News / Local
New details on Intermarket bank heist
08 Aug 2021 at 02:17hrs | Views
There is growing unease at ZB Financial Holdings Limited (ZBFHL) after recent revelations Transnational Holdings Limited (THL) the second-largest shareholder is pushing for a separation following the National Social Security Authority (NSSA)'s "controversial" sale of its stake in the banking group to Datvest Nominees Pvt Ltd.
It has since emerged that under a May 2016 Government-brokered settlement, THL and NSSA had "reciprocal rights of pre-emption over each other's shares in ZB".
THL, which is an investment vehicle owned by international banker Mr Nicholas Vingirai, currently holds 24,65 percent of the envisaged shareholding of 33 percent in ZBFHL.
THL's wholly owned unit, Intermarket, was acquired by ZBFHL in 2006 following a contested curatorship process through which it came under the control of the Reserve Bank of Zimbabwe (RBZ).
Transnational challenged the sale, claiming it violated Intermarket's Articles and was, therefore, invalid. In 2012, former RBZ Governor Dr Gideon Gono, however, absolved Mr Vingirai and Intermarket of allegations of externalisation and breaching exchange-control regulations, which lay at the heart of the challenges faced by the business in 2004.
Dr Gono claimed Mr Vingirai "was a victim of some elaborate skulduggery which is now a common feature against successful black businesspeople".
He added: "On scrutinising Mr Vingirai's activities and Intermarket transactions, the RBZ can confirm that there is no indication of deliberate 'externalisation' or Exchange Control-related issues against him as was initially preferred . . . . "To this end, we have no hesitation in requesting you and his legal counsel to do everything legal and possible to get him to recover his assets and most urgently the farm since the rainy season is upon us."
Project Goliath
But a cache of new documents that surfaced after thorough investigations reveal that Intermarket fell victim to an elaborate plot that was hatched by rivals in the banking industry to prevent its ascendancy, particularly at a time when it was finalising the acquisition of Beverly Building Society through London-based Andrew Weir & Company. Sources told The Sunday Mail Business that the shocking new details about the plot — which was code-named Project Goliath — had strengthened THL's resolve to reclaim the stake that "rightfully belongs to it".
It is believed that after Mr Vingirai was hounded out of Zimbabwe in 2004, some former ZB executives and a former RBZ top official in the bank licensing, supervision and surveillance division (name withheld) actively worked to rig the curatorship process for a pre-determined outcome.
In a letter dated July 27, 2005, then ZB chief executive officer Mr Elisha Mushayakarara wrote to Mr P Matupire, ex-chair of Intermarket Holdings, ordering the "immediate" reconstitution of the IHL board to include Mr Richard Chemist Hove (chair), who was chair of Finhold at the time; Mr Ronald Mutandagayi, who was then Finhold head of finance and risk; Mr Sijabuliso Thabani Biyam (Finhold executive director) and himself.
At the time, the appointments were viewed as controversial as they were in contravention of the Banking Act, which made cross-directorships illegal.
Intermarket was still under curatorship, another situation that made the appointments irregular.
According to the Banking Act Chapter 24:20, Section 19(b): "No person shall be appointed, or hold office as a director of a banking institution or controlling company if: He is a director of another banking institution which carries on business in Zimbabwe in competition with the first-mentioned banking institution."
Questions were raised why the central bank allowed this anomaly to take place.
At the time, the acquisition of the 51 percent stake previously held by the RBZ in Intermarket was considered irregular as no circular was released to shareholders.
The shareholders were only notified of the transaction after both the acquisition and board appointments.
As of December 2003, NSSA held 46 percent in Finhold, while the Government had 13 percent.
Transnational was the second-largest shareholder in Finhold with 14 percent.
Finhold's subsidiaries included Zimbabwe Banking Corporation, whose operating divisions were Zimbank (a commercial bank), Syfrets Corporate and Merchant Bank, and ZB Holdings, which controlled Syfam (an asset management firm) and Continental Capital (a venture capital firm).
There have, however, been more revelations.
An e-mail in October 2005 by Mr Mushayakarara to Mr Mutangandayi shows a plot to warehouse some of Mr Vingirai's assets under Finhold.
"The question of selling the vehicles to Vingirai is very sensitive and can destroy the whole Goliath Project. I would prefer a situation where the vehicles are bought by IDH (Intermarket Discount House), or even Finhold, and held until the matter has been referred to the full IDH board for a decision . . . Let us not underestimate the sensitivities surrounding this matter. We can very easily come under attack from all sorts of quarters," he cautions in the correspondence.
Special accounts
There were "special accounts" that were established to debit Mr Vingirai's personal bank accounts with "fictitious amounts", from which the interest claimed was way above the purported principal amounts owed in contravention of the in duplum rule. In essence, the in duplum rule states that interest on debt will stop to run when the total amount of arrear interest has accrued to an amount equal to the outstanding principal debt.
All in all, an estimated $27 billion was debited from the accounts.
The money markets expert – who hogged international headlines at a Commonwealth Heads of Government Meeting (CHOGM) in October 1989 in Kuala Lumpur, Malaysia, after successfully spearheading the establishment of the first discount House in West Africa in Ghana in 1987 under a Commonwealth technical assistance programme for the country — also lost two farms (Sholliver Farm and Dondo Farm in Banket), which he is still trying to recover.
Repeated efforts to get a comment from Mr Mutandagayi, who has since been replaced as group chief executive officer by Shepherd Tapiwanashe Fungura, were fruitless. The recently unearthed evidence have led to claims by THL that the sale of Intermarket to ZB by RBZ to have been contrived and premeditated.
It is also alleged to be the reason behind inordinate delays to conclude the Government-brokered settlement agreement.
Beverly Building Society, which was then a coveted crown jewel in the banking sector, was eventually acquired by CBZ under unclear circumstances.
However, it was after an exhaustive Government investigation that then Finance Minister Patrick Chinamasa in a letter dated March 6, 2015 instructed the RBZ to return Intermarket to Mr Vingirai.
Government had duly transferred its shareholding of approximately 22,7 percent to THL by August last year.
An additional 11 percent was supposed to be ceded from NSSA's stake, but the recent transaction makes it seemingly impossible to consummate the agreement.
The current top five shareholders in ZBFHL Datvest Nominees (34 percent), THL (24,65 percent), ZB Financial Holdings Ltd (10,08 percent), Old Mutual Life Assurance Zimbabwe (4,15 percent) and Quant Africa Wealth Management (3,97 percent).
THL previously insisted that separation of the entities could be "straightforward" and "quick" as the businesses are separately licensed and have different administrative structures.
It has since emerged that under a May 2016 Government-brokered settlement, THL and NSSA had "reciprocal rights of pre-emption over each other's shares in ZB".
THL, which is an investment vehicle owned by international banker Mr Nicholas Vingirai, currently holds 24,65 percent of the envisaged shareholding of 33 percent in ZBFHL.
THL's wholly owned unit, Intermarket, was acquired by ZBFHL in 2006 following a contested curatorship process through which it came under the control of the Reserve Bank of Zimbabwe (RBZ).
Transnational challenged the sale, claiming it violated Intermarket's Articles and was, therefore, invalid. In 2012, former RBZ Governor Dr Gideon Gono, however, absolved Mr Vingirai and Intermarket of allegations of externalisation and breaching exchange-control regulations, which lay at the heart of the challenges faced by the business in 2004.
Dr Gono claimed Mr Vingirai "was a victim of some elaborate skulduggery which is now a common feature against successful black businesspeople".
He added: "On scrutinising Mr Vingirai's activities and Intermarket transactions, the RBZ can confirm that there is no indication of deliberate 'externalisation' or Exchange Control-related issues against him as was initially preferred . . . . "To this end, we have no hesitation in requesting you and his legal counsel to do everything legal and possible to get him to recover his assets and most urgently the farm since the rainy season is upon us."
Project Goliath
But a cache of new documents that surfaced after thorough investigations reveal that Intermarket fell victim to an elaborate plot that was hatched by rivals in the banking industry to prevent its ascendancy, particularly at a time when it was finalising the acquisition of Beverly Building Society through London-based Andrew Weir & Company. Sources told The Sunday Mail Business that the shocking new details about the plot — which was code-named Project Goliath — had strengthened THL's resolve to reclaim the stake that "rightfully belongs to it".
It is believed that after Mr Vingirai was hounded out of Zimbabwe in 2004, some former ZB executives and a former RBZ top official in the bank licensing, supervision and surveillance division (name withheld) actively worked to rig the curatorship process for a pre-determined outcome.
In a letter dated July 27, 2005, then ZB chief executive officer Mr Elisha Mushayakarara wrote to Mr P Matupire, ex-chair of Intermarket Holdings, ordering the "immediate" reconstitution of the IHL board to include Mr Richard Chemist Hove (chair), who was chair of Finhold at the time; Mr Ronald Mutandagayi, who was then Finhold head of finance and risk; Mr Sijabuliso Thabani Biyam (Finhold executive director) and himself.
At the time, the appointments were viewed as controversial as they were in contravention of the Banking Act, which made cross-directorships illegal.
Intermarket was still under curatorship, another situation that made the appointments irregular.
According to the Banking Act Chapter 24:20, Section 19(b): "No person shall be appointed, or hold office as a director of a banking institution or controlling company if: He is a director of another banking institution which carries on business in Zimbabwe in competition with the first-mentioned banking institution."
Questions were raised why the central bank allowed this anomaly to take place.
At the time, the acquisition of the 51 percent stake previously held by the RBZ in Intermarket was considered irregular as no circular was released to shareholders.
The shareholders were only notified of the transaction after both the acquisition and board appointments.
Transnational was the second-largest shareholder in Finhold with 14 percent.
Finhold's subsidiaries included Zimbabwe Banking Corporation, whose operating divisions were Zimbank (a commercial bank), Syfrets Corporate and Merchant Bank, and ZB Holdings, which controlled Syfam (an asset management firm) and Continental Capital (a venture capital firm).
There have, however, been more revelations.
An e-mail in October 2005 by Mr Mushayakarara to Mr Mutangandayi shows a plot to warehouse some of Mr Vingirai's assets under Finhold.
"The question of selling the vehicles to Vingirai is very sensitive and can destroy the whole Goliath Project. I would prefer a situation where the vehicles are bought by IDH (Intermarket Discount House), or even Finhold, and held until the matter has been referred to the full IDH board for a decision . . . Let us not underestimate the sensitivities surrounding this matter. We can very easily come under attack from all sorts of quarters," he cautions in the correspondence.
Special accounts
There were "special accounts" that were established to debit Mr Vingirai's personal bank accounts with "fictitious amounts", from which the interest claimed was way above the purported principal amounts owed in contravention of the in duplum rule. In essence, the in duplum rule states that interest on debt will stop to run when the total amount of arrear interest has accrued to an amount equal to the outstanding principal debt.
All in all, an estimated $27 billion was debited from the accounts.
The money markets expert – who hogged international headlines at a Commonwealth Heads of Government Meeting (CHOGM) in October 1989 in Kuala Lumpur, Malaysia, after successfully spearheading the establishment of the first discount House in West Africa in Ghana in 1987 under a Commonwealth technical assistance programme for the country — also lost two farms (Sholliver Farm and Dondo Farm in Banket), which he is still trying to recover.
Repeated efforts to get a comment from Mr Mutandagayi, who has since been replaced as group chief executive officer by Shepherd Tapiwanashe Fungura, were fruitless. The recently unearthed evidence have led to claims by THL that the sale of Intermarket to ZB by RBZ to have been contrived and premeditated.
It is also alleged to be the reason behind inordinate delays to conclude the Government-brokered settlement agreement.
Beverly Building Society, which was then a coveted crown jewel in the banking sector, was eventually acquired by CBZ under unclear circumstances.
However, it was after an exhaustive Government investigation that then Finance Minister Patrick Chinamasa in a letter dated March 6, 2015 instructed the RBZ to return Intermarket to Mr Vingirai.
Government had duly transferred its shareholding of approximately 22,7 percent to THL by August last year.
An additional 11 percent was supposed to be ceded from NSSA's stake, but the recent transaction makes it seemingly impossible to consummate the agreement.
The current top five shareholders in ZBFHL Datvest Nominees (34 percent), THL (24,65 percent), ZB Financial Holdings Ltd (10,08 percent), Old Mutual Life Assurance Zimbabwe (4,15 percent) and Quant Africa Wealth Management (3,97 percent).
THL previously insisted that separation of the entities could be "straightforward" and "quick" as the businesses are separately licensed and have different administrative structures.
Source - sundaymail
