A US judge this week threw out a bid by a Zimbabwean bank to have a $25 million compensation case brought against government-linked firms by a group of Dutch nationals whose farms were seized under President Robert Mugabe’s controversial land redistribution drive.
ZB Bank, a subsidiary of the Zimbabwe Stock Exchange-listed ZB Financial Holdings, in which government has a direct 24 percent shareholding, had fought against being declared “an alter ego of Zimbabwe (government)” or an “instrumentality” – a firm tied to the government.
The 40 Dutch farmers seek to attach assets belonging to ZB Bank, along with the Agricultural Development Bank of Zimbabwe (Agribank), the Zimbabwe Mining Development Corporation (ZMDC) and the Minerals Marketing Corporation of Zimbabwe (MMCZ), which they consider government proxies, after Zimbabwe failed to pay the compensation award handed down by the Washington-based International Centre for Investment Disputes (ICSID) in 2009 for breach of a bilateral investment treaty between Zimbabwe and Netherlands following the compulsory acquisition of their properties.
ICSID is an international arbitration institution which facilitates legal dispute resolution and conciliation between international investors. Zimbabwe has signed BIPPAs with countries such as Belgium, Botswana, Germany, Netherlands, Italy and South Africa, which stipulate that compensation must be paid for any assets seized.
The compensation award to the 40 Dutch farmers led by Bernardus Henricus Funnekotter, initially valued at €8.2 million ($9.247 million), has since risen to $25 million due to interest and costs of the protracted legal battle.
The farmers filed a lawsuit in the United States District Court Southern District of New York seeking to confirm the arbitral award in their favour.
The farmers also sought a declaratory judgment that ZB Bank, Agribank and other parastatals are alter egos of Zimbabwe and that their assets located in the United States be treated as property used for commercial purposes against which they could enforce their judgment.
ZB Bank unsuccessfully sought to have the case against them dismissed.
“ZB Bank’s motion for summary judgment is denied,” Judge Colleen McMahon said in her ruling delivered on Wednesday.
In reaching her decision, the judge said she considered the US Office of Foreign Assets Control (OFAC), which continues to have ZB Bank among its Specially Designated Nationals (SDNs) in terms of the sanctions Washington declared on Zimbabwe in 2003.
“Deferring to OFAC’s expertise, I find that ZB Bank’s continuing designation as an SDN is some evidence that it is an alter ego of the Zimbabwean government,” the judge said.
“The (OFAC) press release makes clear that each entity designated, including ZB Bank, was a tool used by the Zimbabwean government and its officials to achieve nefarious ends and – in OFAC’s view – undermine that country’s democratic institutions.”
Western governments imposed sanctions on Mugabe’s government and its related entities following the farm seizures, which started in 2000 and saw an estimated 4 000 farmers being thrown off their land without compensation.
Mugabe argues his move to redistribute farm land was meant to compensate the historically disenfranchised black population, but it has had the unintended result of devastating food output in a country that was previously self sufficient.-The Source
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