Zimbabwe: Pay Back Zimra Funds, RBZ Ordered

Daniel Nemukuyu

30 June 2011

The High Court has ordered the Reserve Bank of Zimbabwe to pay back about US$5 million it unlawfully withdrew from the Zimbabwe Revenue Authority’s bank accounts.

This comes after it was disclosed that the “sweeping” of the funds by the central bank was done illegally between September 2008 and March 2009 at the height of the economic meltdown.

It was the court’s finding that the money was transferred from the accounts of the revenue authority with CBZ Bank Limited and the Standard Chartered Bank of Zimbabwe without a directive in form of an Act of Parliament as requ-ired by law.

The law compels Zimra to pay all collected funds to the Consolidated Revenue Fund for use by the Government and any alterations of the procedure should be effected through an Act of Parliament.

RBZ said the Government used the money in question, although the bank, for fear of breaching the Official Secrets Act, did not produce documents on how the money was spent.

Zimra was never consulted on the transactions and RBZ simply directed the banks to transfer the money into its own account.

According to Zimra Commissioner-General Mr Gesherm Pasi, the revenue authority later discovered the transactions during a reconciliation process that was being done by its workers and bankers.

Justice Anne Mary Gowora yesterday ruled that the actions of the central bank were unlawful and Zimra was entitled to a refund.

RBZ said the money was withdrawn for Government use, but the matter could not be settled at Government level, prompting Comm-Gen Pasi to file a court application clai-ming back the money.

Justice Gowora said the funds should be paid into the respective Zimra bank accounts within 10 days of the service of the order.

“The first respondent (RBZ) shall within 10 days of the date of service of this order pay into the applicant’s accounts generally known as the Commissioner-General’s Accounts held with Standard Chartered Bank of

Zimbabwe the sums set out below:

“The sum of US$2 466 735,15 into account number 870507099000 and the sum of ZAR2 473 417, 57 into account number 9440507099000.

“The sum of £55 900,82 into account number 2840507099000, the sum of 3 061 Euros into account number 9340507099000, and 139 527,61 Pula into account number 1340507099000.”

The RBZ was ordered to pay US$1 857 044 and ZAR2 807 759 into Zimra’s CBZ accounts.

The court, however, denied granting an order against RBZ Governor Dr Gideon Gono, who was cited as the second respondent in the application.

“The application against the second respondent (Dr Gono) be and is hereby dismissed with costs,” said Justice Gowora.

Kantor and Immerman appeared for Zimra, while Chitapi and Associates law firm represented RBZ and Dr Gono.

Zimra, which is mandated with collecting and enforcing payment of all revenue on behalf of the Government among other duties, opened foreign currency accounts with CBZ and Standard Chartered banks. All taxes due to the Government were deposited into those accounts from time to time directly by taxpayers or indirectly.

The accounts are generally referred to as the commissioner general’s accounts.

According to the Revenue Authority Act, Zimra is required to deposit all funds collected into the Consolidated Revenue Fund so that it can be accessed and appropriated by the Government, as it deems fit.

It was not disputed in the trial that during the period in question, Zimra collected substantial amounts of money that were deposited into accounts held with the two banks.

Following a directive from RBZ through a monetary statement in 2009, the money was swept into accounts held by RBZ with CBZ and Standard Chartered banks.

The directive was made without consultation with Zimra.

“It is common cause that Zimra had consistently called upon RBZ to remit to it the monies thus swept through the monetary policy statement.

“RBZ has not complied. It has consistently stated that the money was utilised by the Government and thus it is unable to return the money, which is the reason why Zimra has now approached this court for an order for payment of the money,” read part of the judgment.

During the hearing, RBZ did not dispute the fact that they instructed the two banks to transfer funds into its own account and that they received the funds in question.

RBZ argued that both institutions (Zimra and RBZ) were Government functionaries operating under the aegis of the Minister of Finance and Economic Development and that there was nothing wrong with the appropriation of funds.

It was RBZ’s argument that Government was the ultimate beneficiary of the funds in question and that it was not reasonable for Zimra to seek to recover the money from the central bank.

The appropriation of the funds, according to RBZ, was done with the requisite Government approval and authorisation and that the then acting Minister of Finance was aware of the appropriation.

It was RBZ’s contention that it simply acted as an agent because the Government was the ultimate beneficiary.

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