High Court orders Citibank boss to pay 120m/- or go to jail

THE High Court, Dar es Salaam District Registry, has ordered the Managing Director of Citibank Tanzania Limited to either pay over 120m/- fine or go to jail for five months for contempt of court.

Judge Leila Mgonya issued the order after granting an application lodged by the Attorney General and Petroleum Bulk Procurement Agency, the applicants, against the Managing Director of Citibank Tanzania Limited and the Managing Director of Alchemist Energy Trading DMCC, the respondents.

The respondents violated court orders dated July 12, 2021, restraining the Dubai-Based Alchemist Energy Trading from receiving over 30bn/- from various international banks in execution of tender for supply of fuel to Oil Marketing Companies under petroleum bulk procurement system in Tanzania.

“I proceed to grant the orders sought in this application to the extent that (the Managing Director of Citibank Tanzania Limited) pays a fine of 50,000 US dollars (about 120m/-) to the (Petroleum Bulk Procurement Agency) within 30 days of this ruling,” the judge declared in the ruling dated February 24, 2023.

She added, “In default, the Managing Director of the Citibank Tanzania Limited (should) go to jail and  serve a term of five months as a civil prisoner.”

The judge further ordered the Managing Director of Citibank Tanzania Limited to reimburse the transferred amount of funds from Gapco Tanzania Limited and Total Tanzania Limited bank accounts debited by him in favour of the Dubai based company against the order.

During hearing of the application, Principal State Attorney George Mandepo, for the applicants, had moved the court to issue an order to the Managing Director of Citibank Tanzania Limited to show cause as to why he should not be committed for contempt of court for disobeying the order in question.

He also pushed for the Citibank boss to be imprisoned as civil prisoner for six months and compel him to reimburse the transferred amount of funds from Gapco Tanzania Limited and Total Tanzania Limited Bank account debited by the Respondent against Court Order.

The state attorney submitted that the act of the Citibank boss to debit 1,151,924. 94 US dollars and other 816,335 US dollars from Total Tanzania USD account to reimburse CITIBANK Europe PLC under the letter of credits contrary to the court order amounts to contempt of court.

Advocates Gasper Nyika and Madina Chenge for the Respondents did not dispute that the Dubai based company debited the bank accounts as mentioned and it was done to reimburse in accordance with the terms of the latest version of the Uniform Customs and practice for Documentary Credit.

In their opinion, the applicants failed to establish that there was a breach of Court Order as it is evident from the terms of the court as the order was directed at others and it did not direct and restraining the respondents to the application, hence they had no duty to comply.

In her ruling, the judge pointed out that the court orders are made with a purpose which is to regulate proceedings and of course they must and have to be adhered to.

She said that if parties are to act in total disregard to those orders, then the court business will be rendered uncertain and will not be good for effective administration of Justice. According to her, there was no doubt that the Respondents are aware of the order in question.

“As the Order of this court speaks for itself, the judge said that the Court indeed issued the said Order pending the hearing and determination of the Arbitration proceedings before the International Chamber of Commerce (the ICC),” the judge said.

She said that without even digging deep, the Respondents including City Bank Tanzania Limited and Citibank UAE were among the list restricted to make payment in respect of execution of shipping and supply contract under Tender in favour of the Citibank on account of instructions of all Oil marketing Companies (OMCs).

The judge said that the act of the managing director of Citibank to debit USD 1,151,924.94 and USD 816,335 from Total Tanzania USD account to reimburse CITIBANK Europe PLC under the letter of credits amount to breach of Court’s Order, hence committed the contempt of Court.

“It is my firm opinion therefore that, the applicant has proved beyond reasonable doubt that Respondents committed Contempt of Court as the order was still valid in law by the time the Respondents breached the same,” she said.

On July 12, 2021, Judge Mgonya issued such injunctive orders against the foreign company and 15 banks after granting an application lodged under certificate of urgency by Petroleum Bulk Procurement Agency (an Executive Government Agency) and the Attorney General (AG).

The banks involved in the matter were ABSA Bank Tanzania, Stanbic Bank Tanzania LTD, NMB, NBC, NBCA Bank Tanzania LTD, Citibank UAE, Natixis Bank, I & M Bank Rwanda PLC and Standard Bank of South Africa.

Others are Rabobank Singapore Branch, Bank of Kigali, Eastern and Southern African Trade and Development Bank (TDB), ING Bank, ABSA Bank Mauritius and Citibank.

The judge issued the order in question pending final determination of Arbitration proceedings filed by the applicants before the International Court of Arbitration of the International Chamber of Commerce (the ICC) following a dispute between the United Arab Emirates Company and the Agency.

She ruled that counsel for the applicants demonstrated the need for the prayed orders to be granted as the Dubai Company is said to have failed to honour the terms of contract between her and the Agency under the tender in question.

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