HomeBusiness DigestNMB 'fraud' Affects Financial Year

NMB ‘fraud’ Affects Financial Year

THE shake-up at NMB bank that resulted from the effects of the suspension of the bank’s foreign currency licence following the fraud that saw the bank being prejudiced of US$6,3 million has manifested in its financial results for the year ending December 31, 2007.


Despite sticking to it core business, the uncertainty which came after the “set back” came with painful costs, given the fulcrum position the banking sector holds daily.

The banks’ inflation-adjusted profit before taxation reduced from $1,1 trillion ($110) to a loss of $1,3 trillion ($130) during the period under review.

“The group recorded an inflation-adjusted attributable loss of $255 billion ($25,5) compared to a profit of $379 billion ($3,79) during the same period,” said the bank’s chairman, Gibson Mandishona, in a statement accompanying the financial results.

Deposits declined by 11% from $32,4 trillion ($3 240) to $28,7 trillion ($2 870). Operating expenses, on an inflation adjusted basis increased by 198% to $18,9 billion ($18,9) from $6,3 billion ($0,63) during the same period.

The banks did not declare a dividend citing need to preserve cash for “fear of the unknown”.

The group’s total asset base inflation-adjusted increased marginally by 0,2% from $45,7 trillion ($4 570) to $45,8 trillion ($4 580). The increase was mainly caused by an increase in advances.

“Initiatives to close the gap created by the foreign currency fraud remain a strategic imperative and should come to fruition soon,” Mandishona said.

According to the Reserve Bank’s forensic audit, US$6,3 million was siphoned from the bank between January 10, 2006 and March 2, 2007.

The audit also found that the money was siphoned from NMB Bank through 210 fraudulent transactions.

The money was transferred into an offshore company called Cardinal Finance (Pvt) which holds an account with AKB Bank of Switzerland.

Chief suspect, Shame Mandara, who was an assistant manager in NMB’s treasury department, is alleged to have siphoned most of the money. He is believed to be living in the United States.

The investigators believe that Mandara could have been working in collusion with officials from other commercial banks.

“We confirm that our investigations have established some additional United States dollar payments totalling US$1 474 242,72 which were made by NMB Bank Ltd to Cardinal Finance LLC account number 16701690347. This brings the total amount prejudiced to US$6,3 million,” reads the report.

Ten commercial banks are said to have also made transactions that are related to a company called Haus (Pvt) Ltd which was at the centre of the investigations.

Haus, investigators said, was the conduit company that was used to siphon the money. Haus holds account number 0140074412101 with Stanbic Bank.

According to the documents, foreign currency would be transferred into Cardinal Finance’s account. Haus would then pay the equivalent of local currency to NMB.

Some local companies would then get foreign currency from Cardinal Finance which they would exchange for Zimbabwe dollars paid to Haus through other banks. The US dollars would be wired directly from Cardinal Finance’s account in Switzerland into the accounts of the local companies.

The amount transferred between local companies was $8,1 trillion then.

The fraud resulted in the RBZ suspending the bank’s foreign currency licence.

The suspension was the second after its foreign currency trading license was shelved in 2003 during the banking sector shake-up that year which saw five banks being placed under curatorship.

The bank’s foreign currency licence was reinstated on June 4 after it was revoked the previous month resulting in the bank’s share price surging 86%, in two days buoyed by the news.

By Paul Nyakazeya

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