ZW Treasury Warns Creditors Against Using Debt Collectors

• Treasury has warned creditors against using third-party intermediaries to chase unpaid bills.
• Government will not recognize or pay commissions charged for pursuing outstanding arrears.
• Creditors should follow established procedures for verification, processing, and settlement of legitimate claims through the MDAs that contracted them.
• The warning extends to holders of Treasury Bills, who have been told not to use third parties to follow up on matured bills or their liquidation.

Government will not entertain claims or obligations arising from arrangements entered between Government creditors and consulting firms or other third parties for the recovery or facilitation of payment on Government arrears.

In a move aimed at streamlining government debt recovery, Treasury has issued a stern warning to creditors against using third-party intermediaries to chase unpaid bills. According to Finance Minister Mthuli Ncube, some government suppliers and contractors have been engaging consultancy firms or other entities to pursue payment claims in exchange for fees or a percentage of the contract value. However, Ncube clarified that such arrangements are not recognized by the state, and any resulting fees or commissions will not be assumed by the government. Instead, creditors should follow established procedures for verification, processing, and settlement of legitimate claims through the ministries, departments, and agencies (MDAs) that contracted them.

The warning from Treasury is part of a broader effort to enforce centralized procedures for the verification and settlement of state debts. As government continues to manage substantial obligations to suppliers and contractors, the need for efficient debt recovery mechanisms has become increasingly pressing. The move also underscores the importance of compliance in government contracting, with lawyers advising clients on government contracts now being urged to be aware of the implications of engaging third-party intermediaries without proper authorization. Any such arrangements entered into by creditors do so at their own risk and should not expect the government to recognize or settle any resulting fees, commissions, or other associated costs.

The warning from Treasury has significant implications for lawyers advising clients on government contracts. As the government seeks to enforce centralized procedures for debt recovery, creditors who engage third-party intermediaries without proper authorization may face compliance exposures and potential losses. Furthermore, the move highlights the need for creditors to follow established procedures for verification, processing, and settlement of legitimate claims, which could lead to more efficient and effective debt recovery mechanisms. As Zimbabwe's government continues to grapple with substantial obligations to suppliers and contractors, the warning from Treasury serves as a reminder of the importance of compliance in government contracting.

Lawyers advising clients on government contracts should be aware of the new warning from ZW Treasury, which may impact their ability to recover payments and could lead to compliance exposures if they engage third parties without proper authorization.

Source: Original reporting via Treasury warns creditors against hiring debt collectors to chase government arrears