Bank loses bid to seize Zim assets

A GERMAN bank KFW Bankengruppe's bid to seize Zimbabwe's six properties in South Africa to recover a debt in excess of 40 million Euro hit a snag after a Johannesburg court set aside the attachment.

The Zimbabwe Government had failed to settle a loan advanced to Zimbabwe Iron and Steel Co Ltd by the bank following an agreement on January 29, 1998.

KFW Bankengruppe then obtained a writ of execution against six Government properties in South Africa after failing to get payment on the loan.

The Government challenged the attachment and South Gauteng High Court, Johannesburg, ruled that only one property that was being occupied by a South African through a lease was found to be ineligible for protection under the diplomatic immunity.

The other five properties were removed from attachment.

The property ' which does not fall within the ambit of diplomatic immunity ' is situated at Number 28 Salisbury Road, Wynberg.

Deputy Attorney-General Advocate Prince Machaya yesterday told The Herald that the Government had since instructed its South Africa-based lawyers to appeal against the decision authorising the attachment of Number 28 Salisbury Road.

On November 22 this year, the South Gauteng High Court granted an application by the Zimbabwean Government saying the procedure adopted in the attachment of the five immovable properties in Western Cape and Johannesburg was irregular.

Judge CG Lamont ordered the bank ' KFW Banken-gruppe ' to pay legal costs incurred by Zimbabwe.

"I would make the following order:

"The writ of execution extends to the attachment of the immovable property owned by the applicant (Zimbabwe) situated at 46A Tenant Road, Kenilworth.

"The writ of execution does not extend to the authorisation of the attachment of the immovable properties of the applicant situate at 53 and 55 Kuyper Street Zonneblom, 28 Salisbury Road Wynberg, 179 Beryl Street Bruma Gauteng and 48 Klip Street Gauteng.

"The attachment of all the said properties is set aside. The second respondent (KFW Bankengruppe) is to pay the costs of the application including the costs of senior and junior counsel who were employed," ruled Judge Lamont.

It was the court's finding that the five properties were covered under the diplomatic protection while the one that was being rented out could not qualify for the protection.

The dispute arose when the bank issued writs for attachment of the properties with the intention to sell it to reduce indebtedness.

In 2002, the debt was 40 million Euro, but with the costs, it is believed to have increased over the past eight years.

Adv Machaya welcomed the judgment saying it confirmed the Government's position that diplomatic properties are protected under international law.

"The judgment re-affirms our view (as the State) that under international law, diplomatic properties are protected.

"We have always held that and that is the reason why we were surprised when the properties were attached," Adv Machaya said.

According to the judgment, Number 46A Tenant Road

Kenilworth was vacant at the time the attachment was contested while Number 53 and 55 Kuyper Street Zonneblom were formally occupied by the Zimbabwean Consulate in Cape Town and were now being occupied by vagrants.

The Court did not doubt Zimbabwe's position that it intends to use the other five properties for future Government properties since some of the Consular operations in the areas were no longer functional.

"In so far as the remaining properties are concerned, it appears to me that there is no cogent factual basis before me to disbelieve the stated intention of the applicant, that is, to resume use of the property itself otherwise than for commercial purposes," said Judge Lamont.

"The second respondent (KFW) has no factual basis than to gainsay the stated factual intention of the applicant. The factual evidence before me establishes that the remaining properties in Western Cape are not attachable.

"The applicant has been substantially successful in that all the attachments are procedurally invalid and in that the bulk of the properties are immune from attachment…"

According to court documents filed at the South Gauteng High Court, the Zimbabwe Government, through Zisco, entered into a loan agreement with the German bank on January 29 1998.

The Government was supposed to repay in 16 instalments beginning in May 2000 but allegedly defaulted after the fourth payment in December 2002.

Subsequently the bank appointed arbitrator Dr Wolfgang Peter to facilitate payment and to avoid legal action but this failed prompting the bank to go to court.

Another case in which white former commercial farmers are eyeing four of the six properties is still pending at the Pretoria High Court.

The Government has filed a double-barrelled application at the Pretoria High Court objecting to the attachment of the properties on the grounds similar to those raised in the KFW case.

Zimbabwe is also seeking to quash registration of the Sadc Tribunal land judgement in South Africa.

The farmers ' part of the 79 ' who were parties to the Sadc tribunal land case are seeking to recover legal costs they incurred in long-drawn legal proceedings.