DPC sues failed banks' executives

DPC sues failed banks' executives
Published: 02 August 2017
THE Deposit Protection Corporation (DPC) has started taking legal action against shareholders and directors of banks whose institutions failed due to poor corporate governance.

DPC chief executive officer Mr John Chikura said this in Bulawayo yesterday while responding to questions from the floor during a workshop to create awareness on the operations of the Deposit Protection Scheme run by the corporation.

"You will notice that we have recently started doing this (suing of shareholders and directors) and the cases are now before the Courts. The hearings are yet to commence but we are confident we will win," he said.

Eight banks collapsed in recent years due to alleged lack of corporate governance and corruption among other issues and these are AfrAsia Kingdom (formerly Kingdom Bank), Tetrad, Royal Bank, Interfin Banking Corporation, Trust Bank, Universal Merchant Bank and First National Building Society.

In an interview after the workshop, Mr Chikura said the DPC has since issued summonses to shareholders and directors of Royal Bank, Trust Bank and Interfin while others were being worked on.

"Summonses have already been issued against these banks and the cases are waiting to be set down," he said.

The DPC is an independent statutory body established by Government in terms of the DPC Act (Chapter 24:29) to administer the Deposit Protection Scheme.

Among other benefits, the DPC guarantees compensation up to the cover limit for eligible deposits in the event of a bank failure.

The deposit protection also reduces chances of panic withdrawals and bank runs thereby contributing to the stability of the financial sector and overall economic growth.

The corporation began operating on July 1, 2003 and is headquartered in Harare. The corporation has also opened a regional office in Bulawayo to service the southern region.

Asked why it was seemingly taking them long to issue summonses to shareholders and directors of collapsed banks the DPC boss said: "What happens is that when a bank is closed, first of all we will not have any information on how the bank was run. When the bank is closed we move in and the process of moving in to a bank that has been closed takes time.

"For example, in many cases you will find out that their Information Technology (IT) system doesn't work anymore because they would have failed to pay their subscriptions.

"The supplier of the IT system would have shut them out so we have to start negotiating with the IT system supplier in order for them to give us access to the system and that takes time."

Mr Chikura said it was also taking them long to resort to legal action against shareholders and directors of the failed banks because DPC needed to first commission a forensic audit.

"We also need to take action that is informed by forensic audit in other words you need to commission a forensic audit. That process takes time to get a forensic done and then to get a lawyer to look at what has come out of that report to see whether there is a case for the directors of that bank," he said.

He said court processes also take long to conclude.

In his address, Mr Chikura bemoaned the collapse of indigenous banks which he blamed on corruption and greediness.

He said in most cases depositors' money was abused by banks' directors.

The Reserve Bank of Zimbabwe has also blamed poor corporate governance for the collapse of many banking institutions.
- the herald
Tags: DPC,


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