Online Reporter
Fidelis Munyoro
Chief Court Reporter
THE consul general of Zimbabwe in Israel, Ambassador Ronny Levi Musan, is suing PHD Ministries leader, Prophet Walter Magaya, in a contentious legal battle over a US$3 million debt.
The church leader says the contract breaches exchange control law and so cannot be enforced, and he need not repay the money, at least in foreign currency.
The High Court, presided over by Justice Maxwell Takuva, heard arguments on Monday regarding the validity of their agreement under Zimbabwe’s exchange control regulations.
The matter, filed under case number HC 621/23, involves a promissory note that advanced money to Prophet Magaya for developing a mine..
Amb Musan, represented by Advocate Tazorora Musarurwa, accused Magaya of leveraging legal technicalities to avoid repaying the funds, which were provided as an investment.
The funds, transferred into accounts specified by Magaya, are now the subject of a contentious legal battle.
Through legal counsel Advocate Garikai Sithole, Magaya’s defence centres on allegations that the agreement violated sections 4 and 11 of Zimbabwe’s exchange control laws, rendering it unenforceable.
He argued that the transaction was illegal and proposed repaying the debt in local currency, a move strongly opposed by Amb Musan.
Adv Musarurwa countered, asserting that the funds were intended for a legitimate mining venture, and not speculative currency trading.
He argued that exchange control regulations apply to Zimbabwean residents and their transactions, not foreign nationals like Amb Musan.
By accepting the funds and directing their transfer, Magaya effectively acknowledged the legitimacy of the agreement, claimed Amb Musan’s counsel.
At the trial’s outset, Magaya’s legal counsel introduced the illegality argument, prompting criticism from Amb Musan’s legal team, who accused him of delaying proceedings.
Despite objections, the court allowed both parties to present their arguments.
Citing the precedent set in “Innscor v Dolphin Trading”, Magaya’s defence argued that the court should not enforce unlawful agreements.
Adv Musarurwa dismissed the comparison, contending that the circumstances were entirely different.
He warned that Magaya’s argument, if accepted, would undermine investor confidence and send a damaging message to foreign investors.
He submitted that such a ruling would suggest local businesses could exploit legal loopholes to defraud international partners, with the courts enabling such conduct.
The draft order submitted by Amb Musan’s team demanded full repayment of the US$3 million, along with interest at 3 percent per month compounded monthly from July 1, 2022, until final settlement.
It also sought a declaration of immovable property as executable to satisfy the debt.
Justice Takuva reserved judgment to consider the submissions.
