HARARE – A $760 000 loan extended to City Link Coaches (Private) Limited by African Century Limited has opened a can of worms,with the bus company claiming the financial institution was inflating interest rates.
The bank won a High Court order against City Link, after a judge granted a default judgment in its favour.
However, the bus company, through its director Jecksen Makarichi, has since applied for rescission of the judgment, citing Caroline Mupfururirwa, Eptain Trading (Private) Limited and African Century Limited as respondents.
According to court papers, the bank is claiming $768 309 from City Link.
However, in an affidavit by Makarichi, he claims the bus company has a “good and bona fide defence” to the bank’s demand, adding that the default judgment was “incompetent”.
Makarichi told the court that on one instance, he acquired a loan from African Century and the repayment plan was based on a 15 percent interest rate.
He said a further analysis of how the loan repayment was handled by the bank showed that it inflated the interest rate to 25,9 percent, while another transaction of 20 percent was increased to an interest rate of 34,6 percent.
Makarichi said out of the $768 309 that the bank was demanding, calculations based on the bank’s interest rates as advertised on its website showed that he owed $34 841.
“Given that the applicant was paying in excess, first applicant (City Link) was not in arrears and there was no breach whatsoever by the first applicant necessitating the recalling of the loaned assets and accrued or unaccrued interest,” Makarichi said.
He said the manner in which the interest rates were being changed, contrary to the agreement, showed a pyramid scheme, which called for the intervention of the Reserve Bank of Zimbabwe.
According to Makarichi’s affidavit, there was no breach of contract as alleged by the bank.
“It is clear if one had to go to the respondent’s website that certain interest rates had been added, which may not find their way into the company coffers and if this is the way African Century calculates all its accounts with customers, then there is a gross element of unjust enrichment, which calls for the urgent intervention of this honourable court to bring everything to normalcy,” Makarichi said.
The matter is still to be set down for hearing before a High Court judge and the bank is yet to respond to the application.