Persons on ‘externalisation’ list can still be prosecuted

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It is submitted that other than just the above-discussed legislative provisions, this declaration presumably signed by those on the list at the time of their various transactions, would constitute another legal basis upon which they can be charged for contravention of the Exchange Control Act. The Act further provides in Section 5(3) that, a person convicted of an offence in terms of the Act shall be liable to such fine or imprisonment for such period as the court deems fit or to both fine and imprisonment.

The publication on March 19 by the Office of the President and Cabinet of a list of individuals and companies alleged to have externalised funds has for various reasons been an anticipated event.

Shepherd Machigere,Lawyer

For most companies and individuals, the publication was awaited simply to check whether or not they were part of those suspected of having externalised and, if so, what the consequences and/or available remedies would be.

For the larger part of the citizenry, it was a test to see whether or not government was serious with its threats to release the list and many people were probably curious to see who would be on the list. However, the question that has been of much debate and probably preoccupied some legal experts is whether or not government can pursue legal action against the listed individuals and companies.

This opinion article seeks to contribute to this debate from a perspective that argues that indeed our legal framework makes provision for government to successfully prosecute some of those companies and individuals where certain circumstances can be proven.

An argument has been advanced that the exportation or externalisation of foreign currency after the adoption of the multi-currency dispensation cannot in a legal sense amount to externalisation since all the currencies constituting the adopted multiple currencies now form part of Zimbabwe’s legal tender.

This argument is premised on a reading of the Reserve Bank of Zimbabwe (RBZ) Act which was amended to accommodate the multi-currency dispensation, effectively making those currencies legal tender in Zimbabwe. As the argument goes, it would be difficult for government to define the externalisation of the country’s legal tender as externalisation of foreign currency.

While the above-stated argument has legal merit in that it indeed would be difficult to prove the crime of externalisation of foreign currency under the circumstances of the multi-currency dispensation, it is submitted that government has another route to achieve the same end should proving the crime of externalisation of foreign currency flop.

It is important to note that other than arguing on the legal definition of externalisation and how it ought to be proven, the country’s exchange control framework already criminalises all of the three actions under which the three categories of purported externalisation have taken place. The exportation and importation of goods and services as well as settlement of payments across borders are all matters covered within the Exchange Control Act and its other subsidiary legislative provisions.

From the onset, it is important to acknowledge that the Exchange Control Act in Section 2 delegates to the president the power to make regulations which directly or indirectly relate to exchange transactions, imports into and exports from Zimbabwe as well as payments. In this regard, Statutory Instrument 109 of 1996 (Regulations) forms part of such regulations formulated by the President under the powers vested in him by the Exchange Control Act.

Section 21(2)(a) of the Regulations provide that no person shall export goods from Zimbabwe without satisfaction that payment for the goods has either been received or will be received within a specified period after export (currently 90 days as provided for under RBZ Exchange Control guidelines). In relation to imports, section 24(1) provides that where a person makes a payment for importation of goods and a specified period lapses without the goods being received into the country (also currently 90 days as provided for under RBZ Exchange Control guidelines), such person must notify an exchange control authority (RBZ through an authorised dealer, that is the person’s bank), in writing and within 21 days after the expiry of the prescribed period, of all the material particulars relating to the non-importation of the goods.

The regulations in section 40(1)(c) also give the RBZ the powers to prescribe any matter which in terms of the regulations is required or permitted to be prescribed or which, in the Reserve Bank’s opinion, is necessary or convenient to be prescribed in order to give effect to the regulations. In that regard, the RBZ, with the approval of the Ministry of Finance, issued Statutory Instrument 110 of 1996 (General Order) and various other Exchange Control directives whose effect is to preclude persons from externalising all resources, currencies or otherwise. Of particular note are sections 13(2) and 15(2) of the General Order which re-emphasises the need for export proceeds and imported goods to be received into the country within 90 days.

Now to turn on the question of how a breach of all these measures (as could be the case with some of the persons on the list) constitutes a crime, it is of paramount importance to note that Section 5 of the Exchange Control Act states that, any person who “contravenes or fails to comply with … the terms or conditions of any permit, authority, permission, direction, notice, order or other instrument made or issued under or by virtue of this Act; or for the purposes of this Act, makes any statement or produces any document which is false in any material particular; shall be guilty of an offence.”

It is submitted that the effect of this provision is to criminalise any deviation from or breaches of the Regulations, General Order and all other Exchange Control Directives issued by the RBZ such as all the three “externalisation” categories covered by the list of persons alleged to have externalised. Further to this battalion of delegated legislative instruments, any person who either exports goods or makes foreign payments is mandated by Exchange Control Guidelines to make a legally binding declaration which in the case of exports is of the below similitude:

“In consideration of the grant of authority for the export of the goods specified above, I undertake:

a) to inform the authorised dealer to whom I have registered this declaration of my receipt in Zimbabwe of payment for the goods, or the return of the goods, within ten days of their receipt or return;

b) if any delay occurs in my receipt in Zimbabwe of payment for the goods or their return, as the case may be, or if I have reason to believe that there may be such a delay, promptly to inform the Authorised Dealer stated on this declaration of the reason for the delay, and to provide documentary evidence in support thereof; and

c) to ensure that the goods are exported, and that payment thereof is received or that they are returned, as the case may be, entirely in accordance with the terms and particulars stated above or, where applicable, in accordance with specific directions of RBZ conveyed to me by the aforementioned authorised dealer;

I acknowledge that a breach of any of the aforementioned undertakings shall constitute a breach of the authority granted to me in terms of the Exchange Control Act to export the goods subject of this application thereby rendering liable to a prosecution under the Act.”

It is submitted that other than just the above-discussed legislative provisions, this declaration presumably signed by those on the list at the time of their various transactions, would constitute another legal basis upon which they can be charged for contravention of the Exchange Control Act. The Act further provides in Section 5(3) that, a person convicted of an offence in terms of the Act shall be liable to such fine or imprisonment for such period as the court deems fit or to both fine and imprisonment.

As herein discussed, it thus would be advisable for the prosecution not to confine itself to the legal dictum related to externalisation of foreign currency but rather to rely on the wider provisions of the Exchange Control Act and its related subsidiary legislation for a successful prosecution of the “externalisation” cases as listed on the published list.

Machigere is a lawyer, banker and an exchange control practitioner with a local commercial bank. He writes in his personal capacity. — machigeres@gmail.com

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