THE Deposit Protection Corporation (DPC) plans to institute a forensic audit into Tetrad Investment Bank as part of efforts to establish reasons behind the collapse of a number of banks in Zimbabwe in a bid to punish the culprits who have prejudiced depositors millions of dollars, businessdigest has learnt.
By Kudzai Kuwaza
Tetrad, the last merchant bank in the country’s financial services sector which went under due to bad loans, poor corporate governance and mismanagement, was declared insolvent in August last year with its capital standing at US$51,7 million as of August 31.
Creditors opted for a debt-to-equity swap in a last-minute attempt to breathe life into the troubled financial institution after the bank’s judicial manager, the DPC, proposed the do-or-die arrangement.
“The corporation is in talks with KPMG (South Africa) for them to conduct a forensic audit on Tetrad as mandated by creditors of the bank,” an insider revealed. “The audit will be commissioned soon by the DPC and we will go after anyone found guilty of abusing depositors’ funds.”
The DPC has also completed a forensic audit on the failed AfrAsia Bank which closed into February last year leaving thousands of depositors in the cold.
“The forensic audit on AfrAsia was done by Grant Thornton and has been completed,” a source told businessdigest. “The audit is now in the hands of the DPC’s lawyers.”
The audit comes at a time the DPC is suing directors and shareholders of the now defunct Interfin Bank for prejudicing the financial institution of US$136 million.
According to liquidator Ngoni Kudenga of BDO Zimbabwe, shareholders and directors allegedly took advantage of Interfin’s curatorship to hide assets and put some companies under judicial management to avoid legal action for non-performing insider loans worth US$90 million which they accessed when the bank was still running.
Contacted for comment on the Tetrad and AfrAsia forensic audits, DPC CE John Chikura declined to discuss the issue.
“It would not be prudent for me to comment on any of these issues at this point in time,” Chikura said.
Chikura, however, told businessdigest in an interview in June last year that the delay by the central bank in withdrawing licences of distressed banks allowed shareholders and management in the troubled institutions to strip assets, leaving very little for affected depositors.
“The delays by the Reserve Bank (RBZ) to close distressed banks give shareholders and management time to strip assets. By the time it is liquidated, it’s a shell,” Chikura said, adding the RBZ needed to move swiftly when closing banks to protect the interests of depositors. “Let me give you an example: when Interfin went under curatorship in 2012 the gap was US$98 million, but when it was liquidated last year the gap had increased to US$158 million. This was an unnecessary increase of US$60 million.”
The DPC is in the process of compensating depositors of failed banks which include AfrAsia, Allied Bank, Genesis Investment Bank, Capital Bank, Trust Bank and Tetrad.