Prestige Motors vs ZRA: unveiling the facts
By Daniel Mulasikwanda(The Mast)
The case involving Prestige Motors and the Zambia Revenue Authority (ZRA) has garnered significant public attention.
However, many Zambians remain unaware of the intricate details surrounding this protracted dispute, which dates back to 2012. Below is an objective account of the events leading to the controversy, as well as the actions taken by ZRA and other stakeholders.
The genesis of the dispute
In 2012, Prestige Motors applied for a tax exemption from the Zambia Development Agency (ZDA), claiming it intended to manufacture trucks in Zambia. Based on this application, ZRA allowed the duty-free importation of nine trucks in Complete Knock Down (CKD) form. However, in 2014, when Prestige Motors applied for tax exemptions on 39 additional CKD trucks, ZRA rejected the application. The Authority argued that assembling CKD parts did not qualify as manufacturing under Zambian tax laws. When the 39 trucks arrived in Zambia, ZRA detained them, prompting Prestige Motors to seek relief from the High Court. The court ruled in favour of Prestige Motors, ordering ZRA to release the trucks. Despite this directive, ZRA did not comply, leading Prestige Motors to sue for loss of business.
The USD 64 million High Court award
In its lawsuit, Prestige Motors claimed substantial damages and was awarded USD 64 million by the High Court of Zambia. ZRA contested this award, describing it as excessive, noting that the trucks were detained for only three weeks, and Prestige Motors’ declared annual turnover was estimated at USD 5 million. However, ZRA’s appeal was filed out of time, leaving the High Court judgment intact. At the time, key ZRA officials included Mr Berlin Msiska (then Commissioner General), Mr Dingani Banda (then Commissioner Customs, now Commissioner General), and Ms Diana Banting (Director Legal).
Negotiation and settlement
In 2017, a newly appointed ZRA Board, comprising representatives from institutions such as the Bank of Zambia (BoZ), Law Association of Zambia (LAZ), Zambia Institute of Chartered Accountants (ZICA), and the Ministry of Justice, requested a comprehensive review of ongoing court cases. The Prestige Motors case was identified as a high-risk matter due to the delayed appeal and non-compliance with the earlier court order. Fearing that the damages could escalate beyond USD 64 million, the Board directed ZRA’s Legal Department to negotiate an out-of-court settlement. Following negotiations, a settlement of USD 16 million was agreed upon, effectively saving the government USD 48 million.
Payment and garnishee orders
Due to budgetary constraints, ZRA relied on the Ministry of Finance to finance the settlement in two equal installments. The first payment was made to Prestige Motors’ lawyers, but the second installment was garnished by creditors of Prestige Motors after the company failed to settle debts linked to the original USD 64 million claim.
Allegations of fraud and legal action
Subsequently, two companies alleged that Donovan Grey of Prestige Motors had forged invoices used to substantiate the USD 64 million claim. These allegations led to Donovan’s arrest by the Zambia Police, and the matter is currently before the courts.
Critical questions for Donovan Grey
The ongoing Parliamentary Accounts Committee (PAC) inquiry into this matter raises pertinent questions that should be addressed by Donovan Grey, including:
The basis for the USD 64 million claim and the justification for the amount awarded by the High Court.
How the damages were reduced to USD 16 million during negotiations.
The origin of the invoices used in the claim and their authenticity.
Why creditors garnished the settlement funds and why Donovan has not pursued legal action against them.
The current court cases involving forged invoices.
The role of ZRA management and the Board
ZRA management acted on the directives of its Board and in compliance with court orders. Ignoring these instructions would have exposed the government to greater financial and legal risks. Prominent Board members involved in this decision included Dr Denny Kalyalya (BoZ Governor), Ms Chileshe Kapwepwe (COMESA Secretary General), and representatives from LAZ, ZICA, and the Ministry of Justice.
Conclusion
While the Prestige Motors saga has brought ZRA under scrutiny, the facts suggest that Donovan Grey’s actions warrant greater examination. Parliament, through PAC, should delve deeper into the legitimacy of Prestige Motors’ claims, the conduct of its creditors, and the fraud allegations currently before the courts. Ultimately, the real question is not whether ZRA acted responsibly by negotiating the bill down and obeying court orders but whether Mr Donavan Grey has the necessary credibility to bring a 2012 transaction in a 2024 (PAC). More importantly PAC must deal with facts, not hearsay.
The author seems to align with the perpetrators of the fraud at ZRA.
Prestige has a favorable judgement and yet it seems ZRA and GRZ is using state agencies specifically the police to create cases against the plaintiff just to avoid paying. Exactly the same thing they are doing to owners of sun pharmaceutical against whom the government lost the case in court and are owing them millions of dollars but again grz opted to use state agencies( police) to harass, detain the directors to force them to forego the payment in which even a prominent officer by the name of nawa who was nominated to take over as interpol chief was implicated. This is how zambia is losing face in the international arena and why we are not getting new investments.
Did you read and understand the case, or are you bitter against ZRA? Don’t involve the Police service in this court case. That money ZRA is paying is taxpayers’ money. I wonder why the court ruled in favour of Prestige Motors when the facts were clear.