HomeBusinessGovt, NSSA at loggerheads over Capital Bank investments

Govt, NSSA at loggerheads over Capital Bank investments

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HARARE,– The government forced the National Social Security Authority (NSSA) to invest into the collapsed Capital Bank (former Renaissance Merchant Bank) despite advice to the contrary, general manager, James Matiza told Parliament on Monday.

The bank was part of Patterson Timba’s business empire which collapsed in 2011 in a cloud of poor corporate governance allegations. NSSA took a controlling 84 percent stake in the bank in 2012 after converting its $8, 5 million deposit into equity and rebranded it. It also injected $9.8 million in cash and assumed a debt of $5.9 million owed to telecomms giant, Econet.

Presenting oral evidence before the Parliamentary Portfolio Committee on Public Accounts, Matiza said the authority had declined to extend a loan to the bank on two occasions in 2011 because it was risky but bowed to pressure from government.

“He (Patterson Timba) talked to some people that NSSA was refusing to give the bank money,” said Matiza, adding that he then received a letter from the former finance minister, Tendai Biti directing the authority to invest in the bank “to maintain stability in the banking sector”.

Matiza further claimed that the bank’s curator, Reggie Saruchera indicated to NSSA that the bank could be turned around by a $24 million worth of investment.

“Our expectation did not turn out to be real. The cash NSSA put in was meant to attract new business but they took our money to repay depositors,” he said.

He said NSSA had appointed Allied Timbers chief executive, Joseph Kanyekanye to chair the board of the bank and to keep the authority up to date with the goings-on but he wanted more cash investment.

Initially, NSSA deposited $19.9 million with the bank which was later increased to $30 million through a forced rights issue but failed to get its money back.

“He (Kanyekanye) sided with the bank and NSSA board requested for his removal from the bank,” Matiza said.

The authority then requested for a turnaround strategy from the bank. But at the annual general meeting on 17 October, 2013, NSSA resolved to stop injecting further capital into the bank.

“It was clear then that the bank was going nowhere and the board requested that it be wound up,” he said.

It also came out that an initial $4.5 million debt to the PTA Bank had ballooned to $13 million, which the (Capital) bank’s management failed to explain.

Recently, Matiza said an unnamed Reserve Bank of Zimbabwe board member had written to finance minister Patrick Chinamasa suggesting that the authority inject more funds to resuscitate the bank.

Subsequently, the finance ministry wrote to the Ministry of Public Service, Labour and Social Welfare requesting that it persuades NSSA to invest $40 million to save the bank.

“We want to get out of this bank, as to what will happen to the $39 million, we many not recover some of it,” said Matiza.

“I don’t think it’s a wise idea to put more money. We may be compelled but our brief to the minister (of finance) is to let liquidation take place.”

Matiza said he received another letter dated February 21, 2014 from the Reserve Bank of Zimbabwe saying it was not happy to cancel the bank’s licence.

Member of Parliament (MP) for Hurungwe North, Rueben Marumahoko questioned why the initial directive by the finance ministry was issued to NSSA and not to the parent ministry.

“What would he (Matiza) do as a small man but to accept the directive. I sympathise with him,” he said.

MP for Lobengula, Sipepa Nkomo also concurred saying that Matiza should have sought clearance from his ministry before investing into Capital Bank.

“The dollar you are entrusted with belongs to the worker and it’s not the minister’s money.

“You failed to protect our money and continue to put more money in a bad investment. You should resign,” Sipepa Nkomo said.

“Let’s liquidate the damn bank and get on,” said Bulawayo South legislator, Eddie Cross.

Matiza maintained that that he had advised the ministry not to invest.

Timba, Matiza said was opposed to the liquidation of the bank and wanted it back on grounds that it was undervalued at takeover.

– The Source

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