Royal Bank Zimbabwe Limited (Royal) liquidator Cecil Madondo is facing a legal challenge from the bank's creditors for failing to "take care of their interests" by selling the institution's assets for a song.
This comes as the Deposit Protection Corporation (DPC) agent has disclosed that the $3 million realised from the sale of assets, including cars and land holdings countrywide, would mainly cover liquidation costs following the bank's collapse in 2012.
While Madondo would not say much on the liquidation process - except to say proceeds would also be channelled towards staff retrenchments – a groundswell of discontent is brewing among creditors who feel he is not doing enough to "help their situation".
"The liquidator sold moveable assets with a book value of $2,1 million for $95 000. This represented less than one percent of… book value.
"The assets, included 20 motor vehicles - some of them Ford Rangers that were less than three years old - were auctioned for $700. The
Liquidator made no effort to raise more money by asking for a "reserve" price as is done by other auctioneers," said a draft affidavit seen by businessdaily.
"…made no effort to preserve (the bank's) records… and refused to pay the software developers fees for extracting… from the servers before the (equipment) was sold," it said, adding Madondo has instead sought to lay the blame on Royal's executives.
According to bank officials, Royal had a $9,6 million asset book - comprising properties worth $6,3 million, equipment of $2,1 million and loans of $1,2 million - enough to pay off creditors and depositors.
But since taking over, Madondo's liabilities have inexplicably shot to $12 million when part of his mandate should have been to freeze claims.
These liabilities include staff costs of $3 million - yet salaries had been paid until the time of the bank's closure - and which revenue could have gone to creditors.
With more assets yet to be sold and creditor disbursements beginning in March, the liquidator also faces some questions on the $2 million valuation of about 31 commercial and residential properties, which have book and market value of $6 million, $9 million, respectively.
"The liquidator has failed to protect creditors' interests… and intentionally lost value," the pending court challenge said, adding Madondo could not give a plausible answer about some assets, which were missing on the creditors' list or register.
As such, the creditors want the DPC man removed and the auctions reversed or nullified "for a proper process, if not private sales to be conducted for the benefit of suppliers".
Kicked out of David Whitehead and Merspin Limited, Madondo also faces questions about why he proceeded with the Royal auctions after a recent Supreme Court appeal against the liquidation process.
Some of the bank's creditors include Fidelity Printers and Refineries, Harare Produce Sales, Hwange Colliery Employer Programme Fund and Funeral Account, and the National Railways of Zimbabwe contributory pension fund.
- dailynews
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