US firm sues Reserve Bank

The Reserve Bank of Zimbabwe (RBZ) failed to pay Alex Stewart International for auditing its books in 2006 to ascertain the production and export of minerals from Zimbabwe. The firm was hired on February 8, 2006 at the height of an economic crisis which many people blame on President Robert Mugabe’s policies.

“In terms thereof, first defendant (RBZ) acknowledged and agreed that the debt due to plaintiff was US$34 995 200,” ASI stated.

“Second defendant (Finance Minister Tendai Biti) was made aware of plaintiff’s claim on May 17, 2010 in written correspondence from plaintiff pleading for payment of the entire debt due to it for services rendered.

“Notwithstanding numerous negotiations and discussions regarding payment of the debt, no such payment has been made forthcoming.

“This is in spite of the fact that first defendant (RBZ) does not and has never disputed its indebtedness to plaintiff,” ASI says.

The firm says attempts to settle the matter out of court were futile and that its October 14, 2010 letter of demand penned by its lawyer GN Mlotshwa and Company, demanding payment and accrued interest within seven days had been ignored.

“Notwithstanding such demand first defendant (RBZ) has failed or neglected to pay amount due and payable to plaintiff. Indeed in a separate lawsuit, plaintiff intends to sue the first defendant for damages in an additional amount of US$100 million for breach of contract,” ASI’s suit says, which also demands interest on the outstanding amount of 10 percent per annum and that the RBZ bear the cost of the suit.

In its opposing papers, the central bank says the auditing firm did not give 60 days notice of intention to sue therefore the suit must be dismissed on that basis.

“The honourable court should refuse to exercise its jurisdiction in the matter because the agreement being sued upon provides for an elaborate dispute settlement namely arbitration in terms of the Rules of Conciliation and Arbitration of the International Chamber of Commerce,” the RBZ said in its opposing papers.

“The US firm is peregrinus it should provide security costs in such sums as the court may determine before the matter is heard. The firm should prove its allegations that it is indebted.”

Biti cites more or less the same arguments.

“The plaintiff declaration falls foul of the provisions of the State Liabilities Act in as far as the pre-requisite 60 day notice as prescribed by the said Act were not given and accordingly the plaintiff’s papers are improperly before the court to the extent that they relate to the second defendant,” the minister said.

“First defendant (RBZ) is capable of being sued in its own name, the second defendant (Minister of Finance) was irregularly cited and should not be party to the proceedings,” the minister stated.

The matter will be heard before Justice Susan Mavangira The unity government President Mugabe formed with rival Prime Minister Morgan Tsvangirai had decided to halt the auctioning of the bank’s assets by creditors.

And Biti cited this in his papers.

“We agreed to stop the attachment and auctioning of RBZ properties with immediate effect,” he said. “It has become clear that some individuals and companies are acting like vultures after buying the bank’s assets for a song.”

Zimbabwe’s central bank, which the IMF has certified as broke and is struggling to pay its own workers, is now playing a marginal role in efforts to revive the country after being at the centre of the economy for years.

Tsvangirai’s Movement for Democratic Change blames Gono, a Mugabe ally, for contributing to the economic collapse and wants the power-sharing government to appoint a new governor.