Zimbabwe Banking Corporation Limited and Syfrets Merchant Bank v The State

The two appellants, related financial institutions operating in Zimbabwe, were charged with six counts of contravening s 5(1)(a)(ii)(b) of the Exchange Control Regulations Statutory Instrument 109 of 1996 as read with s 35(1)(b) of the Exchange Control Act Exchange Rate Management Order 2000 S.I. 225B of 2000. The charge alleged that as authorised foreign currency dealers, they failed to apply prevailing international cross rates when dealing with foreign currency transactions. Specifically, the State alleged they sold foreign currency to Treger Industries at black market rates instead of international cross rates on six occasions. The transactions involved transfers to Treger's sister companies in Switzerland, the United Kingdom, and South Africa, requiring conversion between Zimbabwean currency, South African Rand, and US Dollars. After a protracted trial, both appellants were convicted and sentenced to fines. They appealed against their convictions.

• Whether the State was required to prove the applicable international cross rates as an essential element of the offence charged
• Whether the charge was defective for failing to specify the actual cross rates applicable on the dates of the alleged transactions
• Whether the official exchange rate quoted by the State was equivalent to the international cross rate for the currencies involved
• Whether the appellants should have excepted to the charge before pleading rather than raising the issue during trial
• Whether the absence of evidence of the prevailing cross rates rendered the conviction unsafe

The appeal was allowed. The conviction was set aside and the sentence quashed.

Where an accused is charged with failing to adhere to international cross rates in foreign currency transactions, the applicable cross rate on the date of each transaction is an essential element of the offence that the State must prove. A cross rate is the exchange rate between two currencies that are not the official currencies of the country in which the exchange quote is given, and must be distinguished from standard official exchange rates. The State's failure to lead evidence proving the actual prevailing cross rates on the dates of the alleged offences renders a conviction unsafe, as an essential element has not been proved. The failure to prove an essential element is distinct from a formal defect in a charge - the former can be raised at any stage of proceedings including on appeal, while the latter must be raised by way of exception before plea under s 170 of the Criminal Procedure and Evidence Act.

The court observed that the State did not appear to appreciate the technical difference between the official exchange rate and the "international cross rate" referred to in the Exchange Rate Management Order 2000. The court noted that to read the Statutory Instrument as equating the Zimbabwe Dollar rate in column D with the international cross rate "would render it meaningless and would not make any economic sense since it is the currency pairing which is in issue." The court commented that the absence of proof of this essential ingredient resulted in "an unnecessary trial." The judgment also reiterated established principles that particulars provided by the State become part of the State's case and must be proved (citing R v Wilken 1945 EDL 246), and that the State is bound by particulars it provides unless expressly abandoned (citing S v Nathaniel 1987 (2) SA 225).

This case establishes important principles regarding the prosecution of exchange control offences in Zimbabwe. It clarifies that where a charge alleges failure to adhere to international cross rates, the State must lead evidence proving what those cross rates actually were on the dates in question - it is not sufficient to merely allege that official exchange rates should have been used. The judgment provides guidance on the distinction between cross currency rates and standard exchange rates, and emphasizes that this is a matter of proof rather than a formal defect in the charge. The case also reinforces the principle that an accused cannot be deprived of the right to challenge the State's failure to prove essential elements of an offence, even if no exception was taken to the charge at the outset. It demonstrates the strict approach courts take to ensuring accused persons are properly informed of the case against them and that the State proves all essential elements of the offence charged.