Businessman sucked into $6m NSSA scam

PROMINENT businessman Mr David Govere (pictured) allegedly used his position and influence in the National Social Security Authority (NSSA) board to prejudice the organisation of over $6 million in structured loan and money market deals.

NSSA is a parastatal established through an Act of Parliament which is the NSSA Act Chapter 17:04 whose main mandate is to provide social security scheme for the provision of benefits to or of all employees or such classes of employees as may be specified in the notice. After collection of contributions, NSSA invests the pooled funds in shares and equity market, money market and real estate.

A few months ago, the authority sacked five of its executives amid revelations that they were lining up criminal charges against former general manager Mr James Matiza, and directors Mr Shadreck Vera (investments), Mr Patrick Mupani (finance), Mr Tendai Mafunda (corporate services) and Mr Bright Chidyagwai (ICT), on allegations of corruption and mismanagement.

The organisation now has a new board. In the latest development, it is alleged Mr Govere — who is also a prominent economist — used his position as a NSSA board member and chairman of the board's Investment committee between 2008 and 2009 to unscrupulously advance structured loan deals valued at $6,58 million to companies which he owned.

Structured loan deals are just like other money market deals with the exception that these are based on negotiating, sharing the proceeds between the bank representing the corporate customer, which needs the funding and NSSA that provides the funds.

Banks write requisitions to NSSA on behalf of different corporate customers who are in need of funding being working capital or capitalising funding. This is because NSSA does not extend direct funding to any company.

This was uncovered by a National Economic Conduct Inspectorate (NECI) forensic audit report that was instituted by the Ministry of Public Service, Labour and Social Welfare to look at allegations levelled against NSSA and its senior directors and management.

Mr Govere allegedly saw his company, Harambe Holdings being awarded various loan facilities, with one worth $3,58 million being classified by Reserve Bank of Zimbabwe examiners as a loss, meaning its recovery was doubtful despite being secured by a first mortgage bond on a property through guarantees by another of Mr Govere's companies, Medworth Investments.

Harambe Holdings also owns the now defunct Downing's Bakery which got a $1,5 million loan.

"Request for capital funding for this group of companies (Harambe) was also presented by Interfin Merchant Bank. The facility amount was $ 1,5 million with a 90 day tenor at 2,5 percent flat payable every 30 days.

"What makes interesting reading is that Mr C Makoni, the chief economist at NSSA queried on 31 July 2009 why for the same deal and same industry NSSA was to get 2,5 percent flat on Harambe yet Lobels with FBC Bank had been charged 3 percent. He thus proposed for NSSA to seek more information on Harambe, especially on the security which was felt to be less favourable," reads the audit report.

The audit report further states that by virtue of Mr Govere's portfolio at NSSA, he was in a favourable position as to know of the existence of the structured facility and to use his influence to access it.