EAC seeks to safeguard EADB assets

BY BUSINESS REPORTER

EAST African Community (EAC) legal chiefs have less than 20 days to formulate policies that will secure the assets of East African Development Bank (EADB).

The move follows Tanzania High Court ruling that allowed a Dar es Salaam-based transport firm – Blueline Enterprises Ltd – to attach EADB’s property for possible auctioning.

The bank failed to pay a $137 million (Sh12.3 billion) arbitration award.

EAC Heads of State summit meeting last week in Bujumbura directed the bank to appeal against the ruling as the Attorney Generals of the five EAC partner States of Tanzania, Kenya, Rwanda, Uganda and Burundi plan to meet banks lawyers on the matter.

"The summit directed that Attorney Generals of the EAC partner States meet with lawyers of the bank, and the counsel to the community by December 31 to formulate a specific legal position on the matter," Richard Sezibera, EAC Secretary General, said in a communiquÈ of the 13th Ordinary Summit of the EAC Heads of State.

The charter, which established the regional lender, vests upon it immunities and privileges in judicial proceedings and protects its assets. But while recognising this immunity, the court ruled that this immunity did not extend to its cash.

Dismissed case

Tanzania’s judge Augustine Shangwa issued the order on November 8 after the Court of Appeal of Tanzania dismissed EADB’s application, saying the bank’s property is to be auctioned and the proceeds paid to Blueline Enterprises if the bank fails to comply with the Tanzania High Court order dated May 2009.

The judge’s verdict was prompted by the bank’s failure to pay a sum of over $61.3 million (Sh5.5 billion), plus annual interest of 14 per cent since August 31, 2005, until final payment is made.

Tanzania’s High Court has already appointed Mustafa Nyumbamkali of Super Auction Mart as a court broker for the attachment of the property, estimated at $2 million (Sh180 million).

Among the long-term measures the EAC Heads of State want in place to protect the Banks assets includes a Bill by the council of ministers to protect all EAC assets in partner States.

"The Heads of States directed the Council of Ministers to initiate a Bill that will insulate the assets of the community, and introduce it in the East African Legislative Assembly (Eala)," said Sezibera.

"The summit also directed that the bank appeals the order of attachment made by the High Court of Tanzania," he said, adding that EADB should also explore the possibility of referring the matter to the East African Court of Justice.

Meanhile the Heads of State have called on EAC partner states to uphold their collective individual duties and obligations under the treaty, and unhold the banks charter and established state practice to guarantee privileges and immunities as contained in the treaty.

Moreover

The five EAC leaders including Kenya’s Kibaki, Uganda’s Kaguta Museveni, Burundi’s Pierre Nkurunziza, Tanzania’s Vice President Mohammed Gharib Bilal and Rwanda’s PM Pierre Damien Habumuremyi also asked partner States to uphold the sanctity of the assets, property, archives of the EAC and its institutions to ensure that the EAC mandate is accomplished.