Zimbabwe bank told to pay back funds seized by the state

via Zimbabwe bank told to pay back funds seized by the state | BDlive by Ray Ndlovu  OCTOBER 22 2013

Zimbabwe’s fragile banking sector is bracing itself for a string of costly claims from clients after the country’s top court last week ordered Standard Chartered to reimburse $45,000 seized from a client’s account by the state in 2007.

The claim was brought by Chinese-owned firm China Shougang International, whose funds are among $400m seized on the order of the Reserve Bank of Zimbabwe (RBZ). The funds were seized to prevent economic collapse.

The supreme court’s ruling, economic and political observers said on Monday, was likely to be a catalyst for a flurry of approaches by individuals, companies and nongovernmental organisations to the courts to seek reimbursement of their foreign currency.

Economist John Robertson said the ruling was disturbing, and if not challenged might set a bad precedent whereby all banks that had their accounts raided by the central bank could be sued by clients.

Justice Vernanda Ziyambi, in his ruling, indicated that Standard Chartered had transferred the depositor’s funds at its “own peril” and had an obligation to pay up upon its client’s request.

“The payments to the RBZ were made at its (Standard Chartered’s) own risk and did not affect its obligation in law to pay its debt to the respondent (China Shougang) on demand.”

The supreme court further pointed out that Standard Chartered had not provided any evidence to show that it could not afford to reimburse its client — with the court finding that it had the capacity to reimburse the client.

Bankers Association of Zimbabwe president George Guvamatanga said the court order had created “uncertainty” in the banking sector, while an executive at MBCA bank, a subsidiary of South Africa’s Nedbank, said the case was creating a “trying time” for the sector.

“We are all in a difficult space; an injury to one is an injury to all. The court order should have been extended to the RBZ, because banks were complying with a directive from the central bank,” said the executive, who asked not to be named as he is not authorised to speak to the press.

It is unclear if Standard Chartered will approach Zimbabwe’s constitutional court to try to overturn the Supreme Court ruling.

Mr Robertson warned that other banks may be sued by clients. “In 2009, the RBZ admitted that it owed depositors over $1bn and you can imagine if all the people who (are) owed this money approach the courts,” he said.

The RBZ is locked in a case with Trojan Mine, in which a court ruled in June that the RBZ must return $1m to Trojan it seized in 2009.

In its judgment, the court said the RBZ should not hide “behind the proverbial finger” and must pay up. The RBZ, however, filed an appeal with the supreme court earlier this month, arguing it was immune from prosecution under the General Laws Amendment Act.

Political observers said the central bank had now moved to protect itself from prosecution, aware of public anger over its unilateral seizures and fears of a can of worms being opened as multiple firms drag it to the courts over missing funds.

Trevor Maisiri, an analyst at the International Crisis Group, questioned the RBZ’s capacity to repay the funds. “However, the responsibility to return the money lies with the institution that used up the money. The repayment … cannot be transferred to individual banks who were merely complying with the RBZ instruction to pass on that money to it,” Mr Maisiri said.

“In fact, during that time the RBZ had an imposing and overriding excess control of banks and simply used unilateral means to mop up that money from banks…. Responsibility to repay must primarily be of the RBZ, knowing exactly how and where it applied that money.”

 

COMMENTS

WORDPRESS: 6
  • comment-avatar
    Fallenz 7 years ago

    Oh yeah, that ruling is really gonna bring in the foreign investments… Another “dung on their face” moment for ZANUPF.

  • comment-avatar
    Sekuru Mapenga 7 years ago

    What happens with this issue is very important. It will determine whether Zimbabwe is going to become fiscally responsible or whether it will continue on the “grab what you can, the courts are ours” path that Mugabe has steadily crafted over years of misrule.

  • comment-avatar
    munzwa 7 years ago

    So is the court saying that the RBZ can not be taken seriously and everyone must defy their directives?

  • comment-avatar
    Domingos 7 years ago

    Insurers should also pay us individuals our investments. I invested with Old Mutual and Zimnat. Their argument that our investments were eroded by inflation and forced investments in Government Bonds is not our problem but theirs. The obligation is with the insurer to pay me us our investments. I am 51 years old with no pension or investment of any kind. I am unemployable right now and cannot start saving for my old age. How am I going survive in my old age. I want to take Old Mutual to court for a test case. Can someone in my situation contact me so that we pull people and resources to contest our case in a court of law. ZIM LAWYERS FOR HUMAN RIGHTS, can you please help us. My email is domingos.rui@gmail.com

  • comment-avatar
    Domingos 7 years ago

    Sorry people, my email is domingosrui.zw@gmail.com

  • comment-avatar

    I also have a pension policy with OLD MUTUAL which matured in 2011. They offered a one time payment of $200.00, this pays electricity for one month what is one supposed to retire on. I also have a Protecter plan I wrote to them to claim it and got no reply.I have a First Mutual endowment policy for £2000.00 and some years ago they offered to pay Z$4000.00 when a loaf of bread was over Z$200,000,00. Hows that