MAC: Mines and Communities

London Calling on the Zimbabwe-UK asbestos scandal

Published by MAC on 2013-05-07
Source: Nostromo Research, RightonCanada, NewsDay

Zimbabwe is sending a delegation to the May 10th Rotterdam Convention. Its government is apparently bent on wrecking the long-awaited listing of chrystotile asbestos as a hazardous substance.

The Zimbabweans include representatives of the country's Turnall Holdings and SMM Holding - former units of the notorious UK asbestos products' company, Turner & Newall (T&N).

T&N was forced into bankruptcy in 1996, in the face of disease compensation claims from no fewer than 40,000 of its workers [See The Risks We Run, 2005, International Books, Utrecht, pps 54-55].

In March that year, Turnall Holdings and SMM Holding were sold to Zimbabwean businessman, Mutumwa Mawere. Fourteen years later, in November 2010, Mawere had to defend himself against accusations of effectively filching government funds so as to acquire the two oufits.

Mawere said he had approached a number of potential funders for the deal, including Anglo American Corporation, First Merchant Bank, Barclays and Standard Bank.

The last two banks advised him that  it was now too risky to invest in asbestos, but, according to Mawere, Belgium's KBC Bank finally came through with a loan facility.

Today, it's virtually certain that most merchant banks wouldn't look twice at promoting  any asbestos project.  (We say "most", advisedly: it was only six months ago that Credit Suisse said it was still open to unsolicited requests for such funding. See: Surely asbestos mining is now on the way out?)

If it hadn't been for Turner & Newall's off-loading of its subsidaries to Zimbabwe seventeen years ago, it's possible there wouldn't be an asbestos industry in the country.

Soon after the deal was done, T&N was bought out by First-Mogul of the USA, which itself then filed for bankruptcy in its home country and for "administration" in Britain.  T&N went on to resurrect itself as a "car parts" manufacturer.

It was not until 2003 that insurers for T&N agreed to offer £700 million compensation to its poisoned former workers and their dependants.

After further tussling - while workers continued dying from asbestosis and mesothelioma - the UK government settled on a £400 million pay out.

However, this had to be shared not only between the former T&N employees, but with 60,000 victims of other companies.


Zimbabwe intends to sabotage UN Rotterdam Convention in order to protect
asbestos industry

Kathleen Ruff


1 May 2013

Both Zimbabwe and Russia will, for the first time, be attending the Rotterdam Convention Conference of the Parties in Geneva as parties to the Convention. Previously, they attended as observers, but both have now ratified the Convention.

Both Zimbabwe and Russia intend to use their new status as parties to the Convention as a means to sabotage the Convention by preventing the listing of chrysotile asbestos as a hazardous substance, when, on May 7, the issue is put before the 170 countries attending the conference.

Both countries are close political allies of the asbestos industry. Russia is the biggest exporter of asbestos in the world, representing about 75% of global export. Zimbabwe hopes to re-open its asbestos mines and restart exporting asbestos. Both want to export asbestos, while covering up the fact that it is hazardous.

As well as the usual government and embassy representatives, the Zimbabwe delegation to the Geneva conference includes five members of the Zimbabwe National Chrysotile Taskforce (see list below). Both the Vice Chairman of Turnall Holdings Limited and the Chief Executive Officer of SMM Holding Limited, who also sits on Turnall Holdings, are members of the Zimbabwe delegation.

Mr. Darlington Musarurwa, Business Editor of the Zimbabwe Sunday Mail is a member of the National Chrysotile Taskforce and is also a member of the Zimbabwe government delegation.

Mr. Musarurwa acts more like a public relations agent for Turner Holdings and the Zimbabwe asbestos industry, than as an independent journalist.

In an article in the April 28, 2013 Sunday Mail about the Rotterdam Convention conference, Dark cloud hovers over asbestos, SMM (Shabanie Mashaba Mines) revival in focus, Decision to determine future of asbestos trading, Mr Musarurwa promotes the views of Zimbabwe government politicians, the International Chrysotile Association and the chairperson of the National Chrysotile Taskforce, Ms Abigail Shoniwa, who is also Permanent Secretary in the Ministry of Industry and Commerce.

Ms Shoniwa is cited in the article stating “despite the international lobby against chrysotile, the future of the industry in Zimbabwe is strong as local demand remains solid.”

In his article, Mr. Musarurwa reports that the Government of Zimbabwe will oppose the listing of chrysotile asbestos:

The fate of thousands of workers hoping for the revival of Shabanie Mashaba Mines (SMM), including the future trade of asbestos — principally produced by listed industrial concern Turnall Holdings — might ultimately be determined at a crucial international meeting in Geneva, Switzerland, next week.

Presently, there is an active and aggressive lobby by European countries and some of their proxy companies in Africa to list chrysotile asbestos as a hazardous substance whose trading needs to be closely monitored and ultimately banned.

However, Government is confident that the campaign will falter as Zimbabwe, which will vote against the move, will for the first time attend the meeting — the 6th Conference of Parties (COP) of the Rotterdam Convention to be held from May 7 to May 10 — as party after having deposited instruments of ratification of the Basel, Rotterdam and Stockholm conventions, the globe’s three leading chemicals and waste treaties, effective May 30 last year.

Mr. Musarurwa does not disclose the fact that he is actually attending the Rotterdam Convention conference, along with Ms Shoniwa, as a member of the Zimbabwe government delegation. Neither does he disclose the fact that he is a member of the National Chrysotile Taskforce, along with Ms Shoniwa.

Mr. Musarurwa’s article includes no information from reputable scientific organisations regarding the hazards of asbestos. Instead, he puts forward the usual asbestos industry propaganda, referring to a possible “conspiracy by well-organised groups of activists”, who wish to replace asbestos with other products in order to “help rake in a fortune”.

Mr. Musarurwa cites the discredited asbestos lobby group, the International Chrysotile Association: “Further, it has not always been scientifically proven that replacement fibres, the uses of which are encouraged by international lobbies, are safer than chrysotile fibres,” said the ICA in a paper circulated before next week’s meeting.

In February 2013, over a hundred scientists from thirty countries issued a Statement  “condemning in the strongest possible terms the dangerous misinformation that the International Chrysotile Association disseminates”.

It is an international scandal that Russia and Zimbabwe intend to continue the criminal practice of covering up the hazards of asbestos.

The following five persons are members of the Zimbabwe National Chrysotile Taskforce and members of the Zimbabwe government delegation:

1. Mr. Shame Chibvongodze, Secretary, Zimbabwe National Chrysotile Taskforce

2. Mr. John A. Jere, Managing Director, Zimbabwe National Chysotile Taskforce

3. Mr. Prince James Mutizwa, Vice Chairman, Turnall Holdings Limited, National Chrysotile Taskforce

4. Mr. Chirandu Dhlembeu, Chief Executive Officer, SMM Holding Limited, National Chrysotile Taskforce

5. Mr. Darlington Musarurwa, Business Editor, The Sunday Mail, National Chrysotile Taskforce

Government did not guarantee SMM acquisition - Mawere


15 November 2010

Embattled business magnate Mutumwa Mawere on Monday denied ever getting  government support to acquire SMM Holdings from UK's Turner & Newell Plc at a cost of $60 million in March 1996.

Mawere, who was speaking under oath before the Parliamentary Portfolio Committee on Mines and Minerals, said he purchased SMM Holdings and Turnall Holdings Zimbabwe (THZ) from Turner & Newell through Africa Resources Limited via sale and purchase agreement after failing to secure domestic and offshore bank credit.

Africa Resources was incorporated in the British Virgin Island.

"(Legal Affairs minister Patrick) Chinamasa claims that Mawere used a government guarantee to acquire SMM," Mawere said.

"The truth is that the acquisition financing was secured by pledging SMM shares to T & N. The vendor was the lender. It was a sale and purchase agreement. There was no government guarantee and no security. The only security pledged were the shares in the two companies."

Mawere's remarks are a response to Chinamasa's remarks in the august House in 2004 that "Mawere did not use any savings but he used government guarantees to purchase the company".

A Member of Parliament had asked Chinamasa to explain the rationale behind the Reconstruction of State Indebted Insolvent Companies Act, which government used to take-over SMM in 2004.

In chronological order, Mawere explained that he made an "unsolicited" bid for SMMZ and THZ in 1995 while he was still working for the World Bank and the same year T&N eventually agreed to a sale deal.

Mawere further said T&N initially wanted to sell the company to him, but later agreed to a sale and purchase after he failed to secure bank credit.

He said he approached three banks for funding, a Dutch development agency, a German development agency and a French development agency.

"The French development agency came to Zimbabwe in 1995 and carried out a due diligence," Mawere said.

"Their difficulty was financing an asbestos company. They couldn't get the deal approved. "I then contacted the chairman of Anglo-American. First Merchant Bank was controlled by Anglo-American. Anglo-American then arranged a meeting in November 1995. The bank told me that the transaction was best handled by a commercial bank.

"I then approached Barclays Bank and Standard Bank and on contacting their parents in London, they were told that asbestos was a risky business."

"At this point I went back to T&N and told them it was not possible to obtain bank credit for an asbestos business."

The business mogul said T&N then agreed to sell its entire shareholding in SMM and THZ to Africa Resources under a sale and purchase agreement.

Under the agreement, the $60 million "was to be paid from export proceeds", while working capital for SMM would be financed through borrowings from the local market.

Mawere said that agreement did not encounter any exchange control hurdles since capital controls had been lifted under the economic structural
adjustment programme.

"No guarantee was ever used in the acquisition of SMM," Mawere said.

"We then used indigenous banks to secure working capital for SMM, which gave facilities to local companies through what were called memorandum of deposits (MOD).

"These were National Merchant Bank (now NMB Bank), Trust Merchant Bank, Heritage Investment Bank and Universal Merchant Bank." The facility, he said, came from a Belgian bank called KBC Bank.

"In December 1997, the Reserve Bank of Zimbabwe said all MOD facilities would be terminated. It meant that local banks had to take money from exports and not renew the facilities.

"We then approached KBC and negotiated that the money be given directly to us. KBC agreed to give us a five-year medium-term facility of $60 million. But SMM had to surrender export proceeds. The RBZ then said:

‘You can't get the money directly. They wanted the Minerals Marketing Corporation of Zimbabwe (MMCZ) to be the conduit'."

In March 1998, according to Mawere, KBC then asked for a guarantee from government that the exports proceeds pledged would be surrendered to KBC. Under the loan deal, SMM was not allowed to incur new borrowings.

The guarantees were then signed by ministers Simba Makoni and Herbert Murerwa on behalf of government.

The loan, which was fully settled in 2002, was committed to the refinancing of NMB, Heritage Investment Bank and Universal Merchant Bank.

"Now the guarantee was not for the acquisition of SMM for this had already been concluded in 1996.

"It was used to secure a loan to restructure domestic debt."

Mawere further argued that Africa Resources did not default in payment as government alleged, as the company was no longer permitted to make external payments.

"We had reduced our obligation to T&N by $42 million. SMM then approached minister Makoni to use the same guarantee to borrow from local markets just like any other export since we had reduced our debt to $18 million."

The application was rejected.

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