Negotiations to narrow widening differences between AfrAsia Kingdom Bank and Spiritage Group CEO Zach Wazara have collapsed after the financial institution failed to submit a satisfactory proposal for the resolution of the standoff, businessdigest has established.
Report by Chris Muronzi
Well-placed sources said the bank had proposed to write off close to US$10 million of the US$21 million obligation.
Sources told businessdigest this week that negotiations had collapsed after the parties failed to reach a consensus, prompting a court action.
Reserve Bank Governor Gideon Gono had called for negotiations between the two warring parties after Wazara wrote a scathing letter to the central bank alleging AfrAsia Kingdom Bank had made deliberate efforts to conceal a bad loan on its books.
When reached for comment this week, Gono said: “I cannot comment at the moment because no deadlock yet has been declared in the mediation process by either party. Ultimately, however, the matter remains squarely one between the parties in the dispute to resolve one way or the other.
“Each one of them has rights and obligations under the law and where mediation efforts fail, it is the duty of our courts to provide the ultimate determination and everyone would have to abide by the ruling. We were and still are hoping that any mutually destructive route be avoided by either or both parties as the unintended consequences of such a ‘winner take all’, reckless approach to a commercial divorce can have serious adverse effects that go beyond the primary parties to such a dispute and may end up affecting many innocent parties. I hope that whoever is talking to you appreciates that dimension and instead prays hard for ‘Solomonic wisdom rather than for demonic powers of destruction’. It has taken a lot of sweat, tears and blood to rebuild confidence in the banking sector and the ‘institutional comrades’ in this dispute need to take heed and stop playing ego driven, destructive games with this economy.”
It emerged three weeks ago that AfrAsia Kingdom was reeling from a massive US$21 million under-performing loan and could be placed under recuperative curatorship to protect depositors’ funds and the banking sector.
Among some of the damning allegations made by Wazara was that the institution could have misrepresented material facts about its financial position.
Sources pointed to a pending court case reported by businessdigest last week as evidence that the feuding parties have crossed swords further, escalating a fight the bank would want swept under the carpet and hidden from the public. Wazara’s lawyers — Kantor & Immerman — cited Lalela Trading, AfrAsia Kingdom Bank, Valley Technologies and Crustmoon Investments as defendants in a case the businessman wants the parties to honour an agreement for the takeover of Valley Technologies, a mobile phone operator.
Wazara wants a sale of shares agreement signed between Spiritage Telecomms (Private) Limited, Connect lnvestments (Private) Limited, Valley Technologies (Private) Limited, VNet (Private) Limited, Lalela Trading (Private) Limited and Crustmoon (Private) Ltd between January 12 and 15, 2013 be declared valid, legally binding and in full force and effect.
In his application, Wazara says the sale of shares agreement determines the rights of the parties in respect of the settlement of the dispute between AfrAsia Kindgom Bank Ltd and Valley Technologies (Private) Limited arising from the US$21 million loan facility.
Wazara also seeks an order to compel the defendants to pay his company the sum of US$150 000, a balance due to the plaintiffs under the Lalela agreement.
Lalela is a special purpose vehicle used by AfrAsia to take over Valley Technologies.
The order also seeks the immediate release of Spiritage Telecomms (Private) Limited, Connect Investments (Private) Limited and Vnet (Private) Limited from the suretyship guarantees or similar undertakings made on behalf of Valley Technologies (Private) Limited and the delivery of all documents of title originally lodged in connection therewith by Plaintiffs.