Loan shark owes $4m, law take course

By The Southern Eye | Jan. 16, 2014

McDowells International, money-lending firm whose licence was cancelled over a year ago for illegally mobilising $4 million in deposits, has been placed under judicial management.

MASVINGO — McDowells International, a money-lending firm whose licence was cancelled by the central bank over a year ago for illegally mobilising $4 million in deposits, has been placed under judicial management.

The company’s licence was cancelled in 2012 for violating the Banking Act, failing to adhere to ethical business practices while charging lending rates averaging 600% per annum.

According to documents from the High Court, the company is “heavily indebted and its liabilities exceed assets.”

The Masvingo-based company is owned by Member Chipamba and Linda Dewa, cited as applicants, with 5% shares each. It had 21 branches countrywide in 2012. In his application for liquidation dated November 6, 2013 Chipamba claimed that McDowells was owed over $900 000 while it owed depositors $4 million.

Among the creditors are POSB which is owed a secured loan of $80 000; Zimbabwe Revenue Authority, $75 000; workers $170 000, National Social Security Authority, $19 000; TelOne $12 000; the Zimbabwe Power Company, $2 900 and water and rates $33 000.

“The company cannot conduct business of money lending. However, the respondent owns a hotel known as Lee’s Inn, a profitable business whose proceeds can settle respondent’s debts if proper management and accounting structures are put in place,” Chipamba said in an affidavit.

According to court papers, the business owners channelled depositors’ funds towards the construction of Lee’s Inn Hotel in Masvingo, a lodge in Bulawayo and the purchase of other assets. The hotel recorded an income of $3,2 million in 2012. Payment plans to reimburse some of the depositors had been made but repayments were slow, according to court papers.

“It is just and equitable that the respondent be placed under judicial management to enable restructuring of the company in an efficient manner which will see members of the public being reimbursed monies deposited with the respondent,” the affidavit reads.