By Chipo Musoko, HARARE, March 25 (The Source) – Creditors of the collapsed Royal Bank who are owed $9 million will only get $3 million from the sale of the bank’s assets and on Wednesday passed a resolution for a forensic audit which could lead to the prosecution of its directors if found guilty of its failure.
The bank, which was registered in 2002, was closed in 2012 due to among others mismanagement and undercapitalization with a core capital of $1,8 million versus a statutory requirement of $12,5 million.
The bank’s liabilities may exceed the $9 million claimed after creditors presented fresh claims worth $2,7 million during a second meeting at the High Court attended by around 100 people.
Non-secured creditors were told they would get 7 percent of what they are owed as most of the money will go towards liquidation costs, paying statutory bodies and employees.
Liquidator, John Chikura who is also the chief executive of the Deposit Protection (DPC), said it was difficult to recover most of the money owed by debtors as the bank did not follow laid down procedures when advancing loans.
“The directors of the bank violated section 318 of the Companies Act and upon application to the Master (of High Court), the directors could be personally liable for the debts,” he said.
Creditors immediately voted for an amended resolution authorizing the liquidator, represented by his agent Cecil Madondo, to “proceed with and conclude forensic investigations with a view to instituting legal proceedings against the former directors of the bank.”
Madondo said the process would attract $20,000 in legal costs while the forensic audit’s costs were included in the liquidator’s payment.
“We are convinced we have most of the information, we just need to tie up a few things and then take the documents to our lawyers to get an opinion. We will then come back to the Master and proceed to institute civil and criminal proceedings,” he said, adding that it will take 10 days to compile the report.
The resolution was seconded by a lawyer representing a creditor who said: “I support the idea. The culture of forming banks and giving loans to friends and relatives should just end.”
Another creditor wanted to know which directors would be targeted for prosecution, to which Chikura replied: “The Companies Act does not distinguish between non-executive and executive director, so it’s both.”
According to the judicial manager’s report seen by The Source, the company’s directors are: Jeffrey Mzwimbi (chief executive), Durajadi Simba (executive director- banking) non executive directors, Nomusa Sibusisiwe Yehudah, Michael Tapera, Chakanyuka Godfrey Karase, Matthew Chamunorwa Wazara, Hardwork Njodzi Pemhiwa, Sandra Roberts, Adries Christoffel Kloppers and chairman Peter Simhanga Chikumba and executive director Tatenda Munakira.
Another creditor demanded the publication of the names of the beneficiaries of the bank’s loans, which the liquidator promised to present at the next meeting.
Madondo said the books of the company were not properly managed, citing an auditors’ report.
“The accounting system was specifically customized and developed for the Bank by Afrosoft. The system malfunctioned during the course of the period and developed significant errors,” Madondo quoted Deloitte and Touche in a letter dated October 2012 addressed to the board of directors and copied to RBZ.
Distribution and payment of the first account will be made by mid April.