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CFX top brass in forex scandal

Godfrey Marawanyika

SENIOR management officials from CFX Bank were purchasing foreign currency using the bank’s funds and not repaying the money, the Reserve Bank of Zimbabwe (RBZ)

’s internal audit report reveals.

The RBZ audit on CFX, carried out on December 26, said a management “cartel” also used to preferentially award contracts for the supply of security services to Peace Security, a company owned by the bank’s human resources director, Abel Mubango.

The supply of computer equipment to the bank was done by the head of retail banking, Never Muzavazi, finance director Onias Ndlovu and managing director Garainesu Shoko. Motor vehicles were supplied by Croco Motors, a company owned by shareholder and non-executive director, Moses Chingwena.

The management cartel comprised the commercial bank’s managing director, finance director, IT manager, financial accountant, head of treasury, human resources director and head of retail who were allegedly involved in fraudulent activities and leading affluent lives.

Also implicated in the scandal is assistant accountant Calvin Mtombeni.

“In addition to (head of treasury) Mr Chamu Matsika’s flashy lifestyle, the former managing director, Garainesu Shoko, is reported to have built a massive mansion in Mazvikadei resort area and is known to have been spending extravagantly,” the RBZ audit report said.

“The human resources director, Abel Mubango reportedly bought his Pajero from the bank for an unbelievably paltry $1 million in early 2004.”

The report said investigators had so far managed to extract sufficient information to press criminal charges against Matsika who is said to have a business partner in the United Kingdom, a “certain Lloyd Dube who sources forex for him from Zimbabweans residing in the diaspora”.

“In turn, Mr Matsika would then deposit the money that would have been sourced by Mr Dube into accounts of the intended recipients in Zimbabwean bank accounts, at the parallel market rate.”

Mtombeni said that he had bought R429 610 on behalf of Matsika.

“Mr Mtombeni went on to indicate that he was expecting to buy R200 000 to add to the initial amount. In response, Matsika indicated to Mtombeni that he was expecting him to have raised R1 000 000 by Friday, 28 November 2003,” the report said.

Matsika was this week fined $8 million or six months for illegally dealing in foreign currency.

He was convicted on his own plea of guilty to a charge of contravening exchange control regulations.

The RBZ placed CFX Merchant Bank, CFX Asset Management and CFX (commercial) Bank under the management of a curator on December 17 after the bank was found not to be in a sound financial position. Frank Kuipa was appointed curator.

The purpose of the RBZ investigation was to determine the true position of the bank in light of concealment of operating losses by management.

CFX management misrepresented the true condition of the bank by manipulating the system-generated income to conceal accumulated losses of $115 billion.

The manipulated management accounts reflected an accumulated profit of $9 billion.

The bank also created a fictitious asset base of $49 billion, where a foreign currency position of $72,7 billion was not backed by a corresponding Zimbabwe dollar equivalent.

Investigations into former Century Bank have so far revealed that some of the employees were put under pressure to produce fraudulent accounts.

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