News / National
Bond notes illegal, says Mujuru
04 Aug 2016 at 01:40hrs | Views
Zimbabwe People First leader Dr Joice Mujuru has approached the Constitutional Court challenging Government's decision to introduce bond notes as part of a raft of measures to stem the liquidity crunch prevailing in the country.
President Mugabe, as the Head of State and Government, is empowered under the Reserve Bank Act (Chap 22:15) to determine the denominations, designs or form of banknotes and coins that can be used as legal tender in Zimbabwe.
In her constitutional application filed in the apex court, Dr Mujuru listed President Mugabe, Finance and Economic Development Minister Patrick Chinamasa, Reserve Bank of Zimbabwe Governor Dr John Mangudya and the Attorney-General, Advocate Prince Machaya, as respondents.
She wants her application dealt with by the highest court in the land despite the fact that the High Court has inherent powers to hear such an application.
Dr Mujuru has to seek permission from the apex court to file her application in terms of Section 167(5) of the Constitution pursuant to Rule 21 of the Constitutional Court Rules 2016.
In her substantive application, Dr Mujuru wants the proposed introduction of bond notes by the central bank and Dr Mangudya with the approval of the President and Minister Chinamasa declared unconstitutional for allegedly contravening several cited sections of the Constitution of Zimbabwe.
The challenge comes after Government announced that it would introduce bond notes that would be used together with the foreign currencies that are accepted as legal tender in the country.
"It is apparent that the proposed bond notes are not Zimbabwean dollars and therefore not banknotes within the contemplation of Sections 6; 7 and 40 of the Reserve Bank of Zimbabwe Act (Chap 22:15)," she says in her affidavit.
In this regard, she argues that the essence of her fundamental rights under Section 56(1) is that the State should always act in accordance with the law.
"If the State acts contrary to law, the officials so acting would have become more equal than others, thereby being above the law," she said.
"Such conduct automatically infringes the right to equal protection and benefit of the law. Bond notes are not provided for in the Reserve Bank Act (Chap 22:15)."
"In terms of that Act, there are only two forms of currencies that can be legal tender in Zimbabwe namely (i) Zimbabwean dollar and (ii) foreign currencies under Section 44A."
Dr Mujuru challenged the respondents to point to the provisions of the law that they seek to rely on in introducing the bond notes.
"In terms of the Reserve Bank of Zimbabwe Act the respondents cannot introduce a bond note and cause it to masquerade as a form of currency. The law has only two options: either the Zimbabwean dollar or foreign currencies.
"Whatever the respondents may seek to say about the bond note, it is clearly a disguised Zimbabwean dollar that is being introduced through the back door.," she said.
"The law does not allow a back door approach. If they wish to re-introduce the Zimbabwean dollar, they must follow the law and call it by name given its demonetisation."
She also accused Government of trying to avoid Parliament. She said there is no way the bond notes could be legal under the Reserve Bank Act as it currently stands, querying why the respondents were not seeking an amendment of the Act.
She said Section 71(2) of the Constitution protects the right to private property. This, she said, the State could not compulsorily deprive any person of their property except under the strict conditions in Sections 71(3) and 72.
"It is common cause that money is property. Money is property whether it is Zimbabwean currency or foreign currency," she said.
The introduction and use of bond notes, said Dr Mujuru, would lead to the compulsory acquisition of property contrary to Section 71(3).
The former Vice President said on her part she has bank deposits in local banks. These are in United States dollars.
She also argued that a banker`s customer who has a cash deposit in any particular foreign currency has the freedom, protected by Section 64, to be repaid as per his/her/its contract with the bank.
"The modus operandi to be followed in the case of bond notes will involve the State intervening in contractual and trade relations in such a way as to alter the contractual obligations of banks," she said.
"This will be unconstitutional as an infringement of the right protected by Section 64." She said there was no justification for the infringement of constitutional rights in the manner that will be brought about by the introduction of bond notes. On the contrary, she said bond notes pose the greatest threat to the livelihoods of people of this country.
They will destroy the economy and perpetuate poverty, she said. She said from her experience in Government as a Vice President, it was clear to her that the greatest mistake this country ever made was to print the so-called bearer cheques.
She said the only reasonable way forward is to adhere strictly to the multi-currency regime while doing everything necessary to stimulate economic growth.
"The State cannot make it compulsory for the bank to pay me back in bond notes instead of the United States dollars I deposited with the bank for that would be a compulsory acquisition of property contrary to Section 71(3)," she said.
"It is clear that if the respondents proceed with the bond notes, my right under Section 71(2) will be infringed. More specifically, here is no law of general application authorising the deprivation."
She said even if an attempt were to be made to introduce such a law, it would not pass constitutional muster because bond notes will never satisfy any interests of defence, public safety, public order, public morality, public health or town and country planning.
Dr Mujuru further argued that the relationship between a bank and its customer is based on freedom of contract.
"It is a voluntary debtor and creditor contract. The customer gives money to the bank under a contract whereby the bank promises to repay the money on demand," she said.
"If the customer lends the bank an amount of money in foreign currency under a contract in which the bank will repay the customer in foreign currency, the State cannot intervene in the contractual relationship and alter the bank`s repayment obligation. Such an intervention is an infringement of the right protected by section 64 of the Constitution."
She also argued that a banker`s customer who has a cash deposit in any particular foreign currency has the freedom, protected by Section 64, to be repaid as per his/her/its contract with the bank.
"The modus operandi to be followed in the case of bond notes will involve the State intervening in contractual and trade relations in such a way as to alter the contractual obligations of banks," she said.
"This will be unconstitutional as an infringement of the right protected by Section 64." She said there was no justification for the infringement of constitutional rights in the manner that will be brought about by the introduction of bond notes. On the contrary, she said bond notes pose the greatest threat to the livelihoods of people of this country.
They will destroy the economy and perpetuate poverty, she said. She said from her experience in Government as a Vice President, it was clear to her that the greatest mistake this country ever made was to print the so-called bearer cheques.
She said the only reasonable way forward is to adhere strictly to the multi-currency regime while doing everything necessary to stimulate economic growth.
President Mugabe, as the Head of State and Government, is empowered under the Reserve Bank Act (Chap 22:15) to determine the denominations, designs or form of banknotes and coins that can be used as legal tender in Zimbabwe.
In her constitutional application filed in the apex court, Dr Mujuru listed President Mugabe, Finance and Economic Development Minister Patrick Chinamasa, Reserve Bank of Zimbabwe Governor Dr John Mangudya and the Attorney-General, Advocate Prince Machaya, as respondents.
She wants her application dealt with by the highest court in the land despite the fact that the High Court has inherent powers to hear such an application.
Dr Mujuru has to seek permission from the apex court to file her application in terms of Section 167(5) of the Constitution pursuant to Rule 21 of the Constitutional Court Rules 2016.
In her substantive application, Dr Mujuru wants the proposed introduction of bond notes by the central bank and Dr Mangudya with the approval of the President and Minister Chinamasa declared unconstitutional for allegedly contravening several cited sections of the Constitution of Zimbabwe.
The challenge comes after Government announced that it would introduce bond notes that would be used together with the foreign currencies that are accepted as legal tender in the country.
"It is apparent that the proposed bond notes are not Zimbabwean dollars and therefore not banknotes within the contemplation of Sections 6; 7 and 40 of the Reserve Bank of Zimbabwe Act (Chap 22:15)," she says in her affidavit.
In this regard, she argues that the essence of her fundamental rights under Section 56(1) is that the State should always act in accordance with the law.
"If the State acts contrary to law, the officials so acting would have become more equal than others, thereby being above the law," she said.
"Such conduct automatically infringes the right to equal protection and benefit of the law. Bond notes are not provided for in the Reserve Bank Act (Chap 22:15)."
"In terms of that Act, there are only two forms of currencies that can be legal tender in Zimbabwe namely (i) Zimbabwean dollar and (ii) foreign currencies under Section 44A."
Dr Mujuru challenged the respondents to point to the provisions of the law that they seek to rely on in introducing the bond notes.
"In terms of the Reserve Bank of Zimbabwe Act the respondents cannot introduce a bond note and cause it to masquerade as a form of currency. The law has only two options: either the Zimbabwean dollar or foreign currencies.
"Whatever the respondents may seek to say about the bond note, it is clearly a disguised Zimbabwean dollar that is being introduced through the back door.," she said.
"The law does not allow a back door approach. If they wish to re-introduce the Zimbabwean dollar, they must follow the law and call it by name given its demonetisation."
She also accused Government of trying to avoid Parliament. She said there is no way the bond notes could be legal under the Reserve Bank Act as it currently stands, querying why the respondents were not seeking an amendment of the Act.
She said Section 71(2) of the Constitution protects the right to private property. This, she said, the State could not compulsorily deprive any person of their property except under the strict conditions in Sections 71(3) and 72.
The introduction and use of bond notes, said Dr Mujuru, would lead to the compulsory acquisition of property contrary to Section 71(3).
The former Vice President said on her part she has bank deposits in local banks. These are in United States dollars.
She also argued that a banker`s customer who has a cash deposit in any particular foreign currency has the freedom, protected by Section 64, to be repaid as per his/her/its contract with the bank.
"The modus operandi to be followed in the case of bond notes will involve the State intervening in contractual and trade relations in such a way as to alter the contractual obligations of banks," she said.
"This will be unconstitutional as an infringement of the right protected by Section 64." She said there was no justification for the infringement of constitutional rights in the manner that will be brought about by the introduction of bond notes. On the contrary, she said bond notes pose the greatest threat to the livelihoods of people of this country.
They will destroy the economy and perpetuate poverty, she said. She said from her experience in Government as a Vice President, it was clear to her that the greatest mistake this country ever made was to print the so-called bearer cheques.
She said the only reasonable way forward is to adhere strictly to the multi-currency regime while doing everything necessary to stimulate economic growth.
"The State cannot make it compulsory for the bank to pay me back in bond notes instead of the United States dollars I deposited with the bank for that would be a compulsory acquisition of property contrary to Section 71(3)," she said.
"It is clear that if the respondents proceed with the bond notes, my right under Section 71(2) will be infringed. More specifically, here is no law of general application authorising the deprivation."
She said even if an attempt were to be made to introduce such a law, it would not pass constitutional muster because bond notes will never satisfy any interests of defence, public safety, public order, public morality, public health or town and country planning.
Dr Mujuru further argued that the relationship between a bank and its customer is based on freedom of contract.
"It is a voluntary debtor and creditor contract. The customer gives money to the bank under a contract whereby the bank promises to repay the money on demand," she said.
"If the customer lends the bank an amount of money in foreign currency under a contract in which the bank will repay the customer in foreign currency, the State cannot intervene in the contractual relationship and alter the bank`s repayment obligation. Such an intervention is an infringement of the right protected by section 64 of the Constitution."
She also argued that a banker`s customer who has a cash deposit in any particular foreign currency has the freedom, protected by Section 64, to be repaid as per his/her/its contract with the bank.
"The modus operandi to be followed in the case of bond notes will involve the State intervening in contractual and trade relations in such a way as to alter the contractual obligations of banks," she said.
"This will be unconstitutional as an infringement of the right protected by Section 64." She said there was no justification for the infringement of constitutional rights in the manner that will be brought about by the introduction of bond notes. On the contrary, she said bond notes pose the greatest threat to the livelihoods of people of this country.
They will destroy the economy and perpetuate poverty, she said. She said from her experience in Government as a Vice President, it was clear to her that the greatest mistake this country ever made was to print the so-called bearer cheques.
She said the only reasonable way forward is to adhere strictly to the multi-currency regime while doing everything necessary to stimulate economic growth.
Source - the herald
