Woes mount for Trek Petroleum

HARARE - Problems are mounting for one of the country’s leading fuel firms — Trek Petroleum (Private) Limited — which has been dragged to court over a $3,6 million debt owed to a local bank.

This comes as the company is facing an uncertain future after the Supreme Court recently threw out its urgent application to stop the Zimbabwe Revenue Authority (Zimra) from garnishing its bank accounts over a $45 million tax debt.

Ecobank Zimbabwe Limited in its application cited Trek Petroleum and eight others as respondents in a suit in which it is demanding $3,6 million.

The other respondents jointly sued with Trek Petroleum, each bound themselves as sureties, co-principal debtors and guarantors, making them liable to the claim, according to court documents.

The court heard Trek Petroleum was a customer of Ecobank and from time to time was accorded among others inventory financing and overdraft facilities.

“Plaintiff (Ecobank) would generally honour first defendant (Trek Petroleum)’s instructions issued from time to time and would in turn debit first defendant’s account with any monies advanced and/or withdrawn at the instance of the first defendant together with any charges incurred in accordance with ordinary banking practice,” the bank said.

The bank told the court the amount owing would upon breach of the agreement; necessitate the expiry of the facilities and make the demand immediately due and payable.

In terms of the agreement, mortgage bonds were registered in favour of the bank, for various properties in Bulawayo, Mutare and Harare.

“In the period  August 31, 2016 to September 30, 2017, the first defendant accessed the principal amount from the account…Plaintiff charged interest at the rates prevailing from time to time, currently at 20 percent per annum (being 12 percent plus penalty interest rate at 8 percent per annum).

“During the same material period, first defendant made repayments/deposits which amounts were appropriated first to the reduction of accumulated interest and thereafter to outstanding capital. In breach of the agreement between the parties, and as at 30th of September 2017, the balance outstanding on the account was the sum of $3 675 257, 41,” Ecobank said.

The bank also told the court that it had cancelled the banking facilities for Trek because it breached the terms of the agreement.

The respondents are yet to file a response to the application.

Recently Trek lost its bid to have the Supreme Court hear its urgent application stopping Zimra from garnishing its accounts.

Judge Susan Mavangira, who heard Trek’s urgent application in her chambers, ruled that the company — which started operations about seven years ago — failed to establish a strong case for the immediate lifting of the garnishee.

Zimra swooped on its accounts after discovering a discrepancy in the transfer of assets to it by a company known as Chaparrel Trading in 2014.

At the time, the tax liability was valued at $44 million before it was reviewed upwards to $45 million.

Trek started its operations in 2010.

As of 2015, it had 24 service stations, employing over 600 workers.

These figures are now much higher considering that Trek made considerable investments in the intervening period.

In making its application before the superior court, Trek claimed that its business had ground to a halt on account of the garnishee as it was unable to purchase any stock and its business could not otherwise be conducted.

If further claimed that if the garnishee was not lifted immediately, it would be forced to lay off its employees to the prejudice of some 300 families.

Trek also argued that there was no basis for it to suffer all this harm as it was fully paid up and had no tax liability.

Furthermore, its predecessor — Chaparrel Trading — also owed no obligation to Zimra, according to Trek, contending that there was need for what it called a patent illegality and incidence of abuse of statutory authority to be arrested.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.