Gono's creation ZABG, bankrupt

The Zimbabwe Allied Banking Group failed to publish year-end results last month amid reports that PricewaterhouseCooper has refused to certify its financials as it is bankrupt.

PwC managing partner Tinashe Rwodzi declined to comment on the issue, citing client confidentiality.

Bank spokeswoman Theresa Munjoma confirmed ZABG was affected by the return of the assets of Barbican, Royal and Trust banks, hence its failure to meet the mandatory deadlines for results publication.

Central bank governor Gideon Gono created ZABG seven years ago under the guise of preserving the assets of its three antecedent banks, but it has always been dogged by underfunding and a 2005 Supreme Court ruling that the takeover of the assets of Royal, Barbican and Trust was illegal.

Following the court order and ZABG's progressive descent into disaster, Gono was compelled to hand back the banks' assets in August last year.

Around the time, two Deloitte & Touche Corporate Finance and RBZ verification reports revealed that the bank had debts of nearly $15-million, which precipitated PwC's refusal to certify the bank's numbers.

While Gwasira and his team were installed "to turnaround" the fortunes of the bank, the Deloitte report said the amalgamation was in financial ruin owing to several inept decisions and inadequate oversight mechanisms.

The team, for example, inflated the three former independent banks' head-count by 300 staffers - out of Royal and Trust's combined 232 employees at closure - while also acquiring a record 132 cars in five years.

At a time when the wider financial sector was beginning to feel the pinch of a dollarised economy, the ZABG hierarchy awarded themselves generous salaries, with Gwasira netting $16000 a month.

The hefty wage bill and costs, which further bled the bank, saw ZABG fail to pay for utilities, including electricity, rental and telephones for its various offices. It also owed the National Social Security and Zimbabwe Revenue Authority vast amounts in staff pensions, and other taxes.

This dire financial state not only showed how Barbican, Royal and Trust banks' inherited assets were wrecked and shrunk, but also brought into question whether the new team brought in any new and serious business, if not fresh capital, at all.

At closure, Royal and Trust were jointly ranked number five in terms of trading market share, but the Deloitte report showed they had slipped to a lowly number 13 as at September 2009. The two also had an 11% market share.