Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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US firm sues Reserve Bank

US firm sues Reserve Bank

Written by Gift Phiri
Saturday, 09 April 2011 14:57

HARARE – A US auditing firm is suing Zimbabwe’s bankrupt central bank for 
failing to pay US$34million for service rendered in February 2006.

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 

“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 

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.


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