Interfin Bank dispute: RBZ taken to the Supreme Court over US$19 million claim    |

By Mary Taruvinga

Al Shams Global BVI Ltd has filed an appeal at the Supreme Court seeking the reversal of a High Court judgement dismissing its claim of US$19,5 million in damages from the Reserve Bank of Zimbabwe (RBZ) for grossly negligent breach of statutory duty.

The establishment, registered in the British Virgin Islands but operating in Zimbabwe operating as a foreign company, sued RBZ concerning its liability, following the failure of Interfin Bank (Interfin) under its supervision.

It alleged that the RBZ, aware that Interfin was operating with a capital deficit of over US$38 million and having failed to satisfy the central bank’s conditions for a license,  did not ensure that it was adequately capitalised and fit to operate.

The company accused the RBZ of not taking steps to address the situation.

It submitted that the RBZ failed in its duty to adequately supervise a weak bank and take corrective action in breach of its statutory obligations and hence breached the provisions of s48 of the Banking Act which obliged it to act.

Al Shams Global director Jayesh Shah, who was the sole witness in the matter narrated how bankers’ acceptances (BAs), purchased from Interfin on a buyback basis were not honoured.

Shah said they only discovered when it instituted proceedings against the liquidator of Interfin that it had been operating with a capital deficit.

He also submitted that the RBZ ought to have foreseen and by implication, did foresee that its breach of statutory duty would culminate in direct loss to his company and that were it not for the RBZ’s negligence, it would not have suffered damages.

However, the High Court dismissed the company’s application ruling that in its declaration, AL Shams Global made no direct allegation of bad faith.

“It was required to plead bad faith coupled with allegations of negligence because the requirement for good faith is inextricably linked to negligence,” said High Court judge Justice Mary Zimba Dube in a recent judgement.

Aggrieved by the ruling the company has appealed in the Supreme Court arguing that the lower court was wrong in dismissing its claim.

“The Court a quo erred in dealing with the question of the respondent’s immunity which was neither pleaded nor an issue for trial as per the agreed pre-trial conference minute.

“The Court a quo erred in holding that the supervisory powers reposed in the respondent (RBZ) in terms of the Banking Act Chapter 24:20] are discretionary and do not actuate any actionable duty of care,” reads the notice of appeal.

Al Shams Global BVI said such holding is not only inimical to the express wording of s 45 and 48 of the Banking Act but is also incongruent with the dictates of proper statutory interpretation.

“Concomitantly, the court a quo also erred in failing to determine that the RBZ owed the public a duty of care that enjoined such Respondent to make sure that Interfin Bank Limited, as a banking institution under its supervision, not only complied with the law but was a viable entity which could safely interact with members of the public such as the Al Shams Global BVI.

The company also submitted that the High Court was wrong in concluding that the negligence envisaged in terms of s63A of the Banking Act relates only to the positive actions of the RBZ and does not extend to such respondent’s omissions.

“Such erroneous interpretation actuates an absurdity and renders nugatory the whole regulatory framework of the Banking Sector,” said the company.

The company insisted that RBZ’s actions made it suffer a huge loss.

It also added that the High Court ought to have turned its mind to the fact that if it had not failed to properly supervise Interfin Bank Limited as stipulated by statute then it would not have suffered pecuniary loss.

AL Shams Global said it is entitled to damages before praying for the ruling of the High Court to be set aside.

It prayed that its claim succeeds and that RBZ be ordered to pay US$ 19.5 million resulting from its negligent failure to ensure that Interfin Bank Limited was adequately capitalised as required by the Reserve Bank of Zimbabwe Act.

The company is also seeking interest on the claim at the rate of 20% per annum from the 15″ of May 2017 to the date of payment in full.

The matter is yet to be heard.

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