Zambia v Meer Care & Desai (a firm) & Ors, Court of Appeal - Chancery Division, May 04, 2007, [2007] EWHC 952 (Ch)

Resolution Date:May 04, 2007
Issuing Organization:Chancery Division
Actores:Zambia v Meer Care & Desai (a firm) & Ors
 
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Neutral Citation Number: [2007] EWHC 952 (Ch)

Case No: HC04C03129

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 04/05/2007

Before :

MR JUSTICE PETER SMITH

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Between :

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Mr Blair QC, Mr Sullivan, Ms Brown, Mr Evans and Mr MacDonald (instructed by DLA Piper) for the Claimant

Mr Head and Mr Kramer (instructed by Reynolds Porter Chamberlain) for Mr Iqbal Meer a partner in the First Defendant

Mr Croxford QC and Ms Stanley (instructed by Barlow Lyde & Gilbert) for the Second and Eighth Defendants

Mr Veen (instructed by Direct Public Access) for Mr Naynesh Desai a partner in the First Defendant

Mr Bourne (instructed by Bray Walker) for the Fifth Defendant

Mr Fenwick QC and Ms Day (instructed by Barlow Lyde & Gilbert) for the partner in the Second Defendant

Hearing dates: 31 October 2006 - 22 November 2006, 29 November 2006 - 14 December 2006 (sitting as Special Examiner at the High Court Lusaka), 11 January 2007 - 27 February 2007

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Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic

..............................

MR JUSTICE PETER SMITH

Peter Smith J :

INDEX

A INTRODUCTION SECTION

Paragraph 1 The Case

3 Details of Defendants

11 Why the action is brought in London

34 Other Proceedings

B ZAMBIA - SOME POINTS TO NOTE

46 The Allegations in their financial context

C PROCEDURAL MATTERS

57 Unusual acquisitions

59 The President's clothes

D ZAMTROP CONSPIRACY GENERAL MATTERS

90 Burden of Proof

98 How the conspiracy worked

107 Events that are not coincidental

115 MOU

120 AFSL obtains a licence

E OPENING OF THE ZAMTROP ACCOUNT

127 Formalities for Zamtrop Account

139 Finance Charter 1970

145 Significance of Finance Charter

F CREDITS TO ZAMTROP ACCOUNT

161 Transfers into and out of the Zamtrop Account: Systems and Wilbain

172 Budgetary Approval

204 Further transfers out of the Zamtrop Account

G EVENTS LEADING TO DISCOVERY

218 Open Pandora's Box and take the money

222 FJT's Presidency Ends

H CRITICISMS OF AGZ'S EVIDENCE

245 Mr Hamunjele

258 Allegations made about veracity of Third Parties

I ZAMTROP ACCOUNT MONIES ARE GOVERNMENT MONIES

277 Purposes for which payments used

291 Permase General

J ACCESS FINANCIAL SERVICES LIMITED (AFSL)

307 Enock Mwale

K LEGAL ISSUES

314 Conspiracy

330 Breach of fiduciary duty

332 Dishonest assistance

372 Limitation

376 Limitation generally

L INDIVIDUAL DEFENDANTS: VARIOUS ISSUES

427 Xavier F Chungu (XFC) (D7)

441 Dr Chiluba (FJT) (D3)

472 Stella Mumba Chibanda (SC) (D6)

486 Faustin Kabwe (FK) (D9)

503 Aaron Chungu (AC) (D7)

504 Francis Kaunda (Francis K) (D11)

519 Irene Kabwe (IK) (D10)

528 Boutique Basile (Basile) (D12)

541 Iqbal Meer, Naynesh Desai and Meer Care & Desai (IM, ND & MCD) (D1)

544 Churchill Hotel Agreement

593 Harptree Holdings Ltd

604 Further evidence of dishonesty

619 Blue Card warnings

644 Naynesh Desai (ND)

680 Knowing receipt where no beneficial receipt

685 Cave Malik (CM) Bimal Thaker (BT) and Bhupendra Bhailal Thaker (BBT) (D2)

716 Claims against BT, BBT and CM

719 Background BT

724 Cave Malik & Co London (CM)

753 Commencement of association with FK/AFSL

765 CM begins to receive Zamtrop monies

770 Receipts from Redcliffe/Shansonga

799 ZCCM Consultancy

813 Deception of Habib Bank

823 BT Changes His Story

836 Office of President Payments (OOP)

862 Cash Payments of £30,000 to FJT

866 Payments 2002

869 Conclusion as regards BT

874 Quantum against BT

M BBT/CM

876 Two issues

N ATAN SHANSONGA (AS) (D5)

893 Claims against AS

895 Brief summary of claims

904 AS's Case

905 A number of preliminary observations

909 GT's evidence concerning AS's receipts and expenditure

911 Basis for AS's involvement

918 AS's fundamental credibility failing

926 Redcliffe

931 AS's failure to keep records

938 Burden of Proof

949 AS comments on evidence generally

960 Zambian Lifestyle Yardstick

964 Payments to Stella Chibanda

969 Payments to CSW - Bob Standaert

974 Payments to Professor Mweene

975 Purchase of Motor Vehicles

984 Payments for School Fees etc

990 Credit Card Expenditure

1001 Other Credit Matters

1003 DGH Poly Products

1026 Conclusions as regards AS

O MOFED

1038 AGZ's Case

P THE BK CONSPIRACY

1056 Background

1060 Examination and Effect of Documents

1072 Fate of Government monies paid to ABN-AMRO and KBS accounts

1074 Payments to XFC

1075 Meer Care $1,299,456.70

1080 Payments from KBC Account credited to Meer Care Ledger 3556/001

1085 CM $176,985 direct and $275,058 indirect payments from KBC account

1088 Indirect payments from the KBC account to CM via MCD

1089 $200,000 Payment by CM to KBC account

Q THE BK CASE: THE CLAIM AGAINST EACH DEFENDANT

1090 Mr Soriano

1095 Claim against XFC

1100 Claim against FJT

1102 Claim against SC

1104 Claim against FK

1108 Claim against IM/MCD

1114 Claim against BT/CM/BBT

R CONCLUSION

Zamtrop Conspiracy Liability

1120 XFC

1122 FTJ

1123 SC

1124 FK

1125 AC

1126 Francis K

1127 IK

1128 Basile

1129 IM/MCD/ND

1130 BT/CM/BBT

1131 AS

MOFED Claim

1132 AS

BK Conspiracy

1133 Soriano, FJT, XFC, SC and FK

1134 IM, MCD and ND

1135 BT, CM and BBT

1136 Harptree Credit

S FINAL NOTES

DRAMATIS PERSONAE - DEFENDANTS

Non-Defendant Companies and Individuals

Principal Bank accounts

(A) INTRODUCTION SECTION

THE CASE

  1. In this action the Attorney General of Zambia (``AGZ'') for and on behalf of the Republic of Zambia claims to recover sums which were transferred by the Ministry of Finance (``MOF'') between 1995 and 2001. The money in question was transferred on the basis that it was required to pay debts owed by the Government. It is acknowledged by the Claimant (``AGZ'') that some money was used in that way but most of it was not. It is alleged that very large sums were diverted away for private purposes for various of the Defendants and he seeks to recover these sums from the Defendants.

  2. The case falls into 3 distinct parts. The first arises out of the transfer of about $52,000,000 from Zambia to a bank account operated, it is alleged, outside ordinary governmental processes called the Zamtrop Account held at Zambia National Commercial Bank Limited (``ZANACO'') in London. This has been called throughout the proceedings ``The Zamtrop Conspiracy''. The second claim relates to a UK registered property company called MOFED Ltd owned by the Zambian Government. This has been known as the ``MOFED Claim'' and relates solely to the Fifth Defendant Atan Shansonga (``AS''). It is a claim for breach of fiduciary duty on the basis that a consultancy agreement was improperly obtained by him in relation to the letting of the property owned by MOFED which provided for him to receive £100,000 per annum. The third related to payments of about $20,000,000 made by Zambia pursuant to an alleged arms deal with Bulgaria and paid into accounts in Belgium and Switzerland at least some of which funds found their way to London. This claim has been known throughout the litigation as ``the BK Conspiracy''.

    DETAILS OF DEFENDANTS

  3. At the front of this judgment is a list of the Defendants with a brief description of their status and the abbreviated explanation applicable for each such party. In addition there is a similar exercise in respect of important non-Defendants and a list of the key bank accounts the subject matter of the claims brought.

  4. The claims which I shall deal with in more detail further in this judgment range from $25,754,316 to as little as $4,000 depending on the nature of the findings against any relevant Defendant.

  5. AGZ has made substantial recoveries and the current schedule of the recoveries is released with this judgement. Some assets have been sold, some have not been sold and some are still used by the Defendants. Dr Chiluba (``FJT'') (the former President and so referred after the monogram on the clothing recovered by AGZ) still resides in a property, which is said to have been acquired using misappropriated funds for example. As the closing submissions developed it was clear that it would not be possible in the event of primary findings of liability to determine the...

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