RBZ in Multi Million Dollar Lawsuit

SW Radio Africa (London)

Alex Bell

12 April 2011

Zimbabwe’s central bank is once again being sued for failing to pay millions of dollars for services it received, this time from an American auditing firm.

The US firm is suing the bank for failing to pay US$34million for services rendered in February 2006. The bank reportedly failed to pay Alex Stewart International (ASI) for auditing its books.

The firm says attempts to settle the matter out of court were futile and that a letter of demand, written by its lawyer last October for payment within seven days, had been ignored.

“Indeed in a separate lawsuit, the plaintiff intends to sue the first defendant for damages in an additional amount of US$100 million for breach of contract,” ASI says in court papers. The company is also demanding that interest on the outstanding amount be paid, and insists that the RBZ pay the full costs of the case.

In opposing papers, the central bank says the auditing firm did not give 60 days notice of intention to sue, and the suit must therefore be dismissed. It has not denied failing to pay for the services.

“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.

Finance Minister Tendai Biti meanwhile has also been drawn into the case and insists that he has been cited irregularly as a respondent. Biti has also since said that the government will halt the auctioning of the bank’s assets as part of other legal cases.

“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.”

The central bank has been caught up in a number of lawsuits in recent months, brought forward by companies who lost millions as a result of dealing with the bank. Various auctions have been conducted since last year, with the bank’s assets being sold to the cover the costs of its inability to honour financial agreements, and its frequent looting of accounts

Last year, the Commercial Farmers Union (CFU) said it would sue the central bank over an estimated US$20 million looted from export accounts three years ago. Several other companies and organisations, including funding from the Global Fund on HIV/AIDS, also had their funds looted by the RBZ. Most companies never recovered the money, except for the Global Fund, whose money was returned after the international organisation threatened to withhold future funding to Zimbabwe.

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