Royal/FML legal fight looms

Conrad Dube

A LEGAL fight is looming between beleaguered First Mutual Ltd (FML) and Royal Bank of Zimbabwe over a $60 billion debt.



>This follows FML’s application for the bank’s compulsory liquidation.


In a statement yesterday, Royal Bank said: “The alleged instruction to place Royal Bank under liquidation is frivolous and any legal action will be vigorously defended.”


The $60 billion debt at the centre of controversy is made up of $35 billion, an amount which Royal Bank chief executive Jeff Mzwimbi acknowledges in a letter dated July 5 to Douglas Hoto, FML chief executive, with the remainder being a combination of deal notes issued and interest.


Mzwimbi offered to settle the $35 billion debt through a cash payment of $25 billion. Of this amount, $5 billion would be payable by July 12 and then $2 billion every seven days thereafter, according to documents.


Mzwimbi further offered to pay $10 billion through “other instruments to be discussed and agreed upon in the next seven days”.


Royal Bank yesterday denied indebtedness to First Mutual Asset Management (FMAM) or that any such debt could have saddled FMAM to the point of liquidation.


“Royal Bank emphatically denies that it was because of its alleged failure to pay the alleged indebtedness that FMAM has been forced into voluntary liquidation,” the bank said in a statement yesterday.


But FML, which placed its subsidiary FMAM under provisional liquidation this week following a Writ of Execution by Syfrets Asset Management Company, insists Royal Bank has failed to honour several undertakings made. FMAM owes Syfrets $30 billion.


“FMAM also has in its possession several other payment undertakings made by Royal Bank which have not been honoured,” FML said in a statement.


“Several undertakings made by Royal Bank to settle its debt were not honoured. Legal action was subsequently instituted and every effort is being made to recover the amounts due,” FML said.


FML said if Royal Bank had paid in full, the financial group could raise sufficient funds to settle all liabilities to creditors of FMAM.

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