It’s Controversy after Controversy for SMM Administrator Gwaradzimba as Allegations of Fraud Land on His Face

Brian Kazungu, 19/04/2021

The SMM Administrator, Afaras Gwaradzimba is engulfed in a dark cloud of fresh controversy following new allegations of fraudulent changes on the Companies share allotment form in order to make an ‘illegal’ transfer of shares to a ‘fictitious’ company called SMM Holdings (UK).

Even though the operations of companies in a given country are governed by a specific Act of Parliament, like the Companies Act, surprisingly, the form which was used for the transfer of shares in this case has two different Acts thus raising eyebrows on a potential case of fraud.

The CR2 form, now called CR11 which was used in this case is a statutory document in its own right in line with the Companies Act 24:03 but it was altered to also ‘illegally’ accommodate the smuggling-in of the Reconstruction of State Indebted and Insolvent Companies Act for the purpose of SMM share transfers.

Under this new revelation, Gwaradzimba is thus being accused of rewriting or amending the Companies Act without any legal authority to effect those changes and for violating the established legal proceedings in managing corporate issues.

The alleged fraud is said to have been necessitated by the fact that under normal circumstances, subject to the Companies Act, there is no provision for the involvement of a State appointed Administrator in the affairs of a company since a company is subject to control and management by its Directors.

Mr Mushai from the Companies Registry said that the CR2 form is a statutory document which means that it is a form required in terms of the relevant regulations and Act of Parliament.

He further added that if there is a new allotment of shares, there is a need for those responsible to submit another CR11 form rather than to alter the layout of such a statutory document.

In 2009, an attempted controversial takeover of SMM Holdings, a United Kingdom registered entity through AMG Global Nominees, a company owned by SMM Administrator, Gwaradzimba was short down by the Supreme Court in the UK under case A3/2008/0918.

However, under the new but contested company status, SMM Pvt Ltd which was 100% owned by SMM Holdings Pvt Limited is now under Nickdale Investments situated at the Reserve Bank of Zimbabwe and SMM Holdings Limited (UK) whose registered address is Block 2, Tendeseka Park, Samora Machel Avenue in Harare, Zimbabwe.

It is therefore not clear how a foreign registered company is using a local address for its correspondence and thus further raising eyebrows and speculation on an attempt to secretly highjack a company from its actual owners.

In a letter copied to Mr. Gwaradzimba as well as to the Minister of Justice, Legal and Parliamentary Affairs and the President of Zimbabwe, SMM Holdings is contesting the new share arrangement as fraudulently illegal.

“Based on the records kept at the Registrar of Companies, it is clear that it was represented as true and fact that a company by the name SMMH Holdings Limited (UK) was allotted shares and the address of this fictitious company was fraudulently represented as a Zimbabwean address notwithstanding the fact the UK Court of Appeal precluded no other company except our company to be a shareholder of SMM even if the reconstruction scheme that was purportedly approved and implemented without our knowledge and consent was to be accepted as a lawful scheme.

SMM Holdings is also seeking clarity on the basis upon which a company take over which was dismissed in a United Kingdom Supreme Court went on to be successfully recognized as legal in Zimbabwe when the company in question remains the same.

It also further highlights and provides evidence to the fact that Mr Gwaradzimba was well aware of the United Kingdom Supreme Court ruling which he went ahead to act against.

“It is worth highlighting that prior to the placement of SMM under extrajudicial reconstruction and the appointment of Gwaradzimba as Administrator, our company was the sole shareholder of SMM.

..It will be noted that while our company was divested of the control and management of SMM on the basis that SMM was indebted and insolvent, the government of Zimbabwe used Mr. Gwaradzimba’s personal company, AMG Global Nominees Private Limited (AMG), the appellant in this as a vehicle to acquire the bearer share warrants in SMMH…

It follows that when Mr. Gwaradzimba filled the papers in Zimbabwe on 12 November 2009, he has constructive knowledge that the attempt to acquire the shareholding in SMMH had failed and as such, there could be no basis of any lawful relationship between AMG and SMMH.” SMM highlighted.

Gwaradzimba is no stranger to controversy in the SMM matter since even from the start, his appointment, modus operandi and remuneration has been challenged by various stakeholders including the Reserve Bank of Zimbabwe and by investigators that were tasked with a fact finding mission on allegations of criminal activities in the company.

Investigators in the SMM saga found Gwaradzimba’s appointment to be a conflict of interest since he was a former SMM auditor. “….it is the considered opinion of the Investigators that the appointment of Gwaradzimba and Manikai was ill considered and, therefore, inappropriate…” The investigators said.

In the same vein, the RBZ also regarded his remuneration in the SMM deal to be ‘unscrupulous’.

“…..the fact still remains that Mr Gwaradzimba, the Administrator is getting payments set at 6% of gross proceeds, of all SMM companies which is even more lucrative than shareholders themselves, let alone revenues to Government.” Gono reported to President Mugabe.

Interestingly, Gwaradzimba who was appointed by Chinamasa to run the affairs of SMM under the controversial Reconstruction Act is on record saying that he does not directly run the operations of the company, and yet, it is his mandate under the same Act.