench,” adding: “The case reeks of contempt not only for those who have lost employment as a result of the alleged fraud but also the court, including the individual persons who have been judges in this saga, and the court’s rules and processes.” In essence, the landmark ruling essentially redefines cross-border investments and extra-territorial expectations for investors between Zimbabwe and South Africa. Mr Mawere has exhausted all the legal options to appeal the ruling. His efforts have come to naught. Both in Zimbabwe and in South Africa.

His secret seems to have been the ability to conveniently occupy “no man’s land”, existing in a miasmic legal-commercial cloud in which neither the Zimbabweans nor the South Africans could bring him to book. Since he held citizenship in both countries, he was Zimbabwean when it suited him and South African when need be.

His companies that are central to the current saga were similarly structured. SMM was a Zimbabwean company, while its sister corporations, Southern Asbestos and Petter, were incorporated in South Africa. All fell under Africa Resources Limited, which was incorporated in the British Virgin Islands – a tax haven. Much of Mawere’s character is revealed in a letter he wrote on October 4, 2012 complaining about the conduct of Justice Willis’ purported willingness to enforce the jurisdiction of SMM’s claims over South African companies.

In his pleadings to South African Supreme Court judge Justice Mogoeng Mogoeng, Mr Mawere claimed he “became a target of the Zimbabwe Government following my decision to decline taking a position of an office bearer of the ruling party’s (Zanu-PF) provincial committee in October 2003 after being elected in absentia without being consulted”.

He accused the Zimbabwe Government of disguising itself as a company through the Reconstruction Act and trying to apply Zimbabwean legislation “extra-territorially”. For him, Southern Asbestos and Petter were not subject to Zimbabwe’s laws – never mind that they were taking millions from Zimbabwe.

The Reserve Bank of Zimbabwe dispatched a team to South Africa in March 2003 to see Southern Asbestos’ books, but they were informed that they had no legal basis to do so without a court order. On May 17, 2004, the Zimbabwean authorities issued a warrant of arrest for the businessman. He was arrested eight days later.

But his South African citizenship — acquired in 2002 — came in handy. “It is significant that at the time, the authorities in Zimbabwe were operating under the assumption that I was still a Zimbabwean citizen in which case the alleged holding of foreign funds by a resident of Zimbabwe would have fallen within the ambit of the Zimbabwean exchange control regulation hence the choice of words,” Mawere claimed in his affidavit.

The extradition application was dismissed on June 29, 2004. On July 9, 2009, Mawere was specified in terms of provisions of the Prevention of Corruption Act of Zimbabwe. The former World Bank staffer said the Reconstruction Act relied on by Zimbabwean authorities was a “penal one” and offended provisions of South Africa’s constitution.

Added Mawere: “The fact that a number of litigations have been entertained in this jurisdiction based on the rights conferred on the litigants by the draconian law must be a cause of concern to all South African investors in Zimbabwe and no doubt a source of celebration and vindication in Zimbabwe that laws of this nature pose a real threat to the rule of law in South Africa.”

All that has now failed to stick. His only hope is now Mr Cleopas Sanangura — the financial manager of Southern Asbestos at the time the illegal transfer of funds happened between May 2004 and December 2004 – who has applied for the October 11, 2012 ruling to be rescinded.

If that fails, Mr Mawere’s empire will definitely be at risk. As things stand, an instructive precedent has since been set where directors of failed companies should be answerable and compensate prejudiced shareholders. In as far as juridisctions are concerned, there should never be a no man’s land.

And while it also seems that a prima facie case of fraud was established by Justice Willis’ judgment, it is unclear if Zimbabwean authorities will level criminal charges against the businessman.

SMM administrator Mr Arafas Gwaradzimba said last week, “I will not say whether or not SMM will file any criminal case against anyone at the moment. In respect of matters of SMM’s interests, and where necessary, legal action has been taken so far.”

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