Irate depositors take over NDH

Shakeman Mugari

A GROUP of depositors led by Harare lawyer Edwin Manikai this week took over National Discount House (NDH) after the firm failed to meet its obligations to them.



T face=”Verdana, Arial, Helvetica, sans-serif”>There was however dissatisfaction among depositors who said they had taken over a “shell”. They said there was no value in NDH, which was exposed to the troubled ENG and then experienced a huge run on deposits.


The Zimbabwe Independent understands the depositors have asked two senior managers who were also directors – chief operating officer Never Mhlanga and group chief executive Ernest Matienga – to step down.


The depositors said after NDH was given money from the Reserve Bank’s Troubled Banks Fund, its senior managers used depositors’ funds to repay the loan. They said NDH acted “criminally” by continuing to write business when it knew it was in the red.


“I do know for a fact that until very recently,” an investor said this week, “dealers employed by NDH were instructed without due warning to investors to continue receiving investments and strike agreements on rates during a period when the principals must have been well aware that company liabilities exceeded assets by a huge margin. That is a criminal act, actionable in law.”


Another investor took a swipe at the Reserve Bank for not taking action against the NDH management to protect the investing public.


“Through its intelligence network the Reserve Bank is clearly aware of what has been going on at National Discount House yet to the best of my knowledge, it has done nothing to either draw public attention to the situation or to bring an aberrant executive to account,” he said.


NDH, which donated $800 million to zanu pf last year, was expected to be taken over by First Banking Corporation Holdings. First Bank is controlled by Zanu PF.


The irate depositors led by Manikai took over the running of the company after it failed to pay their maturities. The depositors have since formed a committee to oversee the operations of the company. Manikai is the chairman of the committee.


The committee took the unprecedented decision after NDH admitted in numerous meetings that it was unable to pay its maturities. Fearing for their investments, the depositors turned their investments into equity, thus effectively taking over the company.


An NDH official confirmed the company had been taken over by the depositors. “Technically yes, the committee of depositors now controls the company,” said the official.


The company received $20 billion in liquidity support from the Reserve Bank which the directors allegedly repaid using investors’ funds. Some shareholders and depositors are understood to be pushing for the prosecution of the two directors.


NDH’s woes have been worsened by capital flight. Figures in possession of the Independent show that the bank lost more than $12 billion in the first week of last month as panicky depositors took away their investments following press reports that all was not well at the firm.


Sources say the company lost more than $25 billion in one month.