THE High Court judgement that compels those owed money in United States dollars to be paid in that currency could result in a litany of lawsuits, especially against financial institutions.
The fiscal and monetary changes that were announced by the Reserve Bank of Zimbabwe (RBZ) on October 1, 2018, on money transfers and conversion of account balances into Real-Time Gross Settlement (RTGS) balances were nullified by the High Court in a judgement delivered on Thursday last week.
The ruling was made in a matter where Penelope Douglas Stone from The Stone/Beattie Studio represented by prominent lawyer Tendai Biti, who is also the country’s former finance minister, took CABS, the RBZ and Ministry of Finance to court over a US$142 000 deposit. In nullifying the RBZ directive, Justice Happias Zhou said CABS, which was in a contract with Beattie and Stone, should therefore honour its obligations to customers by paying the money in United States dollars.
In an interview with Zimbabwe Independent yesterday, Biti said the ruling by Justice Zhou is important.“The judgement is very important in expressing the fundamental point in that there was an unjust decision by the authorities — the Ministry of Finance and the central bank — in respect of which they simply woke up one morning and advised citizens that their bank deposits which were in US dollars having been built up from 2009 suddenly changed to RTGS dollars.”
However, Biti pointed out that the court judgement failed to deal with Statutory Instrument (SI) 33 of 2019, which stipulated that local dollar electronic balances and bond notes and coins would become RTGS dollars, as part of Zimbabwe’s multi-currency system and trading at an exchange rate fixed by market forces.
He said it also failed to deal with SI 142 of 2019, which does not define the Zimbabwe currency but it makes reference that it is equivalent to the bond notes, coins and the RTGS dollar, which all later became the Finance Act of 2019.
The judgment, he said, only dealt with the legality of the exchange control.“The judgment did not deal with the constitutional questions in the legality of dollarisation,” Biti added.
The court ruling could open the floodgates as companies and employees are likely to sue their banks to restore the value of their United States dollar balances which they held before the nullified RBZ directive. Biti pointed out that any bank should be “very worried” about this judgment and anyone who borrowed money in US dollars and repaid it in RTGS dollars should also be worried.
“The biggest debtor in this country is the government of Zimbabwe, which borrowed over US$11 billion in Treasury Bills alone and repaid those huge sums of money in RTGS dollars and bond notes. The government introduced the SI 33 and SI 143 of 2019 in order to clear its debts,” Biti said.
He also said the government should take the full responsibility of solving monetary problems in Zimbabwe.“When I left government as finance minister, I left US$6,5 billion in cash and through an expansionary of fiscal policy, they overspent, thereby taking people’s money in deposits and the public accounts committee has confirmed that in its report on the central bank,” Biti said.
He said the introduction of SI 33 and SI 143 of 2019 violated the citizens’ rights and the biggest problem in Zimbabwe is that people are under-litigated and subjected to fear.
“If this had happened in South Africa, there would have been multitudes of suits and as a practicing human rights lawyer in this particular commercial case, I blame the big people with real money who cannot come forward to fight such human rights violation because they manage the relations with the government,” Biti added.