CBZ Bank could have been exposed to the tune of about US$3,7 million after a local ginning firm, Insing Investments (Pvt) Ltd, failed to repay the loan it accessed from the bank for last year’s cotton season, businessdigest has learnt.
The bank has promptly moved in to place the company under judicial management to recover its money. The institution appointed Grant Thornton Camelsa as judicial managers. Grant Thornton Camelsa manager (corporate recovery) Alex Dera confirmed that they have been appointed as the judicial manager.
“I can confirm that we have been appointed, but it would be premature for me to say anything more at this stage,” Dera said.
According to a notice published in the press, in the matter between the CBZ Bank and Insing investment, the cotton company has been placed under judicial management indefinitely.
“All actions and application and the execution of all writs, summons and other processes against 1st respondents (Insing investments) shall be stayed and not proceed without leave of court,” the notice reads.
When contacted for comment, a staffer at CBZ who was involved in the handling of the loan said they could not comment as they were not allowed to speak to the media, referring the paper to the notice published in the press on August 22.
The company also owes thousands of dollars to the Agricultural Marketing Authority as well as several local authorities. The firm was also taken to court by mobile telecommuniacations operator —NetOne — last year over failure to pay for cellular phone services rendered to the company.
A director of Insing Investments, Nirmal Kumar Bolia, was cited as the second respondent in the matter. According to the court papers, a written agreement on April 1 2004 shows that, NetOne agreed to render cellular services to Insing Investments and Bolia stood as guarantor.
The placing of the company under judicial management by CBZ has led to the loss of more than 400 jobs at the company with workers owed unpaid wages over a period of seven months. A visit to Insing’s offices on the 4th floor Greenbridge Wing at Eastgate in Harare established that the company was evicted from the building for failing to pay rentals.
Sources said the company was in severe debt despite enjoying a good season of cotton deliveries which could have seen them pay the loan, raising suspicion that money could have been externalised by the company.
Sources also accuse the company of bad management as several tonnes of cotton seed was damaged by rain at its ginnery in Rushinga which could have resulted in the loss of thousands of dollars.
The company, sources say, had proposed to use part of the loan it received from CBZ to build its second ginnery in Kwekwe to complete the Rushinga operation, but very little progress had been made before the intervention in putting up the structure despite assurances it made to the bank that construction was well on course.
A local representative of the company, Richard Mubaiwa, refused to comment.
“The issue is before both the civil and criminal courts so I cannot comment,” he said before hanging up.
This development comes at a time when the Reserve Bank of Zimbabwe (RBZ) has announced plans to create a special purpose vehicle to acquire US$700 million non-performing loans from banks.
In his mid-term monetary policy, the RBZ governor John Mangudya, said it was establishing the Zimbabwe Asset Management Corporation (Pvt) Ltd (Zamco) to purchase non-performing loans from banks as part of initiatives to strengthen banks’ balance sheets and remove them as an economic albatross.