Mayhem looms in banks

via Mayhem looms in banks – NewsDay Zimbabwe by Charles Laiton October 14, 2013

IN a landmark ruling likely to send shock waves in the banking sector, the Supreme Court on Friday ordered Standard Chartered bank to pay back a client’s funds which it surrendered to the Reserve Bank of Zimbabwe (RBZ) following central bank governor Gideon Gono’s directive six-years ago.

This could come as a relief to a lot of companies and could open floodgates from companies that lost millions of dollars when they woke up to find their bank accounts empty after the RBZ took a raid on them at the behest of Gono.

As a result of that directive scores of commercial banks had refused to pay their customers arguing it was the responsibility of the central bank as they simply carried out its directive.

This judgment, which came about after China Shougang International, took Standard Chartered bank to court seeking to recover thousands of dollars the latter had refused to pay arguing it had surrendered the funds to the central bank.

China Shougang International, is a foreign investor whose specific purpose is to refurbish blast furnaces at Ziscosteel in Redcliff. In October 2007, the firm held two accounts with Standard Chartered bank, Kwekwe branch, with an aggregate credit balance of $47 739,86.

The Supreme Court said when the Chinese firm deposited the funds into the bank account, the funds automatically became the bank’s funds and when the latter surrendered the funds to the RBZ, it did so at its own peril.

“The general rule relating to deposits made in a bank account by a customer is that the money becomes the property of the bank which can use such deposit as it pleases so long as it pays to the depositor, on demand, the equivalent of the amount deposited in the account,” Justice Vernanda Ziyambi said.

Standard Chartered bank had argued that having made payment to the RBZ in terms of its directive, it no longer had China Shougang International’s money in its possession and was consequently discharged from its obligation to make payment upon demand by the firm, an assertion dismissed by the court.

“But as has been demonstrated above, the dealings by the appellant (Standard Chartered) with the deposits in the accounts, namely, the payment to the RBZ, were made at its own risk and did not affect its obligation in law to pay its debt to the respondent (China Shougang international) on demand. The appeal is accordingly dismissed with costs,” Justice Ziyambi said in a nine-page judgment which was concurred by Justices Paddington Garwe and Ben Hlatshwayo.

Standard Chartered bank, through its lawyer, Advocate Adrian De Bourbon, filed an appeal at the Supreme Court after losing the case at the High Court early this year.

The Chinese firm was represented by Tendai Masawi of Masawi and Partners legal practitioners.

 

COMMENTS

WORDPRESS: 17
  • comment-avatar

    We also want our money which was in banks be4 dollarisation. The Supreme court ruled in th Fleximail case that th zm$ can b converted to us$. Banks time to pay

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    Sekuru Mapenga 7 years ago

    Good judgement !! and serves the banks right for obeying a clearly illegal instruction from Gono. They should have just said NO — .

    However I hope to see a series of legal actions against the Reserve Bank of Zimbabwe / Gono by the commercial banks. RBZ was the end user of these funds and must repay them.

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    jenandebvu 7 years ago

    At least the bench used western legal framework and opinion in safeguarding the interests of the East. China want is money, turned west for legal principle. Mitemo haibvi kuRBZ, kune Bank of International Settlement (BIS), Basel etc. I also want mine

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    jenandebvu 7 years ago

    Zvave kuda kuchinja face yaGovernor weRBZ. Where lll this shame take RBZ. Ko iye Tshumba akafa here? Mudzosereika panyanga

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    Torai hupfumi 7 years ago

    by that time was there an rule talking of general rule where there is no rule zvinoshamisa. How about trillions dzirimudzimba who will make a judgement for the rest of people. bank ngarirambe kupa machina aya. Who gave the contract for ZISCO first before paying them ngatimboongorora machina.

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    Sound clear and fair.

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    bam bam 7 years ago

    the banks should now pay up as they stupidly obeyed an illegal order by the reserve bank. we want our money back now so we can getr on with our lives in these difficult times, this was theft of depositors funds and someone should go to jail over this outrage

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    chirandu 7 years ago

    There is nothing to celebrate for in this ruling as the rot that is associated with our courts still exist. This company did win this ruling because its a Chinese one and nothing else. Its politics at play here and nothing else. Go and raise your issue with the same court as a Zimbabwean and tell me the outcome later

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    Chirandu taura hako.

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    Greyhora 7 years ago

    This is a rubbish ruling!!! How can anyone blame the banks for obeying a directive from the RB Governor, who was now second in command of the country at that time? Did the RBZ not willfully raid FC accounts in many banks? Why is the RBZ, as the main culprit of the theft, being absolved of blame? There was a directive, RBZ raided the money, evidence is there, records are there, why not go after the RBZ itself????

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    Fallenz 7 years ago

    RBZ will be sued for return of funds… case will be dismissed on basis RBZ does not have funds to pay. What will not be said by court is that the funds were squandered by ZANUPF in corruption. That issue will never reach a Zim court room as long as ZANUPF controls the judiciary. They will not allow one of their own to be held accountable… that’s ZANUPF “justice”.

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    Chara 7 years ago

    You will see double standards in our courts , if Standard bank takes RBZ they will loose the case.This Ziyambi Judge just judged in favour of Mugabe’s Chinese friends.Try it Zimbabweans and Chidyausiku will take you to the cleaners.

  • comment-avatar
    Chirau 7 years ago

    Good God in Heaven….. this country is heading for a very slippery slope. How do they get away with it???

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    Another bullsh1t black man’s solution to a bullsh1t blackman’s problem. Come people this is 2013 wake and stop this African solutions for African problems. Lets modenise and join the rest of the world, illegal is illegal ends of story.

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    Mozal 7 years ago

    Good ruling. The insurance companies and pension funds are next. They must make good of all the people’s moneys that they entrusted with in us $ equivalence cause they have brought about untold suffering. Vanguard ngavapiwe Mari Davonte mhani.

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    munzwa 7 years ago

    now is the chance for all banks to present a class action against RBZ and Gono, what \ever the out come of the courts!!! Watch out as this could also be the excuse to bring back the Zim $