ZimRe mulls litigation to recover US$1m from US Insurance giant says money intercepted by Washington

MELODY CHIKONO

ZIMBABWE Stock Exchange-listed insurance giant, ZimRe Holdings Limited (ZHL), this week said it was considering taking legal action against the United States (US) to recover about US$1 million intercepted by Washington when the firm was slapped with an international embargo a decade ago.

In 2017, ZHL was removed from a list of companies whose funds were blocked during the drastic action after Zimbabwe was hit by US sanctions in 2003.

But this week, chief executive officer, (CEO) Stanley Kudenga said while the firm had recovered about US$700 000, attempts to access the US$1 million have been futile.

The US Department of the Treasury’s Office of Foreign Assets Control (Ofac) imposed sanctions on a string of firms including ZHL for “contributing to the undermining of democratic procedures and institutions in Zimbabwe”.

The Government of Zimbabwe controlled shareholding in the insurance giant at the time of the embargo.

In an exclusive interview with businessdigest this week, Kudenga said processes for legal action had been put into motion.

However, he admitted that it would be a protracted battle before the funds are returned.

But one of the biggest headaches confronting the firm was that some of the blocked funds were caught up while in transit from business partners.

Some of these have since folded.

For those still existing, there have been management changes, which makes it difficult for ZHL to recover its funds should the US decides to reroute it back.

“As you can appreciate these are funds that were blocked over 10 years ago,” Kudenga told businessdigest.

“The standard rule that we have now been informed is that when the blocked funds are coming from your business partners, they are supposed to be returned to the source who then reimburses them. But you will find that so many things have happened since then. You find that some of our business partners have folded. If funds are transferred back to them, we will actually lose. What we are trying to do is that they are remitted directly to us. But then it’s a very long process. So we now have to use the legal route through our attorneys in America to try and recover our money.

“You will realise that there have been changes at some of the corporates at management and staff level. You will find new staff who do not even understand the history of those transactions. It is very sensitive.”

He said a Nigerian firm owed ZHL over US$400 000, while a further US$500 000 ended up being blocked after Dutch farmers attached Zimbabwe government assets.

“They went ahead and attached some of our funds in American banks. So that is part of the US$500 000. To unwind the whole thing, it is a process … to say these are not government funds, they are Zimre funds and try to separate them. This is the reason why the whole process is taking so long.” Kudenga said.

Kudenga said sanctions pushed ZHL into redesigning its strategy, with regional operations being established.

The embargo has hit firms in several sectors.

In June, the mining sector plunged into a near crisis, as some companies failed to access money from banks and clients abroad after being seized by US fiscal authorities because they were dealing with the Mineral Marketing Corporation of Zimbabwe (MMCZ), which is also under sanctions.

The MMCZ is the sole marketing and export agent for all Zimbabwean minerals, including nickel and chromite, excluding gold and silver.

One miner told the Zimbabwe Independent that the situation had become desperate since they could not pay workers.

“We were supposed to pay our workers by May 25, but we failed because the money that has been withheld was for salaries and other running costs. It is a major challenge,” the miner said. “If this situation persists we will have no choice but to suspend operations because it means we can’t buy consumables such as explosives and workers cannot come to work on empty stomachs.”