THE saga at the troubled First National Building Society (FNBS) took a new twist last week after the High Court dismissed an urgent chamber application by the Reserve Bank of Zimbabwe (RBZ) to pu
t the society under liquidation.
FNBS was placed under a curator last year after two founding directors – Samson Ruturi and Nicholas Musona – were arrested for allegedly defrauding the society of $1 billion.
Ruturi and Musona have a combined shareholding of 89,74% in the holding company First National Holdings Ltd (FNHL).
Investigations this week revealed that Ruturi and Musona were not served with court papers.
Rather, the papers were served on a clerk at FNBS and since the society is under a curator appointed by the central bank, it effectively means that the central bank served itself papers.
Justice Tendai Uchena dismissed claims by the central bank that the founding directors had no locus standi, that is, the competence to sue or be sued.
Justice Uchena ruled that Ruturi and Musona had a direct and substantial interest in the subject matter of the litigation before the court.
Justice Uchena said by virtue of having a controlling stake in FNHL that wholly controls FNBS, Ruturi and Musona had the locus standi.
The court ruled that the matter was not urgent. It said the central bank was aware of the matter and could not find reason why RBZ had made an urgent application.
Legal experts told businessdigest this week that it was abnormal to proceed with liquidation by way of an urgent chamber application.
“In a normal situation liquidation procedures go by way of a petition whereby the litigant is given 10 days to respond,” said a legal practitioner.
Legal experts also questioned the timing of the application to liquidate the society.
“The timing is questionable considering that the curator’s term of office was ending the following day and that the curator was scouting for new investors without taking aboard founding directors,” said a legal expert. The central bank’s legal representative was Susan Brighton while George Chikumbirike represented Ruturi and Musona.
Brighton also represented FNBS curator Dave Scott for the insolvency of Ruturi and Musona last year.
The case was dismissed by the High Court.
If the court had ruled for liquidation, it would have meant that the founding directors have been kicked out of the society and that a new team would be appointed to run the affairs.
Ruturi told businessdigest this week that the appeal to liquidate FNBS via an urgent chamber application was a way to dispossess the society without anyone contesting.
“They (RBZ) had sidelined us so that their case would sail through at the courts without any contest,” he said.
FNBS has since last year been rocked by boardroom squabbles pitting the founding directors in one camp with FNHL chairman Michael Mahachi, FNBS general manager and company secretary Morgan Moyo and Gerald Mlotshwa in the other.
Businessdigest revealed last month that there were behind-the-scenes manoeuvres for Zimnat Life Assurance Company Ltd with 4,40% equity to garner a controlling stake in the holding company.
Banking sources claimed Moyo and Mlotshwa were allegedly behind the Zimnat manoeuvres.