Herbert Moyo/Clive Mphambela
THE National Social Security Authority (Nssa) was used as a vehicle to prop up investments by Interfin Holdings amid allegations of collusion and conflict of interest on the part of senior management at both institutions, the Zimbabwe Independent can reveal.According to a National Economic Conduct Inspectorate (NECI) report for 2011, Nssa was used as a sub-underwriter for Interfin Holdings, suggesting there existed “vested interests” among the social authority’s senior management in Interfin Holdings.
Sources close to the Nssa dealings said there was a manipulated management structure and handpicked appointees at the authority, whose main purpose was to facilitate a “massive collusive network of passive and pliant team members in order to bleed the social security agency dry of pensioners’ contributions, under the guise of investments which turned out to be dubious”.
An example is Nssa general manager James Matiza who allegedly connived with Nssa investments director, Shadreck Vera and the Board Investments Committee (BIC,) to splash US$2,5 million on sub-underwriting Farai Rwodzi’s Interfin Holdings-led CFX rights issues in 2009, which the rest of the market had deemed worthless.
NECI investigations revealed that Matiza had been engaging Rwodzi on the issue outside Nssa structures and had reached a decision to sub-underwrite the CFX rights issue on behalf of Interfin as early as October 2009, and proceeded to instruct Vera to draft an acceptance offer to Rwodzi on November 6, two weeks before Nssa decided to accept Rwodzi’s offer.
NECI questioned why Matiza accepted the value of US$2,5 million quoted by Rwodzi in the absence of any write-up or analysis of the cost or benefit of the transaction.
NECI also questioned why the investments committee had failed to advise on the price cap for the shares to be underwritten.
In his letter dated November 6 2009 (a day after the BIC meeting), Rwodzi alluded to his “prior” meeting with Matiza on October 14 2009 and confirmed “our offer to Nssa to be sub-underwriters in the CFX Bank rights issue to the extent of US$2,5 million”.
On November 30 2009, Rwodzi wrote back to Nssa advising the rights issue had been under-subscribed by a whopping 98% for which Interfin was liable and of that deficit, Nssa had to provide US$2,5 million as previously agreed.
On the same day, Matiza instructed Vera to draft an acceptance offer to the sub-underwriting contract to the extent of US$2,5 million.
Contacted for comment by the Independent this week Matiza refused to comment. “We are not allowed to comment on the NECI report because that report was not given to us and is still with the minister,” said Matiza.
Rwodzi was not available for comment.
According to NECI, the chain and manner of events on the choice made by Matiza and the BIC suggests there was connivance for Nssa to tie itself to subscribing for the CFX financial services which the market rejected through a sub-underwriting arrangement.
“In fact a trend can be noted whereby Nssa has mainly partnered Interfin to underwrite share issues which are unattractive to the market,” read the report. “This has been an instrument used by Interfin to get significant shareholding.”
NECI found it “rather confounding” that Rwodzi signed the contract on November 2 2009, yet the Nssa board only gave authority for Nssa to sub- underwrite the CFX rights issue on November 5 2009.
Also of concern is that a swift payment of US$2,5 million was made to Interfin Merchant Bank on December 2 2009, well before Nssa had signed the sub-underwriting agreement with Interfin Holdings.
Interfin had underwritten US$10 Million in respect of rights issues for CFX Financial Services and Nssa was contracted to sub-underwrite shares to the value of US$2,5 million to Interfin for shares valued at US$0,0007 each.
Rwodzi signed the agreement on November 2 2009 (though the date appears as 2010 on the contract). Nssa signed on February 15 2010, three and-a-half months later.