HARARE: A Local agro-equipment supplier is paying, quite literally, for doing business with the insolvent Reserve Bank of Zimbabwe (RBZ) after a bid to attach the central bank’s property was blocked by the High Court.
Farmtec Spares and Implements was contracted by the RBZ to supply 150 tractors under the central bank’s farm mechanisation programme in 2008 with most of the implements allegedly going to top Zanu PF officials who never paid for it.
The scheme was part of the RBZ’s infamous quasi-fiscal activities under which it freely printed money, helping fire inflation which reached 79.6 billion percent in mid-November 2008, forcing the government to ditch the worthless Zimbabwe dollar the following year.
The quasi-fiscal activities ballooned the central bank’s debt to more than $1 billion. The government has since loaded the debt on the tax payer, meaning those who collected the tractors and never paid for them no longer need to worry. Farmtec supplied 60 of the required 150 tractors, billing the RBZ US$2.1 million. The central bank never paid, resulting in the collapse of the deal.
Farmtec subsequently sued and managed to attach RBZ property including stands in Kariba, Harare, Mutare as well as Nyanga. The central bank rushed to the High Court, arguing that its assets were State property and could not, under the law, be seized.
Justice Tendai Uchena agreed with the RBZ and, recently, ruled that Farmtec must return the stands and wait for the central to pay when it wants. To add salt to injury, the court ordered Farmtec to pay the costs of the case. The judge said amendments to the RBZ Act through Statutory Instrument Number 115/10 protect the central bank’s property from execution.
“The legislature obviously intended to equate the applicant to State organs which cannot be executed against because it had accrued debts which left it open to detrimental executions,” he explained in his ruling.
“This, in my view, is why the provisions had to first be made by way of Presidential Powers (Temporary Measures), and when enacted, through the General Laws Amendment Act Number 5 of 2011, had to be backdated to June 18 2010.”
