ZB Financial Holdings (ZBFH) chief operating officer Mike Manyika has been removed in what appears to be a volte-face on the initial position that was taken by one of the group’s key shareholders Transnational Holdings Limited (THL) following a corrective order issued by the Reserve Bank of Zimbabwe early this month, Zimbabwe Independent can report.
By Bernard Mpofu
This comes after a storm had engulfed one of Zimbabwe’s oldest financial institutions, ZBFH, over a series of issues which include the forcing out of independent board members, a controversial payment of dividend, unlawful appointment of the group’s chief operating officer, stalling of a merger process and a raft of corporate governance failures.
In a letter written to RBZ director in charge of bank supervision, Norman Mataruka, dated March 23, ZBFH legal secretary Charles Kathemba said the financial services group had agreed to comply with the central bank’s directives.
Following the corrective order, the ZBFH board, in a major climbdown compared to the position that was taken by veteran banker Nicholas Vingirai’s THL, met on March 17 to discuss the central bank demands.
“The board underscored its intention to comply with the Corrective Order. Any issues on which the board thought clarification was necessary would be raised with your office — while the two entities — ZBFH and ZB Bank were in compliance with the order,” wrote Charles Kathemba in a letter dated March 23.
“The penalty of US$36 000 imposed by your office on ZBFH was paid as directed into your account, on 17 March 2017. A copy of the payment voucher is attached for your records. In compliance with your instructions, Mr Mike Manyika was stood down and has ceased to discharge any duties on behalf of ZBFH.
“Kindly note that both the payment of the fine and the suspension of Mr Manyika, are on a without prejudice basis, and subject to possible representations to be made to you in due course.”
He said the group would replace two independent non-executive directors, who resigned last year by today after Vingirai won a legal case which saw him become the second largest shareholder after the National Social Security Authority. With a 26% stake, THL became the second largest shareholder in the group after Nssa’s 37,79% following Vingirai’s victory in a long-running legal battle over shareholding. “At its meeting, the board constituted the nominations committee. The members of the committee, who are all independent non-executive directors, are John Nhavira, Obey Matizanadzo and Richard Mbaiwa,” Kathemba wrote.
“The nominations committee will submit names of proposed new appointments to the board executive committee, which will hold veto powers on such appointments.”
The group said the repayment of the over US$600 000 to THL was now the only sticking point.
“The THL representatives on the board pointed out that THL had submitted a detailed response on the matter through a letter dated 10 March 2017, addressed to the Governor of RBZ (John Mangudya). A copy of the letter was circulated to all directors prior to the meeting. The board agreed to defer passing a decision on the matter pending conclusion of consultations between THL and its professional advisors, and the response from the governor,” Kathemba wrote.
On the capital adequacy of the group after Mangudya warned that ZBFH’s core capital levels could be compromised after a process to merge the group’s flagship commercial bank and its mortgage lender, ZB Building Society, stalled.
However, Kathemba said a proposed merger between the group’s flagship retail banking unit and the building society was still being considered and a decision would be made after adoption of the group’s strategy for the period 2017 to 2020.
In a letter written to Mangudya early this month, Vingirai rejected the central bank’s demands over a series of corporate governance issues, a contested senior appointment and controversial payment of a dividend.
Vingirai challenged the legality of the central bank directive calling for the stepping down of Manyika. Mangudya had ordered the banking group to pay a fine of US$36 000 (calculated at US$300 per day) and the immediate stepping down of Manyika.
On dividend controversy, the central bank boss said the dividend was declared on May 26 2015 before THL recovered its shareholding from government and hence was fraudulently received. He said the board agreed to a claim by THL shareholders to be paid a dividend for the same financial year before it took control of the shareholding.
However, Vingirai rejected this, saying THL would not reimburse the US$$658 699 dividend that was paid to the group. He argued it had claimed its portion of the dividend pursuant to the settlement of a shares agreement which states that risks and rewards pass to THL on the effective date or May 31 2016.