THE Zimbabwe Allied Banking Group (ZABG) has recommended that criminal charges be laid against group treasurer, Andy Hodges, who quit last month followin
g the discovery of a questionable transaction that he tried to push through the bank for alleged personal gain.
Hodges resigned on September 24 after it was discovered that he was allegedly using the bank systems to make margins on foreign currency transactions between clients under the Reserve Bank of Zimbabwe (RBZ)’s twinning arrangement.
“The bank believes that criminal charges should be laid against Hodges because these are serious allegations of fraud and parallel market dealings,” said a source in the bank.
The RBZ is currently carrying out an investigation and is expected to make a decision anytime soon. businessdigest however understands that ZABG has since written to the central bank recommending criminal proceeding. In the letter to the central bank, ZABG, said there were valid grounds to proceed with criminal charges because the case involved both fraud and parallel market dealings.
It said the fraud arose from the fact that Hodges had given the clients varied foreign exchange rates in order to make a profit from the transaction. It said Hodges had betrayed the trust bestowed in him by both the bank and its clients.
It is alleged that Hodges used a parallel market rate of US$1:$300 000 in the transaction between a locally owned mining company and a small firm which wanted the funds to import agricultural equipment under government’s mechanisation programme.
Internal investigations have since established that Hodges, who had negotiated the twinning arrangement, was going to make a “profit” of $4 billion dollars out of the transaction.
The deal was worth $70 billion. An amount of $66 billion was going to be transferred into the account of the mining company while the remainder would go to Hodges’ account. Both accounts are held at ZABG.
Last week Hodges, who had been with ZABG since its formation, vehemently denied that he had been forced to resign insisting he quit for personal reasons. “I’m not at liberty to reveal reasons for my resignation. Just know that I resigned for personal reasons, nothing more.”
businessdigest can also reveal that the decision to recommend criminal charges was reached after further investigations discovered that apart from the $70 billion deal that eventually forced him to resign, Hodges had made an equally questionable transaction in August.
The probe found that Hodges allegedly pushed through a deal worth $75 billion dollars using a parallel market rate of US$1:$250 000 in August. That deal involved the sale of US$300 000 between the same companies that were part of the $70 billion deal.
The twinning arrangement involves partnering exporting and importing companies for easy foreign currency management and distribution.
The twinning arrangement can be used when a company needs to buy raw materials, fuel and payment of debts. All transactions under the twinning arrangement should be approved by the central bank and done at the official exchange rate.
“The other problem is that it would seem that both transactions were properly approved by the central bank,” the source said.
Although ZABG was not prejudiced, its bosses were concerned that Hodges, who ran a strategic division in the bank, was using his position to negotiate parallel deals that put the institution at risk.
The bank is also concerned that Hodges had used its systems to push through a personal deal.