High Court rules against EcoCash in agent line freeze

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Harare – EcoCash agents whose agent lines were frozen by the RBZ will have to re-register and then undergo Reserve Bank vetting after the High Court ruled against the country’s biggest mobile money firm.

In a judgement delivered on Tuesday, Justice Webster Chinamora ruled that EcoCash did not have a legal basis to seek relief of behalf of its customers. He added that the Reserve Bank had acted legally when it froze accounts it suspected of being involved in criminal activities.

“The fact of the matter is that EcoCash owns the platform, while the agents enjoy the right of use of the platform as long as the applicant receives its fee per transaction.”

“While the applicant might feel passionately about the financial strain occasioned by the directive, it’s not the kind of interest that can found locus standi for the applicant at law.”

“The question that arises is: if the agents are independent contractors in their own right, on what bases does the applicant have standing to litigate on their behalf? I see no lawful reason for EcoCash to bring the present action to vindicate what essentially are rights which inhere in an independent contractor who has not even asserted his/her/its loss, actual or potential, before this court.”, he said.

The RBZ directive of May 4 required EcoCash to freeze and re-license the accounts of agents who were carrying out transactions of over Z$100,000 or more each month. Only banks and listed companies were spared.

EcoCash argued that the RBZ directive was “illegal and irrational” because of its blanket application, and failure to consult the company and its agents.

Justice Chinamora conceded that the RBZ action of “adopting a dragnet approach” may have been unlawful, but insisted that this did not give EcoCash a “sufficient legal interest to file an application before the court on behalf of its agents.

Chinamora added that EcoCash could not interdict the RBZ from performing its functions in terms of the law.

“It would be a disjuncture for an executive functionary to exercise its legitimate statutory mandate, and then have the court undermine that through an interdict. Rather, EcoCash should challenge any perceived irregular exercise of administrative power via an application for a declarator or review… My conclusion in no way means that the applicant cannot approach the court, but that it has selected the wrong method to vindicate the rights it seeks to protect,” he said.

Advocate Addington Chinake appeared for the RBZ while Advocate Thabani Mpofu argued for EcoCash.

RBZ governor, in an affidavit before the court, described EcoCash as a “ponzi scheme” and the central bank’s Financial Intelligence Unit escalated the rhetoric in recent days, accusing the Econet subsidiary of being the nexus of a thriving foreign currency parallel market where the local currency is taking a battering.

But even as the EcoCash accounts were frozen, the Zimbabwe dollar suffered major losses with the electronic RTGS now trading upward of 1:64 to the United States dollar. It was 1:49 on May 4, according to currency tracker, Market Watch Zimbabwe.

Tuesday’s judgement came as EcoCash and RBZ chiefs were meeting in Harare in a bid to reach a compromise to the stand-off, and it remains unclear what effect the ruling could have on those negotiations.

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