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ZIM govt cannot arrest people, businesses for using US$- Veritas Zimbabwe

ZwNews.com

The Zimbabwe Republic Police (ZRP) has issued a stern warning saying it would arrest anyone found using and pegging their prices in the United States of America dollars (US$).

In a statement released today, ZRP National spokesperson Paul Nyathi said; “ZRP would like to warn all those who are charging commodities in United States dollars that they risk being arrested as the law will be applied without fear or favour.”

Nyathi went on to urge members of the public to report such people to any nearest police station, so as to make sure they are brought to book in accordance with the law.

Nyathi’s warning comes at a time there were similar sentiments by government officials who have made it clear that they believe it is now a criminal offence for storekeepers to price their goods in US$ dollars or any other foreign currency, than Zimbabwe dollars in local transactions. This was also repeated by the Reserve Bank of Zimbabwe governor John Mangudya who recently told a parliamentary committee the same thing.

However, the statements made by by both Mangudya and Nyathi along with other government officials purporting that it is a criminal offence to charge goods in US$ are horribly wrong and may lead to serious violations of the rule of law, as the sentiments encourage the police to arrest people for conduct which is in fact lawful, says Veritas Zimbabwe.

Adding that such arrests will be illegal and may leave the police officers concerned liable to pay heavy damages.

The constitutional watchdog, says the rule of law is an elastic concept which fundamentally means that people’s rights and obligations must be determined by laws rather than by individuals or groups of individuals exercising an arbitrary discretion.

Veritas Zimbabwe adds that from this fundamental concept several principles are derived, among them; no one is above the law, state officials, and even the State itself, are subject to the law and must act in accordance with the law.

Laws must be certain, i.e. clear and definite. People must be able to establish easily the content of a law and the extent of their rights and duties under it. Crimes must be clearly defined and reasonably limited in scope. People must know what they can and cannot do.

Therefore, statements made by the Governor and the Police violate these principles because, they mis-state the effect of the law, leading the public to believe that storekeepers and others are committing crimes when they are not as stated by Veritas.

Veritas Zimbabwe explains that if Ncube and Mangudya want to outlaw the use of foreign currency as a medium of exchange in Zimbabwe, then they must do it properly. That is to say; they must work out precisely and in detail what they want to achieve. With the aid of their legal advisers, they must establish what the existing law says on the subject, and work out which laws need to be enacted, repealed or amended in order to achieve the new policy goals.

After that, then they must get laws drafted so as to give effect to their new policies while observing the precepts of the rule of law, and then the Minister must approach Parliament to enact the new laws.

Why Parliament?

Veritas says this is so because when laws pass through Parliament they are subjected to scrutiny and debate.

Which gives stakeholders, such as businesses and members of the public are given an opportunity to express their views when laws are referred to the appropriate parliamentary committees.

The constitutional watchdog adds that there is the further point that the Constitution makes Parliament, not the Executive, responsible for enacting laws in line with the principle of separation of powers.

“It needs to be asserted strongly that, contrary to what the Governor of the Reserve Bank said, it is not a criminal offence to use foreign currency in transactions within Zimbabwe or to price goods in a foreign currency,” adds Veritas.

The multi-currency system was introduced in 2009 by the Finance (No. 2) Act, 2009.

Section 17 of the Act first amended the Reserve Bank of Zimbabwe Act so as to insert a new section 44A which gave the Minister of Finance power to make regulations prescribing that tenders of payment in specified foreign currencies would be legal tender in Zimbabwe. However, section 17 of the Finance Act then confused matters by adding a further provision stating that British pounds, US dollars, South African rand and Botswana pula “shall be deemed to be legal tender” as if the new section 44A were already in force and the Minister had made regulations under it.

As a result, the multi-currency system was not introduced by regulations made under section 44A of the Reserve Bank of Zimbabwe Act.  It was introduced by the Finance (No. 2) Act itself, which deemed the Minister to have made the appropriate regulations. Under our law Ministers cannot make regulations amending or repealing Acts of Parliament, and it is arguable by enacting SI 142 the Minister has repealed the Finance Act’s declaration of foreign currencies as legal tender which he cannot do.

Even if it is valid, SI 142 does not expressly state that foreign currencies cannot be used in transactions or to price goods. Instead it provides that the Zimbabwe dollar is the sole legal tender in Zimbabwe for all transactions.

“Legal tender” means a currency which, if offered in payment of a debt, discharges the debt unless the creditor and the debtor have specifically agreed otherwise. So if a debtor owes a creditor $20, say, the debtor can normally repay the debt by offering $20 in RTGS dollars (because they are legal tender). If however the parties have agreed that the debt should be repaid in US dollars, then the debtor must repay it in those dollars.

SI 142 does not specifically forbid contracts that require payments to be made or calculated in a foreign currency, so if shopkeepers mark their prices in US dollars, for example, or insist on payment in that currency there is nothing to stop them doing so.”

There is no provision in SI 142 of 2019 stating that the use of a foreign currency rather than Zimbabwe dollars is a criminal offence.

There could not be any such provision because sections 44A and 64 of the Reserve Bank of Zimbabwe, under which the SI was made, do not allow the Minister to create criminal offences or, to put it more precisely, the sections do not provide expressly for criminal offences and, in the absence of such a provision, the Minister cannot create them. If SI 142 of 2019 does not criminalise the use of foreign currency, is there any other law that does? No, there isn’t.

The Reserve Bank Governor mentioned the Bank Use Promotion and Suppression of Money Laundering Act (actually it was amended extensively six years ago and is now called the Bank Use Promotion Act], but that Act does not deal with foreign currency. It prohibits traders and other business people from hoarding or trading in cash and provides for the confiscation of cash illegally held.  “Cash” however is defined in the Act as meaning bank notes and coins of any currency that is designated as legal tender in Zimbabwe. If Zimbabwe dollars are, as the government claims, the sole legal tender in this country then on bond notes and coins the Bank Use Promotion Act can apply.

 

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