On arrival at the Celebration Centre, the colossal church property in the leafy suburb of Borrowdale, analysts, shareholders and journalists were greeted by stern-looking women keen on denying entry to those not carrying proper proxies.
They could have automatically qualified to be the late Libyan leader Muammar Gaddafi’s personal bodyguards.
The year is 2005 and it’s the First Mutual Ltd Extraordinary General Meeting GM.
Items on the agenda are the stuff financial journalists the world over die for. And a front seat row at the meeting is what a typical newshound would want.
On agenda is the removal of various directors from the board, including the then chairman.
It was a date pitting the old and mature board against the new, fast, and impatient new money.
“They are young you see,” a seasoned executive on the old board would say after the EGM.
On the board were notable and respectable faces such as former Bindura Nickel Corporation MD David Murangari, who chaired the board.
He had also seen change coming in fast. “The boys are really back in town,” he must have thought to himself.
Patterson Timba and his crew comprising Dunmore Kundishora was indeed a bunch of boys enjoying their new found toy with a rather sophomorical eagerness normally associated with new found playthings.
All things that could spoil the fun such as then MD Douglas Hoto, who they feared could pull in the opposite direction had to be rid of. And rid of they did.
Though a young man by all accounts, Timba had founded RMB with Kundishora, several years back an exhibition of that ambitious boy in him the market could not ignore.
Unfortunately, on approaching RMB, Sachikonye and his FML team could have discounted an age mate and buddy, and ignored his snake like ambition.
It then came as no surprise that he had foreclosed on the loan at the slightest of opportunity and realised security — the scrip — when Capital Alliance failed to service the loan.
Naturally, he wanted board presence. And badly too.
The battle to control FML however had gone back as far as 1999 when Phillip Chiyangwa tried but failed despite attempts to use his “empowerment” card.
But the very shares that had claimed the scalp of FML boss Norman Sachikonye would also be a blessing and curse to the new owner.
Sachikonye two years back, had led a management team that had acquired a 20% equity stake in Zimbabwe’s second largest insurance conglomerate at demutualisation and subsequent listing.
The deal, which saw management emerge with a significant shareholding was disparaged by analysts as a ploy to enrich management with policy holders getting peanuts, torching a storm.
Because of the controversy created by the Capital Alliance issue, the management special purpose vehicle holding the 20% equity stake , the Zimbabwe Stock Exchange (ZSE) and the Commissioner of Insurance are forced to intervene and investigate further.
The ZSE quickly suspended trade in FML shares.
IPEC was a bit more dramatic. According to a person who was with FML at the time, the commissioner of insurance arrived at what would later be known as the Renaissance Park in typical movie fashion; a team of 20 or so subordinates in tow and giving out orders, effectively wresting control from the management.
It was the same team that would arrive at the decision to oust the FML top management and its then chairman Ian Makone from the board in the wake of the Capital Alliance scandal.
What had begun as a genuine deal that saw management controlling a 20% equity stake in capital alliance, had been caricatured as perhaps the worst financial robbery of the new millennium, swaying public opinion.
Even the regulators had shareholders of reference in mind, clearly exhibiting how corporate vultures had wanted to swoop on FML at the earliest of opportunity. It was and is still a good asset.
FML has a property portfolio running into over US$200 million.
The group also controls a significant portion of the country’s pension funds. This naturally means FML controls a good part of money in the country flowing from monthly premiums paid by policy holders.
It made sense for a small bank.
Through a loan from RMB in 2003, FML management had managed through capital alliance to buy the equity.
The Capital Alliance shares had claimed its first victim in the form of CEO, other top managers and its chairman, to have control of such on institution.
But this would not be the last scalp the shares would claim. Timba, who had been propelled by the same shares to significant corporate stardom and significance in the wake of the hostile takeover of 2005, would also lose control of the same institution he rebranded to Africa First Renaissance Corporation or Afre in short.
Post the EGM, Timba had become executive chairman of Afre and remained the top dog at the bank he helped find.
He was a man about the corporate town.
As part of his hostile takeover bid, Hoto had been forced to step down. Hoto, a much loved manager, who always had a mathematical explanation when shareholders raised concern over numbers, left to join a competitor ALtfin Insurance.
But Hoto would have the last laugh in the years to come.
Any financial writer would be forgiven for taking poatic licence in speculating the Capital Alliance shares could be cursed, if events that pursued were anything to go by.
When Jayesh Shah sensationally claimed Timba had helped himself to depositors’ funds to pay back a loan, it would mark the beginning of the end of the banker as a high flyer.
The curse of the Capital Alliance was great, it would seem.
Timba pledged part of Afre Corporation’s shares in Rainbow Tourism Group (RTG) to guarantee a loan acquired by RFHL, which holds a 30% interest in Afre Corporation.
Timba had collateralised about 60% of RFHL issued share capital to secure around US$12 million from Shahto recapitalise RFHL’s merchant banking unit.
A forensic audit had revealed that Timba had violated corporate governance structures, advancing loans amounting to US$13,9 million in related party transactions and insider loans.
A total of US$1 018 286,25 of depositors’ funds had been used to pay for Timba’s personal expenses.
Various payments adding up to this figure were made in violation of section 177 of the companies Act (Chapter 24:03).
When the Reserve Bank moved in to save the bank, a transaction entailing the disposal of FML or Afre to National Social Security Authority two years ago was struck, Timba had to pay “paid” back loans amounting to US$17,9 million with the same scrip he had used to control the insurance giant.
So far, one can be forgiven for believing that Capital Alliance’s FML, Afre, FMHL (the company has changed names too many times) shares’ are a bit jinxed.
It sounds like a storyline borrowed from Peter Jackson’s famous Lord of the Rings trilogy.
First, the shares attract its owner. Give him or her comfort in its acquisition and then leads the owner to lose the shares and sets such owners on a frantic quest to reclaim the shares.
Now the same shares are now with Capital Bank. If the curse story is to be taken seriously, who will the Capital Alliance equity waylay and lead to corporate irrelevance. Ironically, the Capital Alliance shares are part of the shares Capital Bank is stuck with and desperately need capital.
As if Timba’s woes were not enough, Hoto bounced back as CEO of the group, renaming it to its pre-Timba era name of First Mutual.