Godfrey Marawanyika/Shakeman Mugari
THE Zimbabwe Banking Corporation Ltd (Zimbank) illegally disposed of $4 billion worth of Grain Marketing Board (GMB) Bills five days after the central bank had closed Cent
ury Discount House (CDH), businessdigest can reveal.
Zimbank is a subsidiary of Zim-babwe Financial Holdings Ltd (Fin-hold) group led by Elisha Mushayakarara, a former permanent secretary in the Ministry of Finance.
Confidential documents compiled on April 6 by liquidator Cecil Madondo entitled “Century Discount House CR number 3/2004 in compulsory liquidation” reveal that the liquidator was “shocked” by the transaction.
The discount house was closed by the Reserve Bank of Zimbabwe (RBZ) on January 2, making any further transaction with the institute illegal.
The documents also reveal that Zimbank sold its GMB Bills well before their date of maturity. The bills were supposed to mature on March 4.
“Century Discount House was officially closed by the Reserve Bank of Zimbabwe on 2nd January 2004. To my surprise Zimbank liquidated GMB Bills on 7th January 2004 before date of maturity 4th March 2004, although before date of liquidation the 20th of January,” Madondo said in his report.
Century creditors have met once and a follow-up meeting is scheduled for April 28.
It was not immediately clear if Century and Zimbank had before hand signed a pledge form which would result in the government-run bank recovering its money in case Century Discount House closed shop abruptly.
However, experts in the financial sector said up until January this year, when the banking sector suffered financial tremors, no pledge forms were ever signed between financial institutions.
CDH was closed by the central bank in January and had its banking licence cancelled following their failure to pay their creditors.
In the report Madondo said the company largely failed to perform because of gross mismanagement, ineffective corporate governance and ineffective internal control systems by top management.
ENG bought Century Discount house in April last year for $1,5 billion but authority was never obtained as required by Section 26 of the Banking Act.
At the same time, ENG also entered into a management service contract with Century Holdings.
Madondo’s report said on the same date the management contract was entered into whereby Century Holdings retained day-to-day operational functions of CDH in return for 20% profits.
The operational functions which Century Holdings had is sufficient “evidence of an equity or residual interest in Century Discount House Ltd”, the report said.
Century is involved in merger talks with CFX Merchant Bank which is now said to be only awaiting the central bank nod.
Between October 7 and December 29 Century Holdings allowed ENG to benefit from depositors’ funds amounting to $44 653 039 698 which the report says, “security for funds was not administered in the best interest of creditors or depositors”.
Zimbank said it was bound by normal banking ethics not to disclose confidential information on the transactions undertaken by their clients.
“It is normal market practice bearer instruments as security for short-term money market transactions,” said Zimbank in a statement. “Depending on the market conditions obtaining, the security may be held to maturity or liquidated as appropriate.”
Zimbank are also one of the companies that are listed as creditors in the liquidation of CDH.
The report will be presented to creditors on April 28.