Late last week it was widely reported that Reserve Bank of Zimbabwe Governor Gideon Gono has ordered the return of some of the confiscated banks to their original owners. This was both shocking and surprising given that no credible explanation was given for such a dramatic policy suamersault.These Banks were looted and grabbed on the pretext that the owners were unfit to run banks. The owners of these Banks were scandalized and criminalized whilst their assets were being seized under some smoke screen of false and fabricated allegations.
In the High Court of Zimbabwe case Mzwimbi and Others v Reserve Bank of Zimbabwe and Others (42/05) [2005] ZWSC 35; SC35/05 (5 September 2005) ,Royal Bank owners vigorously resisted this but Gono using various judicial and extra judicial means still seized the banks and tried to create a “super bank” called Zimbabwe Amalgamated Bank Group ( Z.A.B.G). This project failed dismally as the ownership dispute negatively affected investor and depositor sentiment.
Royal Bank Lawyers stated “Our clients have been advised that public statements, advising the bank’s customers, creditors, shareholders and other interested persons have been made to the effect that the bank is part of an institution known as Zimbabwe Allied Banking Group, whereas the correct position is that the legal requirements for the amalgamation of banking institutions as provided for in the Troubled Financial Institutions (Resolution) Act and the Banking Act have not at all been pursued. Requisite notices to former directors, creditors and shareholders have not been issued in terms of the Troubled Financial Institutions Resolution Act. No confirmation application has been made to a judge of the High Court as is required in terms of that Act. No amalgamation application has been made in terms of the Banking Act. Consequently, the highly publicized amalgamation of Royal Bank with any other bank is manifestly unlawful.
The Lawyers further stated that’s “ We are advised that notwithstanding the fact that no lawful amalgamation has taken place in terms of the law, advertising signs of Royal Bank have been removed from its premises and have been replaced by advertising signs of Zimbabwe Allied Banking Group. There is no legal basis whatsoever for this action at this stage. Former directors, shareholders, creditors and other interested parties have received no communication whatsoever regarding what is taking place. You have displayed a brazen and contemptuous disregard of their interests and the law relating to amalgamation of banks.
It was common cause that when the curator sold the assets of Royal Bank to the ZABG he did not act in terms of the Troubled Financial Institutions Act. It was also common cause that the transfer of Royal Bank’s assets to the ZABG was not in compliance with s 25(1) of the Banking Act which provides for the amalgamation of banking institutions.”
It is clear from the above that the Reserve Bank was acting beyond its powers and in the process Gono was breaking the laws. The recent decision to return the Banks only confirms that Gono is admitting to wrong doing for which he owes the affected Banks, the shareholders, employees and Directors a public apology for the humiliation and embarrassment he brought upon these once thriving institutions which are now mere ghosts of their former self.
These Banks were not alone in their unfair treatment. Nicholas Vingirai of Transnational Holdings had his Intermarket Banking Corporation seized and incorporated into Z B Bank Holdings, Century Bank was grabbed from Gilbert Muponda and ENG Capital and fraudulently merged with CFX Bank.
Whilst there is no independent study to verify the cost of such illegal Bank seizures it goes without saying that Zimbabwe’s Financial Sector was severely affected by these ill advised policies led by Gideon Gono. It is clear that whilst Gono has admitted failure by surrendering the Banks he still has to own up to his poor plan and strategy of stripping Banks from their owners. All these Banks ZABG ,CFX/Century and Intermarket Bank have failed to perform after being looted from their original owners. Gono must explain why he now finds it acceptable to hand over the Banks to the very same executives he accused of being a threat to “ National Security”.
This article appears courtesy of GMRI CAPITAL – www.gmricapital.com . It is original content generated for 3MG MEDIA.
Gilbert Muponda is a Founder of GMRI CAPITAL . He can be reached at; www.ZimFace.com and www.facebook.com/muponda
Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda
Twitter ; http://twitter.com/gmricapital
Phone: 1-416-841-5542
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