HomePoliticsAnother legal battle over ZABG looms

Another legal battle over ZABG looms

Shakeman Mugari

THE Reserve Bank of Zimbabwe (RBZ) has failed to respond to an urgent appeal by the owners of Trust and Royal banks to make a decision on the unlawful takeover of their banks by the troubled

Zimbabwe Allied Banking Group (ZABG), setting the stage for another legal battle.

Lawyers for Trust and Royal had written to the central bank on September 11, giving it up to Wednesday last week to stop ZABG from trading using the defunct banks’ assets.

The Supreme Court in a ruling last month said the state had taken over the banks unlawfully.

Trust and Royal wanted the Reserve Bank to force ZABG to immediately stop trading using the assets and return them forthwith, in line with the Supreme Court ruling. The Supreme Court ruled that the transfer of Trust and Royal Bank’s assets to ZABG was “null and void and of no force or effect”.

The ruling means that if the assets are returned to their owners, it could suck the life out of ZABG whose shareholders may not have the capacity to pump in the trillions needed to prevent its imminent collapse. It would trigger a run on the bank, which would sink it.

The RBZ has however failed to respond to Trust and Royal’s appeal forcing the lawyers of the two banks to prepare for a legal battle that is likely to start next week.

The legal dogfight whose papers were still being prepared yesterday is likely to suck in central bank governor Gideon Gono, ZABG and its directors.

Sources say the litigation would also involve Peter Bailey and Robert McIndoe, the curators of the two banks who actively participated in the transfer of the assets. It would also include the accounting firms of the curators and their partners in the business.

Sources say there are jitters in the ZABG board and management who are divided on how to extricate the bank from the crisis. A source said the ZABG board held an urgent meeting this week to deliberate on the impending danger of losing the assets.

The board, the source said, failed to agree, with some members insisting that they stop operating using the contentious assets until the matter was resolved. Other board members thought ZABG should wait for a decision from the central bank.

The source said the board sought Gono’s opinion on the matter but the governor said ZABG should sort out its own problems.

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