SMM sues Mawere

Nathan Mariemuthu, devised a scheme in which two South African firms withheld money due to SMM during a time the duo were at the helm of the mining firm.
The suit followed an agreement entered in 2004 by Southern Asbestos Sales that used to be a marketing arm of SMM in South Africa, to pay Petter Trading money owed by SMM in mining equipment supplies.
It was submitted that in the agreement, SMM  “purported” to be ceding to Petter a part of its claim against SAS, something the local asbestos firm argued was fraudulent.
The transaction, SMM said, had           the effect of prejudicing it and violated the country’s foreign exchange regulations.
SMM, under a State appointed administrator, Mr Afaras Gwaradzimba, contends that the money that was paid to Petter Trading should have been paid to SMM in reduction of money SAS owed to the asbestos mining firm from the proceeds of asbestos fibre sales.
The court reserved judgment in the case.
Mr Mawere opposed the suit citing various reasons.
He challenged the legitimacy and entitlement of SMM to sue him, saying legally he was still the shareholder of the firm. The Zimbabwean-born South African businessman who was despecified two years ago, questioned whether or not it was not a fact that SMM owed Petter Trading.
He urged the court to dismiss the application, saying it had nothing to do with pursuit of a legitimate and bona fide claim.
Mawere said the application was seeking to assert the interests of the Government of Zimbabwe that had already taken control of his assets.
“The approach of the first defendant has always been that this matter is a political one involving directly a foreign state approaching this court dressed as a company when in truth and fact, the company’s membership and control has been altered by an act of state,” said Mawere.
“Accordingly, a claim by the plaintiff against the defendants in South Africa, given the factual and legal matrix, represents an attempt by a foreign state to assert rights acquired through a law that is offensive to the constitution of South Africa.”
Mawere submitted that in December 2003, the foreign exchange surrender requirements were changed in Zimbabwe, reducing the amount available to SMM in foreign currency to pay to its creditors to which Petter Trading was one of the significant ones.
“Accordingly, SMM could no longer meet its obligations to its foreign creditors, including Petter,” he said.
Mawere said the ownership of SMM was in dispute, but it was critical that at the time of the alleged indebtedness of SAS to SMM occurred, the control of the asbestos mining firm was vested with him.
SMM, he said, had since altered shareholding and an interim board.  But SMM submitted that Mawere should be held liable for the money due to SMM.
Government took over the running of SMM in 2004 after it felt that the mining firm was heavily exposed.