Defunct bank haunts Bulawayo

Bulawayo City Council has suffered significant financial losses after investing in Tetrad Investment Bank, which was shut down by the Reserve Bank of Zimbabwe two years ago, according to a recent parliamentary report.

The Public Accounts Committee (PAC) of Parliament, reviewing the council's 2019 and 2020 audited accounts from the 2023 Auditor General's Report for Local Authorities, revealed that the city will recover only a fraction of its US$500,000 investment, which included US$26,220 in accrued interest.

Tetrad Investment Bank's license was revoked on August 30, 2023, after it failed to resume operations following its provisional judicial management period. The liquidation process converted the council's investment into 5,262,200 shares, valued at just 10 cents each - far below the original investment.

The committee criticised the council for failing to conduct proper due diligence before committing public funds. "The committee observed that due diligence was not done by the management and councillors of Bulawayo City Council in approving equity investment in Tetrad Investment Bank," the report stated.

Parliamentarians stressed that equity investments by local authorities should be rigorously scrutinised by the Minister of Local Government and Public Works before approval, as outlined under Section 302 of the Urban Councils Act. They recommended thorough interrogation of all council resolutions, paperwork, and related documentation before any public funds are committed to private equity.

The report also highlighted concerns over the council's investment in City of Kings Business Ventures, a body tasked with running non-core council operations such as Mzilikazi Pottery, Mzilikazi School of Arts, Parks Nursery, Caravan Park, and Aisebly Farm.

"The evaluation of capital investments in City of Kings Business Ventures has taken too long, and the entity does not have a balanced board in terms of good corporate governance," the committee noted. "Oversight by a management committee can create conflicts of interest and undermine checks and balances."

To comply with Section 49(2c) of the Public Finance Management Act, the committee recommended that Bulawayo City Council complete a revaluation of its investment in City of Kings Business Ventures by July 31, 2025. The council has indicated that it will engage an independent evaluator during the first quarter of 2025.

Despite the financial missteps, the committee expressed optimism that the Auditor General's concerns will be addressed. "The committee implores all tasked stakeholders to take the recommendations seriously to ensure financial prudence, transparency, and efficiency in the management of public funds," the report concluded.