Leonard Makombe
AN international minerals auditing firm, Alex Stewart International (ASI), is suing the Reserve Bank of Zimbabwe (RBZ) for US$34,99 million over unpaid fees for services rendered between 2007 and 2009.
ASI, through its lawyers GN Mlotshwa & Co, in summons lodged with the High Court on December 16 last year also listed Finance minister Tendai Biti as second respondent because the central bank falls under his ministry.
ASI, which is registered in the United States and was contracted by RBZ in 2006 to audit the country’s mining industry, has further threatened to lodge another US$100 million lawsuit, which would effectively cripple the central bank which is already saddled with debts.
In June last year RBZ was saved by the invocation of the presidential powers to gazette temporary regulations protecting the central bank from having its property attached by creditors as government had assumed the debts. RBZ had failed to pay local and foreign companies for fertiliser, seed, tractors and vehicle imports.
In its declaration lodged with the High Court, ASI said it was claiming US$34 995 200 for the auditing services in respect to the production and export of minerals from the country, a debt RBZ has acknowledged.
This figure represents what RBZ owed as at the end of July last year and it includes a US$2 187 200 net interest for the period December 2008 to July 2010.
“Notwithstanding numerous negotiations and discussions regarding payment of the debt, no such payment has been forthcoming,” said ASI in the declaration. “This is in spite of the fact that first defendant (RBZ) does not and has never disputed its indebtedness to plaintiff (ASI).”
In October last year, ASI’s lawyers issued a letter of demand compelling the central bank to pay the outstanding debt and it not honoured.
“Notwithstanding such demand, first defendant has failed and or neglected to pay amounts due and payable to plaintiff,” said ASI in the declaration. “Indeed in a separate lawsuit, plaintiff intends to sue first defendant for damages in an additional amount of US$100 million for breach of contract.”
The RBZ has failed to pay a number of debts since the adoption of multiple currencies and the institution of a government of national unity, which has seen Biti take over as Finance Minister and the start of personal clashes with RBZ governor Gideon Gono.
Prior to the changes, RBZ was able to settle its debts with the international auditing firm and at one time, in October 2008 Gono wrote a letter of acknowledgement to ASI president Enrique Segura, where he “recognised and very strongly recommended the services provided”.
“Your company had accomplished very concrete results as follows: RBZ knows every month with accuracy the quality and quantity of all minerals mined and exported (RBZ is able to calculate effectible income taxes and royalties,” the governor wrote.
He added that ASI’s audit work since June 2007 had enabled the central bank to have accurate data on financial statements of the mining companies “as we are proceeding with the auditing of every mine since its inception to today”.
ASI’s work enabled RBZ to ascertain the cost of mine closures and the impact on the environment of mining activities.
Gono said by engaging the auditing firm, they had managed to identify through the ASI reports, extensive losses at Fidelity Printers in the processing of gold bullion, taxes and penalties due by Zimplats, and Bindura’s financial distortions.
ASI reports exposed an absence of US$30 million in funds which should have been set aside by mining companies for environmental remediation and a general lack of observance for environmental standards.
However, relations turned frosty in 2010 after the central bank failed to pay the auditing firm required fees.
Segura in May last year wrote to Biti “as a last resort”, saying despite having performed the job for which they were hired, they had not been paid their fees by government.
“Mr Minister, we at Alex Stewart have been working very hard for your country, maintaining an infrastructure of 100 local employees and more than 50 expatriates,” said Segura. “We have done this in the face of opposition from our own government which first refused to grant us permission to work in Zimbabwe due to its embargo.”
Segura said they had hired lobbyists to convince the US government to allow them to work in Zimbabwe.
“We fought (for) our right to work in your country because we believe in your country’s cause and we understand all too clearly the need to protect the country’s non renewable resources against exploitation by mining companies to the detriment of national treasury and the health and well being of the people.”
Segura said they were appealing not only to the “Honourable Minister’s sense of fairness but also to your understanding of the work we have done and the benefit that a Mineral Production and Export Auditing Program such as ASI can bring to the country and people of Zimbabwe.”
It appears the appeal fell on deaf ears and ASI instructed its lawyers to write an order requesting the payment of the amount due on October 14 2010.
At the time of going to print, the RBZ and Biti were yet to respond to the lawsuit.