eBusiness Weekly
Golden Sibanda
Depositors’ funds running into several millions of dollars, lost when Capital Bank shut down in 2014 after facing crippling liquidity challenges, cannot be reimbursed as protracted legal fights over control of the now defunct bank have stalled the liquidation process.
State deposit insurer, Deposit Protection Corporation (DPC), chief executive John Chikura told Business Weekly in an interview this week that he was now seriously ‘worried’ over delays to the liquidation, as the battle for the bank plays out in the courts of law.
According to Chikura, a 2014 petition by ‘majority’ shareholder National Social Security Authority (NSSA) for voluntary liquidation of Capital Bank was opposed by minority shareholders of the bank. The High Court is yet to make a determination on the matter. The bank had surrendered its licence.
This also comes after Patterson Timba, founding director of Renaissance Financial Holdings-the holding company of Renaissance Merchant Bank (renamed Capital Bank when NSSA took over after converting a loan to the bank to equity)- challenged takeover of the bank, with the High Court ruling in his favour that he was entitled to reclaim the assets.
Chikura said there was very little he could do at present to compensate depositors the millions of dollars they lost when the bank closed, due to the lawsuits ‘playing out’ outside of his jurisdiction, as ‘shareholders’ in the bank tussle for control and rights to the entity, which though had long seized to operate.
DPC is a statutory insurance body created to reimburse depositors part of their funds in the event of a failed banking institution. When NSSA bought into RMB (Capital Bank) the institution was believed to have a loan book of $46 million and deposits of about $50 million plus assets and liabilities that were not revealed.
“The issue is neither before DPC nor the Reserve Bank of Zimbabwe. That is why we cannot do anything, there is a legal fight between shareholders at the courts (of law),” Mr Chikura said. “I will only takeover when the issue (liquidation) comes to me.”
“But for me that (legal fight) is my biggest worry. Depositors have not been paid and that is not a good situation, but until the matter comes to me, there is not much I can do,” he said.
Timba is entitled to reclaim all his lost properties and assets, including the Renaissance Merchant Bank, after the High Court nullified the actions and all decisions made by the Professor Christopher Chetsanga-led board after January 26, 2012, shortly before NSSA converted its loan to RMB into equity.
While NSSA took over ownership of RMB (now Capital Bank Corporation) after acquiring an 86 percent stake through a deal presided over by the Prof Chatsanga led board, the High Court ruling last year nullified all transactions the board entered into after January 12, 2012, as the board had been ‘fired’.
RFHL owned 100 percent shareholding of Renaissance Merchant Bank, which was sold and changed its name to Capital Bank without the approval of Timba and his appointed directors.
As a result of the disputed acquisition of RMB by NSSA, Timba filed a $526 million lawsuit against RMB curator Reggie Saruchera, Prof Chetsanga and his board over the loss he claims to have suffered as a result of the decisions and transactions effected by the board post-January 26, 2012.
Timba claims that some costly decisions were made during the tenure of the ‘expelled’ board, which he alleges had been expelled at an extraordinary general meeting (EGM) RFHL held earlier. The decisions have since sparked a flood gate of lawsuits for recovery of assets and reversal of liquidation.
The said directors disregarded the expulsion arguing that it had not been sanctioned by Saruchera, who was then RMB curator.
