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powers and government control
Project Zimbabwe (MMPZ)
Extracted from Weekly Media Update 2004-36
Monday September 6th – Sunday September 12th
media laws, infamous for their crude suppression of alternative
sources of information, have given rise to public perceptions of
key national issues being largely shaped through the lens of the
official media, which have long become dedicated messengers of pro-government
This was clearly
illustrated in the week by the government media’s failure to question
the authorities’ continued abuse of Presidential decrees to promulgate
laws that severely erode constitutionally guaranteed rights of Zimbabwe’s
citizenry. For example, these media did not critically analyse the
government takeover of businessman Mutumwa Mawere’s Shabanie and
Mashaba Mines (SMM) Holdings through the recently gazetted Presidential
Powers (Temporary Measures) (Reconstruction of State Indebted Insolvent
Companies) Regulations 2004. Neither did they fully discuss the
implications of the regulations on property rights enshrined in
the Constitution. Rather, they demonstrated their ineffectiveness
as diligent watchdogs of government policies by unprofessionally
siding with the authorities on the matter. The private media, which
have often tried to balance such disparities by providing alternative
views, did not fare any better. Except for The Daily Mirror
and its weekly sister, The Sunday Mirror, the rest either
simply announced the takeover or ignored the matter altogether.
In their coverage
of the development, the government media as illustrated by The
Herald (7/9) and ZBC (7/9, 6 & 8pm) only provided one-sided
reports on government’s takeover of SMM and tried to justify the
move. For example, although The Herald quoted Justice
Minister and a member of the Cabinet Taskforce on SMM, Patrick Chinamasa,
saying government’s intervention was aimed at preventing SMM from
"collapse", it did not challenge him on
the technicalities surrounding the move. Instead, the paper attempted
to defend government’s move by chronicling SMM Holdings’ alleged
indebtedness to government arising from the authorities’ role as
a guarantor in helping the company source funds on the local market.
The paper claimed
that as part of its "restructuring" of SMM,
government was also expected to assume liability for US$23 million,
which is the balance of payments that African Resources Ltd (ARL),
the holding company of SMM, still needed to pay for the assets of
Turner and Newall in Zambia and Zimbabwe, which it acquired in 1996.
To further justify government’s takeover, The Herald claimed
that the mining company had suffered from "low capitalisation
and diversion of cash resources" while "it
is understood the company suffers from bad governance".
Thus, it contended that the "collapse" of
SMM was "inevitable" if government did not
take "corrective measures and intervene".
ZBC took a similar
stance that same evening. For instance, ZTV (7/9, 6pm) welcomed
the government move saying it would "save thousands of
jobs" and quoted Chinamasa adding that the takeover
was done to "preserve national interests and the assets
of the company". But it did not explain the extent
of the extraordinarily broad powers contained in the "emergency"
regulations or whether government would now apply them to all companies
in financial trouble. Instead, TV and Radio Zimbabwe (8/9, 6am)
tried to get public approval for government’s move by quoting selected
individuals supporting the takeover and claimed that, "Zimbabweans
have expressed concern at business people who fatten their pockets
while workers get poorer…"
As if to address
such concerns, Chinamasa was quoted in The Herald and Chronicle
(9/9) saying the authorities could not just help SMM financially
and leave it in the hands of Mawere because they did not want to
"enrich" the business baron.
Sunday Mirror (12/9), and its sister daily, The Daily Mirror
(7/9 and 8/9), gave the other side of the story. The two papers
contradicted claims by the government media that the grabbing of
SMM arose solely from government’s sense of social responsibility
to the nation by highlighting several irregularities that marked
the "nationalisation" of the company. The
Sunday Mirror especially, not only questioned the morality and
legality of the Presidential decree that paved the way for SMM’s
takeover by government but wondered "what the whole saga
entails for the private sector". The paper claimed
that a clique of unnamed businessman and politicians triggered the
takeover by deliberately creating a financial squeeze on SMM and
then fabricating corruption charges against its owner.
Mawere is facing
corruption charges arising from the alleged externalisation of foreign
Mirror further alleged that SMM’s financial problems seemed
to have been off-set by the central bank, which converted the company’s
foreign currency at the rate of US$1: Z$824, leaving the mines starved
of foreign currency needed for their operations.
the paper, from December 18 2003 to April 1 2004, the mines received
US$9 million but only US$1 million was availed to them by the central
bank for the purchase of imports.
Mirror also attributed SMM’s problems to the Reserve Bank’s
politicisation of the Productive Sector Fund (PSF) loans. It claimed
that while government granted funds to other companies as PSF loans,
in SMM’s case, they were termed "State loans".
The paper argued that such treatment of SMM raised "speculation
of a deliberate political move to bring the establishment to its
knees so as to provide an excuse for a takeover". While
The Herald and Chronicle (9/9) quoted Chinamasa claiming
that Mawere did not "invest a cent in SMM"
but acquired it through "financial engineering",
The Sunday Mirror cited Mawere as having contested this.
It reported that Mawere’s purchase of SMM was, on the contrary,
not financed by the government through the Minerals Marketing Corporation
of Zimbabwe’s (MMCZ) guarantee. Instead, the loan for which the
guarantee was sought was merely meant for working capital purposes.
Apart from providing
such background information on the operations of SMM, the Sunday
weekly also sought comment from legal experts who observed that
government’s rushed appointment of an administrator for SMM Holdings,
barely a week after appointing an investigator, was irregular.
lawyer Lovemore Madhuku told the paper that the very fact that the
government had to use a Presidential decree to confiscate the mines
showed that there was no law empowering it to do so. He added that
the use of such powers was an "infringement"
of Section 16 of the Constitution, which protects private property.
An unnamed legal
source also quoted by the paper agreed, saying the normal procedure
should have been for the courts to declare the company distressed
and unfit to continue in business before government moved in. Besides,
the source noted, it was also normally the prerogative of the board
to make a determination whether liquidation was the only solution.
this was a State-induced distress. A number of individuals naturally
are using the State for their own selfish interests",
added the source.
private radio stations were largely reticent on the issue, SW Radio
Africa (9/9) carried a related report that did expose government’s
apparent disregard for private companies’ rights. It reported that,
"four senior government ministers…visited Sable Chemicals
recently and fired six company managers for allegedly failing to
solve labour disputes" and appointed "Zanu
PF functionaries" into key positions in the
company. An unnamed employee was quoted alleging that the ruling
party officials accused Sable employees of supporting the MDC.
Financial Gazette (9/9) helped expose some of the fallacy surrounding
government’s commitment to weed out corruption in the corporate
sector through its anti-graft crusade. The paper reported that a
ZANU PF committee set up to investigate the operations of the ruling
party’s companies had released a "watered down"
report on the issue. The investigation, which the paper suggested
was chiefly targeted at Speaker of Parliament Emmerson Mnangagwa
as ZANU PF’s previous finance chief, was said to have "dismally
failed to lift the lid off the complex and secretive operations
of the ZANU PF companies or uncover any imprudent deals".
This is despite the fact that the report had allegedly "exposed
serious corporate governance issues".
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