AS the banking saga unravels, the ghost of the Reserve Bank of Zimbabwe (RBZ)’s past dealings with financial institutions continues to haunt Kingdom Financial Holdings Ltd (KFHL) which is battlin
g to recover US$900 000 from businessman Jayesh Shah.
The dispute, now before the High Court, has exposed the role of the RBZ when it bought forex from banks, some of which was traded on the parallel market.
Banking sources this week said the new regime at RBZ headed by Gideon Gono was in a quandary as to how to deal with such banks since the central bank was also a player in the chain of murky forex dealings.
Last week the RBZ confirmed it was aware of the dispute but declined to give details.
“Banking matters at whatever level are confidential matters which cannot be discussed in public without violating public confidence,” said Gono’s spokesman, Fortune Chasi. “We are unable to shed more light on the matter.”
Sources said the central bank wanted to arbitrate in the dispute and was considering confiscating the forex in the event that Shah paid up.
Court papers to hand say in April 2002 the parties entered a contract in which Shah, through his company Saturn Trading and Investments, lent and advanced US$4 million to Kingdom Merchant Bank for onward lending to RBZ via Renaissance Merchant Bank.
According to the terms of the contract, Shah could receive repayments direct from third parties (Renaissance) and would refund any overpayment to Kingdom if there was such overpayment.
The RBZ is said to have delayed repaying loans to Renaissance, which resulted in Kingdom failing to pay Shah. A dispute then ensued with Shah threatening to cancel the loan.
As part of the deal, Renaissance paid directly to Saturn while Kingdom did the same. Kingdom contends that Shah was paid an extra US$900 000 in the process.
The bank is also claiming further payment on the amount at the rate of the Treasury Bills of the Federal Bank of the United States calculated from October 1 2002 to the date of payment.
Shah and Saturn Trading & Investments Ltd, trading as North Eastern Transport Contracting Services, have been cited as first and second respondents respectively in papers filed in the High Court by Kingdom Merchant Bank (KMB). KMB, a subsidiary of KFHL, is represented by Chihambakwe, Mutizwa & Partners.
The bank’s lawyers claim that Shah “unjustly enriched himself” and carried on his company’s business “recklessly”, “negligently” or “fraudulently”.
The bank in May made a report to the police to press charges of theft by false pretences against Shah.
Shah in his statement denied receiving the said money from Kingdom. He however said the amount in contention was paid to him as additional security for the loan after Kingdom defaulted on payment. It is not clear whether police will lay formal charges against Shah who also has businesses in Tanzania and Zambia.