KINGDOM bank founder Nigel Chanakira is under probe amid allegations he could have abused depositors’ funds amounting to US$3 million when he got a facility from a local bank, businessdigest has established.
Report by Chris Muronzi
Information made available to businessdigest shows that Chanakira is under a Reserve Bank of Zimbabwe (RBZ) probe relating to how he placed US$3 million with Tetrad Investment Bank (TIB) and ended up getting a US$2 million facility in May last year.
Sources said the RBZ is concerned depositors’ funds were used as cash cover for a personal loan by the major shareholder in AfrAsia Kingdom Holdings Ltd, the owners of Kingdom bank.
Sources said Chanakira approached Tetrad in March last year with a request for a US$3 million facility to finance the development of a training and conferencing facility for SMI, a multi-million dollar training franchise held by Major Management Consultants (Pvt) Ltd, a company his family owns.
Information gathered this week shows that Tetrad indicated to Chanakira that his request was of a capital nature and would require long-term funding.
Chanakira then offered to provide cash cover through a deposit from Kingdom Bank, which would then provide Tetrad with liquidity support and security of a million AfrAsia Kingdom shares for the loan facility.
It is said on March 19 2012, Kingdom transferred funds amounting to US$3 million in two batches at TIB’s call rate of 5% per annum as cash cover. It is understood that the loan was disbursed on May 21 2012 at a rate of 7% per annum.
Information at hand shows Chanakira did not sign a cash pledge but allegedly gave a verbal commitment the US$3 million deposit from Kingdom would not be moved while the loan was outstanding.
The interest rate on the loan has since been reviewed twice and was being charged at 23% while the deposit was at 11%.
Although Tetrad was unavailable for comment at the time of going to print, it is understood the bank asked for additional security as May 31, the date of maturity, neared.
Investigations show that Chanakira placed two properties as security for the facility two months ago.
In e-mailed responses to questions, Chanakira said the transaction was done above board.
He said: “Ordinarily, I would not comment on what essentially is a bank-client transaction that is subject to normal confidentiality clauses. However, in the event that this has been breached, I can confirm as follows: I independently obtained a loan sometime after a deposit of our bank’s capital funds into Tetrad. The dates you mentioned do not match as both my loan amounts and investments of Kingdom’s capital do not match and the two-year loan facility is still running. Kingdom’s capital account investments that were made with that approved institution were between US$300 000 and US$3,2 million during the period March 2012 to May 2013, and have since matured. I can confirm that no depositors’ funds were at any stage used as cash cover. It is pertinent to note that both as a businessman and client, I am not restrained from conducting transactions with any bank that might have dealings with Kingdom Bank. In all instances, such transactions follow the normal banking procedures.”
A number of indigenous banks have collapsed owing to a breakdown of corporate governance structures, non-performing related party loans and general abuse of depositors’ funds.
Insiders at Kingdom said Chanakira enjoyed protection from the central bank chief Gideon Gono.
When Gono was asked if he was protecting Chanakira, he said: “ I am governor of the entire financial sector, who stands by all its shareholders, boards, management and staff. Anyone suggesting that I am closer to one institution than the other does not quite know how the central bank or the governor functions.
“One thing for sure is that I will not comment on individual shareholders or management unless it’s absolutely necessary. And I don’t see the necessity to do so in this case.”