HomeBusiness DigestZibawu blames executives for the collapse of banks

Zibawu blames executives for the collapse of banks

THE ZIMBABWE Banks and Allied Workers Union (Zibawu) has resolved to engage parliament to stamp out malpractices in the banking sector.

Fidelity Mhlanga

The union said it was frustrated by the snail’s pace of the Reserve Bank of Zimbabwe (RBZ) in weeding out the rot threatening the financial services sector.

Zibawu secretary general Peter Mutasa said the union plans to petition parliament to enact a law that protects bank workers willing to expose misconduct in the sector.

Mutasa said the major cause of banks’ collapse was corporate governance inadequacies and the laxity of the regulators in dealing with the problems affecting banks.

“We are referring the issue to our national executive and by next week we will be done with our consultations. We are going to engage parliament’s portfolio on finance because the issue of insider non-performing loans is eroding confidence in the banking sector. It’s having a huge impact on the sector; it has a huge bearing on the economy,” he said.

Mutasa said developments in the banking sector were worrisome and a form of economic sabotage, adding that he was engaging other stakeholders like the Consumer Council of Zimbabwe to nip the problem in the bud.

He said there were allegations that some senior RBZ officials were also getting loans from banks and not servicing them, a factor in the demise of several banks.

“There are allegations that senior officials from the RBZ are getting loans from destabilised banks. It’s a matter we are looking at seriously and the solution should come from parliament. Bank workers know these transactions as they happen. Some say they have evidence but they cannot bring it because of contractual agreements. We want them to be given immunity by parliament,” Mutasa said.

He said employees from destabilised banks like AfriAsia, Capital Bank and Interfin were ready to bring evidence if protection was guaranteed.

“If these allegations are true, it means the supervisor is complicit and no longer doing his job. This means we should be worried about the policing of banks,” Mutasa said.

He querried why RBZ placed banks under curatorship when they could no longer be rescued.
“We think there is much which is happening. Why should the RBZ let a bank operate when it is borrowed to the tune of over US$60 million.
“Why don’t we have early detection? That is something we should analyse. Why is the bank brought to curatorship when it cannot be rescued anymore?” he asked.

As at September 13, 2014, the ratio of non-performing loans in the entire banking sector stood at 20,14%, according to the central bank.

Total bank deposits stood at US$5,2 billion by October 2014.

RBZ Governor John Mangudya last year said he would expedite the revival of the struggling banks. The RBZ set up the Zimbabwe Asset management Corporation (Zamco) to deal with non-performing loans (NPLs). It also intends to set up a credit reference system and the interbank market as well as capitalise the RBZ to resume its functions as a lender-of-last-resort.

Mutasa’s concerns come after former Interfin Banking Corporation Limited employees called for a hearing with the directors and shareholders of Interfin Bank on the collapse of the bank.

In a damning letter submitted to the Clerk of Parliament, RBZ, Zibawu and the Banking and Finance Managers Union of Zimbabwe, former employees said Zimbabwe should not turn a blind eye when directors and shareholders are lining up their pockets with depositors’ funds.

Disgruntled former employees requested RBZ to make public the forensic report compiled by KPMG audit firm in 2012.

“Our view is that since Interfin is a public institution, it is in the interest of the public, employees and customers included to know what is contained in the forensic report.

“As insiders we believe it is unimaginable for depositors funds amounting to more than US$100 million to vanish into thin air.
We were quite relieved to have the bank placed under curatorship as we hoped the culprits could be brought to account. We have, however, watched in dismay as no action has been taken to bring the wrongdoers to account,” reads the letter.

Former employees said that no trained banker or director worth his salt could afford to lend and transact as recklessly as was the case at Interfin given that such officials have a fiduciary duty to customers.

“It does appear that certain actions which led to the demise of the bank were fraudulent.

“It is also unimaginable that a forensic report on such a public organisation can be done and no action taken within two years,” said the former workers.

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