Businessman sues UK bank for $4 million

Source: Businessman sues UK bank for $4 million | The Herald December 23, 2016

Fidelis Munyoro Chief Court Reporter
A British bank has failed to thwart a $4 million lawsuit by a Harare businessman for the financial loss his company suffered after the bank falsely classified the funds held in his account as proceeds of money laundering activities.

Justice David Mangota ruled on Wednesday that the claim against HSBC Bank by Mr Jayesh Shah’s company, AL Shams Global BVI, should go ahead at the High Court.

HSBC Bank is being sued for delictual damages after it allegedly scuttled a $22 million loan deal between Al Shams Global BVI and the Reserve Bank of Zimbabwe.

The bank had sought to bar Al Shams from prosecuting the civil suit on the grounds that its lawyers had filed heads of argument out of time.

To strengthen its bid to thwart the claim against it, the multi-national bank also filed a special plea of prescription, jurisdiction and an exception to AL Shams Global BVI’s summons.

In his ruling, Justice Mangota found that the degree of non-compliance with the rules which AL Shams Global BVI suffered was minimal and was not of its own making.

“The court has considered all the circumstances of this case. It is satisfied that the applicant (AL Shams Global BVI) proved its case on a balance of probabilities,” said Justice Mangota, allowing the company to file its papers, paving way for a hearing of the matter.

HSBC Bank in September 2006 reported to the Serious Organised Crime Agency (SOCA) that Mr Shah’s request to transfer almost $28 million to his other account in France was “suspicious”.

The allegations of money laundering in the UK later the following year adversely affected a $22 million loan deal his company, AL Shams Global BVI Limited, had struck with the RBZ.

According to the loan agreement, AL Shams Global BVI Limited, a company registered in the UK, would avail $22 million to the RBZ on a revolving basis.

In return, AL Shams Global BVI Limited would get an arrangement fee of 18 percent and a disbursement fee of one percent flat on the loan amount.

This would have earned Mr Shah’s company a profit of $4 180 000. After the deal was concluded, rumours spread in Harare that Mr Shah was suspected of money laundering in the UK. The RBZ became suspicious and cancelled the deal.

In the claim filed at the High Court, AL Shams Global BVI and Mr Shah are seeking to recover $3 960 000, being the arrangement fee of 18 percent flat on the loan amount and $220 000 disbursement fee of 1 percent of the loan from HSBC Private Bank (UK) Limited and its commercial bank, HSBC Bank.

Through its lawyers Dube, Manikai and Hwacha, AL Shams Global BVI argues that the claim arose from the loss suffered as a result of HSBC Holdings and its bank’s alleged interference with the loan deal after reporting Mr Shah to SOCA without just cause, resulting in the RBZ cancelling the loan deal.

The cancellation, AL Shams Global BVI said, was caused by HSBC’s failure to furnish information to the former or RBZ explaining the basis on which the Suspicious Activities Report had been made.

The bank, which is being represented by Advocate Adrian de Bourbon, is denying the claim and seeking an exception to the lawsuit.

Four years ago, Mr Shah sued HSBC for $300 million at the Court of Appeal in London for making false reports against him to SOCA in a case involving the transfer of close to $28 million to his account in France.

However, Justice Supperstone ruled in favour of HSBC Bank.