Royal Bank directors face prosecution?

Published: 07 June 2015

Royal Bank Zimbabwe Limited (Royal)'s directors could face prosecution after the defunct institution's creditors on Wednesday approved a plan to institute legal proceedings against the ex-board for abusing depositors' funds.

However, this comes as liquidator Cecil Madondo also faces his own questions about undisclosed consultancy fees, allegations that he will take a lion's share of the wind-up proceeds and that he sold assets worth $9 million-plus for $3,5 million.

As Madondo has allegedly refused to "present sales records and what assets were available for sale", creditors authorised the Tudor House Consultants (Tudor) boss to institute legal proceedings against the bank's 11 directors, in accordance with chapter 24:03 of the Companies Act.

The group includes Jeffrey Mzwimbi, Durajadi Simba, Michael Tapera, Chakanyuka Karase, Matthew Wazara, Hardwork Pemhiwa, Peter Chikumba, Sandra Roberts, Adries Kloppers and Tatenda Munakira.

However, another creditor said "assets were sold at give away prices when creditors could have realised more if the auction had been conducted professionally".

"He proposes to recover the balance from directors when according to his own records the directors are owed over $2 million by the bank and how can a group owed that much act in a manner that sinks its own bank?" she asked.

The bank surrendered its licence in 2012 after it had been deemed unsafe by the Reserve Bank of Zimbabwe (RBZ).

At yesterday's meeting, some creditors also tasked Madondo "to liquidate any holding company, associate or companies related to Royal or the former directors to recover funds owed to depositors and creditors".

The resolutions, which were passed before the High Court master, will see the liquidator demanding about $8 million from the former board with an interest of 10 percent annum and other charges.

Tudor is also expected to compile a forensic report for the courts on the director's alleged misconduct. While many would want to follow the legal route, others are worried that the prosecution would drag for long.

According to Madondo, the estimated realisable value of the bank's assets is $3,3 million against liabilities of $9 million - largely emanating from demand deposits, term deposits, guarantees, trade creditors, outstanding wages and statutory obligations.

According to the liquidator's report presented at the meeting, Mzwimbi and Simba obtained a $200 000 overdraft facility in May 2012 for their Lockhart Scott (Private) Limited, among other things, yet the facility was not presented for board approval.

Madondo said if all went according to plan, Royal employees would be paid their dues by mid-May.
- dailynews

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