Lawsuits for failed banks executives

THE Deposit Protection Corporation (DPC) has sued directors of four failed banks for lack of corporate governance and abuse of depositors' funds.

Last year, the deposit protection entity said that it had started taking legal action against shareholders and directors of banks whose institutions collapsed owing to corporate governance shortcomings and corruption.

In an interview DPC chief executive officer Mr John Chikura said the directors would be appearing in court facing allegations of lack of corporate governance and abuse of depositors' funds due to reckless lending at the time their banks were functional.

"We have sued them (directors of four) failed banks over lack of corporate governance and abuse of depositors' funds. The four directors are from Interfin, Trust Bank, AfrAsia (formerly Kingdom Bank) and Royal Bank," he said without revealing the names of the directors from the failed banks.

At the time of their closure, Royal Bank was majority-owned by Mr Jeffrey Mzwimbi and Mr Simba Durajaji, Trust Bank by Mr William Nyemba and Interfin by Messrs Farai Rwodzi, Jeremiah Tsodzi and Ray Njanike.

Mr Chikura said the directors of the four banks were yet to appear in court.

"They have not appeared in court but they have all indicated to the court that they are prepared to defend themselves," he said.

In recent years, about eight banks have collapsed due to alleged lack of corporate governance and corruption among other issues. These also include Tetrad, Allied Bank and Genesis, which DPC was also working on before legal action is taken.

Among other benefits, the DPC guarantees compensation up to the cover limit for eligible deposits in the event of a bank failure.

DPC is an independent statutory body established by Government in terms of the DPC Act (Chapter 24:29) to administer the Deposit Protection Scheme.

Deposit protection also reduces chances of panic withdrawals, thereby contributing to the stability of the financial sector and overall economic growth.

DPC began operating in July 2003 and is headquartered in Harare. The corporation has also opened a regional office in Bulawayo to cater for stakeholders including depositors in Matabeleland region.

Meanwhile, DPC is calling on depositors of the defunct Royal Bank who are yet to submit their claim forms to the corporation before the end of next month.