Saturday, July 4, 2020

“Small-man” takes Banc ABC to the cleaners

Botswana Stock Exchange (BSE) listed Banc ABC recently escaped the public auctioneer’s hammer by a whisker following a major upset in a David and Goliathesque court battle with a little-known trucking company.Banc ABC which is Botswana’s 4th most profitable bank and ranked the 5th largest by assets, suffered a double whammy earlier this year after it was ordered to write off P200 000 from the logistics company’s loan. The trucking company, Xaroo Birds subsequently obtained a writ of execution in March 2020 to attach the bank.

According to court records,  on April 2015 Banc ABC issued Summons against Xaroo Birds and its sureties for payment in the sum of P 2 502 697.55 plus P 198 890.07. This was money due and payable pursuant to a loan.  The parties entered into a settlement and a consent order was on 23rd August 2016 issued by the court. Banc ABC however understated the money Xaroo Birds owed them by P200 000 in the consent order.

In December 2017 Xaroo Birds wanted to settle the debt, the bank however demanded P200 020.03 in excess of the amount stated in the consent order.In their correspondence the bank warned that interest would continue to accrue at an annual rate of 19% on the daily outstanding balance.Xaroo Birds on the other hand queried the amount and asked the bank to justify it.  Xaroo Birds paid Banc ABC as per the consent order and asked the bank to release their security. The bank explained that due to human error they had understated the money owed by Xaroo Birds when entering into the consent order and maintained their position in demanding money which was not lawfully due to them. Xaroo Birds lawyer Tshepiso Lediretse of Lediretse Attorneys argued that the bank ought to take accountability for their error. Xaroo Birds made several proposals to the bank including a moratorium on the steep daily interest that was being charged on the account while the parties explored a settlement.

The bank adopted a hardline, demanding payment in excess of the consent order, not halting interest, and refusing to release the debtor’s security. Placed under pressure by the bank, Xaroo Birds paid, without prejudice, the money as demanded. In December 2017, Xaroo Birds instituted proceedings for reimbursement of the amount paid in excess of the consent order. In response, the bank brought a variation application, seeking a variation of the consent order. The matter was heard and decided by Justice Khan in February 2020. The reimbursement application by Xaroo Birds was successful and the Court dismissed the bank’s variation application. The bank was ordered to reimburse Xaroo Birds their P 216 004.64, plus interest and legal costs.

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Sunday Standard June 28 – 4 July

Digital copy of Sunday Standard issue of June 28 - 4 July, 2020.