CFX Bank Under Police Probe

CFX Bank and senior managers are under police probe for allegedly diverting $900 billion (then US$450 000) in new notes from the central bank last December, meant for depositors, and buying assets and foreign currency on the black market.

Documents in possession of businessdigest show that of the $900 billion which the bank received from the Reserve Bank on December 3 at 9.30pm, $255 billion was allegedly used to buy assets while the remainder was diverted to the parallel market to buy foreign currency when it was recovered by the Reserve Bank.

The rate of the local currency to the US dollar was US$1: $2 million then, before it rose to $5 million the following day.

According to the documents, Sydney Makonese, a chief dealer with the bank was on December 5 given US$19 870 and 24 800 South African rand worth $39,7 billion and $4,9 billion respectively using the then exchange rate by the director of treasury.

“Thabeth Muzarakura, an administration manager, was handed over diesel and fuel coupons by the head of finance on Monday December 8 2008.

In the afternoon she received additional coupons from Sarah Makombe (an accountant at the bank), who advised that an unidentified man had delivered them to her,” the documents said.

The breakdown of the coupons on hand was 10 000 litres of petrol valued at $18 billion and 4 720 litres off diesel valued at $8,4 billion.

“On Sunday December 7 2008 around 1630 hours Mrs B Kadira — retail director — requested keys to ATM room at London Derry from CCD Officers. Grocery items were delivered by a man called Brain in three trips using two different vehicles with the following number plates — ABD 2906 and DND 611 NW (South African),” reads one of the documents.

The list of groceries include mealie-meal 12,5kg x 100 bags valued at US$1 000; cooking oil 2 litres x144 — US$576;  salt 20kgsx10 — US$120; washing soap 48 bars x22 boxes — US$792; beans 50kgs x10 — US$500 and sugar 5kgs x58 —–US$406. The total was US$3 394.

According to the document, the purchase of the assets was unprocedural because requisition and authority to incur the expenditure was not done by the relevant department.

“A requisition for Redan fuel was done but BP coupons have been delivered and they are not in batches. Kadira (retail director)’s involvement in the purchase of human resources related items is questionable as the department was still in the process of consulting MANCO (management committee) on staff benefits,” the document said.

The documents said there was no audit in the purchase of the items — that is  requisitions or invoices.  
 On December 3 last year banking institutions were issued with a total of $80 trillion to prepare their system for the increased cash withdrawal limits, which went into effect the following day.
 
CFX Bank and senior managers are under police probe for allegedly diverting $900 billion (then US$450 000) in new notes from the central bank last December, meant for depositors, and buying assets and foreign currency on the black market.

Documents in possession of businessdigest show that of the $900 billion which the bank received from the Reserve Bank on December 3 at 9.30pm, $255 billion was allegedly used to buy assets while the remainder was diverted to the parallel market to buy foreign currency when it was recovered by the Reserve Bank.

The rate of the local currency to the US dollar was US$1: $2 million then, before it rose to $5 million the following day.

According to the documents, Sydney Makonese, a chief dealer with the bank was on December 5 given US$19 870 and 24 800 South African rand worth $39,7 billion and $4,9 billion respectively using the then exchange rate by the director of treasury.

“Thabeth Muzarakura, an administration manager, was handed over diesel and fuel coupons by the head of finance on Monday December 8 2008. In the afternoon she received additional coupons from Sarah Makombe (an accountant at the bank), who advised that an unidentified man had delivered them to her,” the documents said.

The breakdown of the coupons on hand was 10 000 litres of petrol valued at $18 billion and 4 720 litres off diesel valued at $8,4 billion.

“On Sunday December 7 2008 around 1630 hours Mrs B Kadira — retail director — requested keys to ATM room at London Derry from CCD Officers.

Grocery items were delivered by a man called Brain in three trips using two different vehicles with the following number plates — ABD 2906 and DND 611 NW (South African),” reads one of the documents.

The list of groceries include mealie-meal 12,5kg x 100 bags valued at US$1 000; cooking oil 2 litres x144 — US$576;  salt 20kgsx10 — US$120; washing soap 48 bars x22 boxes — US$792; beans 50kgs x10 — US$500 and sugar 5kgs x58 —–US$406. The total was US$3 394.

According to the document, the purchase of the assets was unprocedural because requisition and authority to incur the expenditure was not done by the relevant department.

“A requisition for Redan fuel was done but BP coupons have been delivered and they are not in batches. Kadira (retail director)’s involvement in the purchase of human resources related items is questionable as the department was still in the process of consulting MANCO (management committee) on staff benefits,” the document said.

The documents said there was no audit in the purchase of the items — that is  requisitions or invoices. 

 On December 3 last year banking institutions were issued with a total of $80 trillion to prepare their system for the increased cash withdrawal limits, which went into effect the following day.

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

Reserve Bank governor Gideon Gono said: “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.”

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 were already on the market.

A protected informant who worked with the Reserve Bank throughout the night reported that a total of $260 billion was offloaded by CFX at night on Wednesday, buying foreign currency.

The Reserve Bank then dissolved CFX Bank’s board of directors and removed the financial institution’s senior management.

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, have 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 years.

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.

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 in 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%. –– Staff Reporter.