Zimbabwe News and Internet Radio

StanChart loses case to Chinese firm

By Tendai Kamhungira

HARARE – The Supreme Court on Friday ordered Standard Chartered Bank (StanChart) to pay back money it transferred to the central bank, belonging to a Chinese firm, China Shougang International. 

Standard Chartered bank (Kenya) CEO Richard Etemesi (file photo)
Standard Chartered bank (Kenya) CEO Richard Etemesi (file photo)

The appropriation of the funds followed a monetary statement issued by the RBZ in October 2007 centralising all foreign currency accounts. In the Supreme Court appeal, StanChart was contesting a High Court order compelling it to pay back $47 739,86 owed to the Kwekwe-based Chinese firm.

According to court papers, when the Chinese firm demanded its money, the bank refused to pay, claiming RBZ’s intervention rendered it impossible for it to comply with its contractual obligation.

StanChart, through its lawyer Adrian de Bourbon, said it was not liable to make the payment because of supervening impossibility of performance, urging the firm to demand its money from the RBZ.

However, the Chinese firm’s lawyer Tendai Masawi said there was no nexus between the company and RBZ. Masawi told the court that StanChart ought to have sought legal advice before remitting the funds to the central bank, adding that the transfer was illegal.

The Supreme Court ruled that the central bank’s directive “did not extinguish the bank’s (StanChart) contractual obligation” to make payment to the Chinese firm.

“The general rule relating to deposits made in a bank account by a customer is that the money becomes the property of the bank, which can use such deposit as it pleases so long as it pays to the depositor on demand, the equivalent amount deposited in the account,” the Supreme Court said.

The court further said that StanChart had failed to place evidence before it, to prove that it was no longer able to pay back the money.

“The payments to the Reserve Bank of Zimbabwe were made at its own risk and did not affect its obligation in law to pay its debt to the respondent (China Shougang International) on demand,” the Supreme Court ruled. Daily News