StanChart loses case to Chinese firm

HARARE - The Supreme Court on Friday ordered Standard Chartered Bank (StanChart) to pay back money it transferred to the central bank, belonging to a Chinese firm, China Shougang International.

The appropriation of the funds followed a monetary statement issued by the RBZ in October 2007 centralising all foreign currency accounts.

In the Supreme Court appeal, StanChart was contesting a High Court order compelling it to pay back $47 739,86 owed to the Kwekwe-based Chinese firm.

According to court papers, when the Chinese firm demanded its money, the bank refused to pay, claiming RBZ’s intervention rendered it impossible for it to comply with its contractual obligation.

StanChart, through its lawyer Adrian de Bourbon, said it was not liable to make the payment because of supervening impossibility of performance, urging the firm to demand its money from the RBZ.

However, the Chinese firm’s lawyer Tendai Masawi said there was no nexus between the company and RBZ.

Masawi told the court that StanChart ought to have sought legal advice before remitting the funds to the central bank, adding that the transfer was illegal.

The Supreme Court ruled that the central bank’s directive “did not extinguish the bank’s (StanChart) contractual obligation” to make payment to the Chinese firm.

“The general rule relating to deposits made in a bank account by a customer is that the money becomes the property of the bank, which can use such deposit as it pleases so long as it pays to the depositor on demand, the equivalent amount deposited in the account,” the Supreme Court said.

The court further said that StanChart had failed to place evidence before it, to prove that it was no longer able to pay back the money.

“The payments to the Reserve Bank of Zimbabwe were made at its own risk and did not affect its obligation in law to pay its debt to the respondent (China Shougang International) on demand,” the Supreme Court ruled.

Comments (11)

The ruling is sound at law. However this ruling has set a very difficult precedent in that it makes the relationship between the apex bank the RBZ and banks under its supervision one of mistrust and suspicion. Advocate Adrian's argument pleading supervening impossibility was in my humble view adequate on the part of StanChart but it would also have ignored the contractual relationship between the bank and its depositors. What then could have been done to avoid the relationship between the apex bank and banks becoming untenable / unsustainable. Having said this, the flood gates have opened for those whose moneys were remitted to the central bank to claim the moneys. What an interesting scenario.

Farai Hove - 14 October 2013

Please help, can we claim our precious Zim dollars that are held by banks?

Mavara Azarevhu - 14 October 2013

with respect i believe this is a wrong decision. RZB has statutory powers to order the remision of currency held by anyone to it, a situation which stanchart could not resist. assuming for a moment that this is correct at law, i believe stanchart can as well approach the court for an order to compel rbz to remit back the money to it for onward transmision to the chineese.Everyone knows where the money is ... its at rbz.

zvakanaka pahurungwe - 14 October 2013

You can claim your Zimdollars, as long as the banks can claim the loans that were written off!!!

mablanyo - 14 October 2013

StanChart and all other banks should start claiming their monies from RBZ - The lender of last resort.

Farai - 14 October 2013

Then I guess the banks will claim their money from RBZ and Gono should be taken to task. The buildings that RBZ owns should be sold to pay off the said arrears.

Jomo - 14 October 2013

This is ZANU at work anywhere this is just the begining of a struggle all those companies that were swindled by the GOVT will flock to the courts & find ZANU judges waiting to drag these cases for YEARS to come.If the money was taken for sure ,WHY can't they just PAY UP ,l am not seeing any rightfull ,mentally stabble INVESTOR coming to LOSE their hard earned MONEY to ZANU vultures who are ready to LOOT all viable companies.This is evidence that ZANU cannot be trusted ,even our own SAVINGS are not safe .Especially now that ZANU has a majority in parliament ,they will play around with the CONSTITUTION to suite them so that they LOOT at will.DON'T BANK YOUR MONEY YOU WILL LOSE IT DEFINATELY, GUARANTEED.

CASHTALK - 14 October 2013

The money was spent by the RBZ to buy agricultural equipment which never got to the deserving recipients. Some of it was used on the unnecessary trips abroad by the untouchable so-called chefs. I am thinking of writing books on high level corruption in Zimbabwe.

tomasi tohwi - 15 October 2013

The money was spent by the RBZ to buy agricultural equipment which never got to the deserving recipients. Some of it was used on the unnecessary trips abroad by the untouchable so-called chefs. I am thinking of writing books on high level corruption in Zimbabwe.

tomasi tohwi - 15 October 2013

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