DPC pays 220 Trust depositors

Published: 28 March 2014

The Deposit Protection Corporation has so far paid 220 Trust Bank Limited (Trust) depositors following closure of the financial institution last December.

However, the compensated account holders represent only eight percent of the total 2 958 who had their money locked up in the bank.

This comes as DPC defied a petition by Trust - through its attorneys Gwaunza and Mapota Legal Practitioners - to hold off the compensation process after it lodged an Administrative Court appeal against its closure.

John Chikura, DPC's chief executive, argued that his institution was acting in line with its mandate "to compensate depositors in full or in part... in the event of insolvency of a contributory institution".

DPC pays out a maximum insurable amount of $500 to each depositor.

"Before the creation of DPC, there was uncertainty about how and when depositors will be compensated in the event of a bank failure.

The existence of a deposit protection fund ensures that depositors are assured of their payments in the event of bank failure," said Chikura at the World Consumer Rights day commemorations held last week.

Trust lodged an Administrative Court appeal challenging revocation of its operating licence on January 7 and successfully challenged regulatory authorities in the High Court for the postponement of its liquidation process by the Reserve Bank of Zimbabwe (RBZ), and its agents.

In its petition to DPC, Trust said "the court still has to give an order either confirming you as the final liquidator or setting aside the provisional order," adding that "your (DPC) powers are therefore limited to the terms of the provisional order given by the HighCourt."

Trust ordered DPC to retract "the call to depositors to claim compensation pending finalisation of the High Court proceedings and hold off disposing of any of the bank's assets in whatever form."

Before revocation of the bank's licence, Mining, Oil and Gas Service - a subsidiary of the cash-rich Royal Bafokeng Holdings -- was seeking government approval to construct a fuel pipeline linking Beira and three southern African countries through Zimbabwe as part of a deal to invest in Trust.

The transaction talks, however, hung in the balance after the central bank cancelled Trust's licence arguing the institution was financially unsound while it also failed to operate in line with set administrative and accounting practices.

Last year, High Court judge Loice Matanda-Moyo placed Trust under provisional liquidation in terms of the High Court Order HC 10703/13. She ordered the institution to provisionally wind up, paving way for liquidation.
- dailynews

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