The National Economic Conduct Inspectorate (Neci), an elite government crime-investigation unit, is looking into the circumstances surrounding the Zimre Holdings Ltd (Zimre) takeover amid indications the unit’s investigators this week interviewed National Social Security Authority executives and directors to ascertain the events that led to the appearance of a consortium of local business people as majority shareholders in the reinsurance group.
Sources told businessdigest this week that investigators from Neci visited Nssa executives at its headoffice in Harare and made enquiries concerning the transaction.
According to the sources, Neci investigators want to establish if the transaction was done above board. “The Neci guys were at Nssa this week. They had several meetings with Nssa management. They are trying to establish what could have happened or made Nssa not to follow its rights. Additionally, they want to know whether the transaction was above board in terms of whether laws were broken,” a source said.
Sources added that Neci, which produced damning reports on Ziscosteel looting and Nssa management’s indiscretions a few years ago, is keen on ensuring government was not prejudiced and establish if laws were adhered to.
“They are people who feel there was minimal disclosure on the transaction. For instance, if one withholds information that Al Qaeda is buying into one’s business, it cannot by any stretch of the imagination be viewed as adequate disclosure. My point is if such disclosures are made, then a buyer or seller makes an informed decision not do business with such parties. We feel that is what happened on the Zimre deal,” another source said. This comes after the Reserve Bank of Zimbabwe’s anti-money laundering unit, Financial Intelligence Inspectorate and Evaluation Unit (FIIE Unit), launched another investigation on whether NMB Bank used depositors’ funds when it underwrote the US$15 million capital raise and whether the money was already onshore.
Sources last week said the FIIE Unit was keen on establishing whether the funds used to pay for the shares in Zimre were not funded locally before the closure of the rights issue and whether the financial institution used its own capital. The investigation, according to sources, has taken a new twist and could see the financial institution being caught up in the ongoing Zimre-National Social Security Authority (Nssa) fiasco. “The investigation is headed by the FIIE Unit, a department in the RBZ. They want to establish whether depositors’ funds were not used to pay for the shares. Secondly, they want to follow the money trail and see if NMB was the actual underwriter. When they follow the money trail and discover that NMB’s account was already funded, then there is a problem.
“They want to establish if they did not use depositors’ funds. Under Basel, they are not supposed to touch depositors funds. This is the reason why indigenous banks failed in Zimbabwe. Most were using depositors’ funds to buy non core assets. If the transaction was above board, then there is no problem.”
Another source said the proposed amendments to the securities and exchange legislation would also help players in the market play by the book. Finance minister Patrick Chinamasa announced that offenders on capital markets could now be slammed with longer jail terms and part with a fortune in fines when amendments to the Securities and Exchange legislation come through parliament this year.