Govt refuses to pay supplier

GOVERNMENT has refused to pay a local company which supplied hardware and software for a biometric card-based platform to facilitate the administration of social welfare programmes for the poor. The matter has since spilled to the High Court where Digicard Zimbabwe is accusing the Public Service, Labour and Social Welfare ministry of refusing to pay US$1 610 364 for services rendered.

The ministry had refused to pay for the services after accusing the company of doing shoddy work.

The dispute was referred to arbitration at the behest of the company before the late retired judge Justice November Mtshiya, who found the ministry to have breached a written agreement by refusing to pay after it was invoiced US$1 610 364 by the company.

The arbitrator also held that the ministry’s failure to pay caused the company to suffer damages through loss of profits anticipated from the project. The ministry was ordered to pay the company US$17 783 863 in damages.

The ministry, however, approached the High Court to challenge the ruling arguing that it was in conflict with Zimbabwe’s policies.

The ministry argued that the arbitrator misconducted the arbitration proceedings. The ministry said the 50 000 delivered cards could not be used because they were non-functional, while it disputed that the company suffered US$17 783 863 in damages.

The ministry also accused the company of seeking to benefit from public funds which is tantamount to corruption and fraud.

Digicard Zimbabwe opposed the application.

The matter was then heard by Justice Joseph Mafusire who ruled against the arbitration ruling directing the ministry to pay US$17 783 863 for damages.

In his ruling, Justice Mafusire said the arbitrator’s reasoning was patently faulty.

“In my view, the arbitrator did not consider the real dispute before him in its totality,” the judge ruled.

“The contract between the parties did not provide for any kind of advance payment. All that the first respondent (Digicard) was entitled to in the initial instance was US$2 per card issued.

“Thus, it was itself obliged to first perform before it could become entitled to any payment.”

Mafusire then set aside the late Justice Mtshiya’s ruling. “The damages were only claimed in the alternative, in fulfilment of the rule on pleadings,” he said.

“There was no evidence before the arbitrator, or even a suggestion to that effect, that specific performance was no longer possible or feasible. For the reasons set out in this judgment, the applicant (the ministry) is entitled to the relief sought.

“However, there is no justification for costs on the higher scale.”