HomeBusiness DigestRBZ dissolves CFX Bank Board, Fires Top Managers

RBZ dissolves CFX Bank Board, Fires Top Managers

THE Reserve Bank of Zimbabwe has dissolved CFX Bank’s board of directors and removed the financial institution’s senior management after new serialised bank notes issued to the bank were found on the black market prior to the date of the launch.

Addressing a press conference yesterday, Reserve bank governor Gideon Gono said the bank’s nine  directors identified as P Chitando, the chairman, JS Brown, E Shadaya, JN Dhliwayo, M Chingwena, BC Hofman, I Chagonda, P Alichindama and A Kandlela, had all been purged.

Gono also declared the bank’s management “unfit and improper” to work in any banking institution in Zimbabwe or sit on any banking institution’s board for the next five year.

The top management were identified as  O Mukumba –– Managing Director,  PT Ndoro –– Company Secretary, B Kadira –– Head of Retail, W Chidziwa –– Head of Treasury and International Banking, P Mureya ––– Head of Finance and Administration, C Dangarembga ––– Head, Risk Management and C Saungweme –– Head of Audit.

On Wednesday banking institutions were issued with a total of $80 trillion to prepare their system for the increased cash withdrawal limits, which went into effect yesterday.

CFX got a total of $900 billion on the same day for issuance to their depositors.

“At exactly 9:30 pm on December 3 2008, the Reserve bank’s tracking system picked up that the serialised notes issued to CFX had mysteriously found their way into the market,” said Gono.

Gono said it was illegal to have new notes issued into the market prior to the date of their launch.

“There was no way the money issued to CFX Bank could have gone into the market through any channel other than the bank’s own systems since the delivery for the next day,” Gono said.

CFX got notes in the following series –– $10 million notes with serials AA0207001 to AA0217000 amounting to $100 billion.

$50 million notes with serials AA7363001 to AA7377000 amounting to $700 billion and $100 million notes serials AA0079001 to AA008000 amounting to $100 billion.

The $900 billion signed off by CFX on collection was done under voucher number 01408 at 1220 hours on Wednesday.

At 9:30 pm on Wednesday serialised new notes off CFX’s withdrawal from the Reserve Bank was already on the market.

$50 million notes with serials AA7371182, AA7371195, AA7371198, AA7371199 and AA7371200 were retrieved from the market at 10:30 pm on Wednesday under the Reserve Bank’s enhanced surveillance system.

The protected informant who worked with the Reserve Bank throughout the night reported that a total of $260 billion was off-loaded by CFZ at night on Wednesday, buying foreign currency.

“The Reserve Bank is in possession of the actual notes that were issued into the parallel market actually pinning down CFX Bank as the culprit. They have absolutely no excuse or way out,” said Gono.

Gono said he or the Reserve Bank were not in any way involved on the parallel market as is widely believed on the market.

“Others have been alleging that there is Gono’s money bag doing the rounds with cash yet it is unscrupulous banking institutions who, instead of being the trusted custodians of the public’s funds, abuse their status and become the agents of economic destruction,” said Gono.

Some bankers however insisted that the Reserve Bank was “actively involved on the parallel market”.
Gono advised shareholders of CFX to swiftly re-organise their institution’s management and corporate governance systems to avoid “further improper conduct”.

“It should be noted that the requisite due-diligence procedures and clearance vetting are to be followed for all the needful appointments,” Gono said.

Gono said the Reserve Bank had cancelled all annual leave for its management and staff and will leave no stone unturned to put a stop to any act of indiscipline in the banking sector.

“Each bank much fully account for all cash withdrawn from the Reserve Bank right up to the actual branch by serial numbers as directed on December 22 when each bank chief executive officer was given a specific letter of instruction preparing for the on-going currency tracking system on all new notes issued,” he said.

Formerly Century Bank, the institution was renamed CFX Bank (CFXB) following a merger between CFX Financial Services (CFX) and Century Holdings Ltd in 2004. The bank was placed under the management of a curator on December 17 2004.

CFX applied to merge the operations of CFXB with CFXMB on the grounds that it was not viable to continue the business of the merchant bank separately; as all trading was taking place in the name of CFX Bank Ltd.

The merger was approved by the Minister of Finance on February 27 2006. Following the determination that CFX Bank Ltd had been resuscitated, curatorship of the bank was uplifted on February 28 2006.
The bank’s majority shareholders are –– Allied Financial Services 17%, the People’s Own Bank –– 13%, Premier Asset Management Nominees –– 6% and Premier Asset Management 6%.

Meanwhile Gono held meetings with the Zimbabwe Congress of Trade Unions senior executives. He said the nature of ZCTU mandate and the issues they raised during the discussions were national in nature, representing the interests of the generality of all workers and users of cash in general.

“With the Reserve Bank having presented to the ZCTU the current limitations in terms of currency printing because of the adversity of sanctions currently being imposed against the country it was agreed on December 3 2008 that the ZCTU prepares scenarios and suggestions on possible remedial measures that would meet the interest of the worker,” said Gono.

ZCTU was said to be considering their proposals in the context of factual current average wages and wage levels as well as the employment numbers.

Gono said they agreed with ZCTU that cash limits be reviewed to $500 million from $100 million per week for individuals from December 12.

“Company withdrawal limits shall remain at $50 million per week given the workers’ needs have been catered for,” he said.

On December 19 each worker could withdraw up to $10 billion per month against presentation of a pay-slip which shall be endorsed at the bank to prevent abuse of the facility through repeated withdrawals.

On January 12 next year all workers will be able to fully encash their full salaries, without any limit upon presentation of a bona-fide verifiable pay-slip, which shall be stamped at the bank to avoid repetitive round-trippling.

By Paul Nyakazeya


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