CFX bosses’ jobs on the line


Godfrey Marawanyika

THE future of managers at the collapsed CFX Bank hangs in the balance when the group reopens after the curator, Farai Kuipa of Ernst & Young (EY), discovered that

there is a $195 billion fund gap instead of the reported $115 billion deficit.


The latest figure was revealed by Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono on Wednesday when he unveiled his fourth quarter monetary policy statement in Harare.


In addition to the already-known creative accounting scandal at CFX, the discovery has led the central bank to order all financial institutions to introduce independent computer-based auditing packages, with effect from March 1.


Businessdigest learnt this week that in addition to the managers, there was a likely boardroom reshuffle at CFX when it reopens in April.


Officials privy to developments at the bank said CFX management and shareholders had tentatively set their sights on getting the bank opened either in April or May.


In its findings before the bank was closed in December last year, auditing firm PricewaterhouseCoopers (PwC) said the bank was in the red to the tune of $115 billion.


Company insiders, however, maintain the $115 billion loss was accrued largely because of investments in the information technology platform, which the bank undertook to support its commercial banking operations. Losses were also incurred when it bought several branches of Barclays Bank.


It has since emerged that Kuipa last Friday informed the RBZ of his findings on the bank’s books and this in turn informed Gono’s mid-week statements.

Gono said his new accounting checks would interrogate and counter-check financial databases at banks for their accuracy and validity.


“I am aware of the likely outcry from my colleagues in the banking sector, but stakeholders will agree that the Reserve Bank was in fact pushed into a corner by the CFX-Century debacle as to be left with no choice but to redouble its interrogative and certifications,” he said, adding: “For those who did not know the CFX debt is now $195 billion.”


Under a proposed CFX rescue plan, which is one of many options management and the board are considering, the bank could reopen under an arrangement put together with depositors.


The scheme, it was learnt, would see some creditors arising from service contracts being paid in full to make the arrangement exclusive to large depositors only. The debt conversion will create preference shares, with a half-yearly dividend of at least 20% annually.


The rescue plan, however, is still to be discussed by the current board chaired by Isaac Takawira. It is reported elsewhere in businessdigest that Takawira has since distanced himself from the report circulated by anonymous sources two weeks ago.


If the turnaround plan is adopted and approved by the RBZ, this means CFX would have avoided compulsory amalgamation into the Zimbabwe Allied Banking Group.


While Kuipa did not return calls from this paper all week, the central bank’s December 12 summary of findings give an indication as to what was likely to happen to certain individuals at the distressed bank.


The December report apportions blame on the messy state of affairs at CFX, taking the form of concealment of accumulated losses, squarely on the shoulders of top management.


The report singles out managing director Gairainesu Shoko, finance director Onias Ndlovu, financial accountant Calvin Mtombeni, assistant accountant Joseph Kwidini and head of information technology Henry Mazimbe.


Insiders this week said the RBZ had also turned down requests for a reversal of the merger of CFX Financial Services, fronted by Sean Maloney, and the former Century Holdings group.


They said the central bank was insistent on changes in “both managerial and shareholding structures at the group”.