Interfin bosses face criminal charges

International audit firm KPMG has recommended the curator of Interfin Banking Corporation (Interfin) to consider civil action and criminal charges against the directors and shareholders of the bank — Farai Rwodzi, Timothy Chiganze and Jerry Tsodzai — who presided over the collapse of the bank, which had a capital deficit of more than US$100 million at the time of its closure, the Zimbabwe Independent can reveal.

Report by Staff Writer

The recommendations are contained in a report submitted to the Reserve Bank of Zimbabwe (RBZ), following a three-month investigation into the affairs of the collapsed bank by KPMG.

“We consider it prudent to recommend that: The curator requests an attorney to consider events at Interfin referred to in this report in light of the civil code and precedent, and if deemed appropriate, depending on the outcome of this exercise, the RBZ requests the Attorney-General to consider events at Interfin referred to in this report in light of the relevant criminal code and precedent,” reads part of the forensic report.

The investigation by KPMG unearthed four critical events that caused Interfin Bank’s liquidity crunch.

The first was that, having failed to capitalise the bank, the directors and shareholders forced it to borrow expensively from the market and on-lend these funds to parent company Interfin Holdings. In turn, Interfin Holdings used the borrowed funds to capitalise its subisdiary bank.

“Capital created this way was thus not sustainable as the risk of gain and loss in the capital created was with Interfin,” the report says.

Second, the bank was exposed as its assets were used to back speculative activities, for instance, in Art Corporation and Starafrica Corporation where it lost a massive US$9,489 million. The bank also lost control over a US$6,310 million speculative gold deal with Interfin Resources, a company substantially controlled by founder Rwodzi.

The curator found that in the third instance, the bank lost US$17,396 million after it dipped into a government facility it was supposed to run separately, the Zimbabwe Export and Trade Revival Facility.
Last, the bank, due to acute under-capitalisation, could not fund related party loans from capital as stipulated by law. Instead, it resorted to using depositors’ funds to the tune of US$62,066 million, resulting in a capital deficit of more than US$59,073 million as at March 31 2012.

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