Harare — FORMER director of the now defunct ENG Capital Gilbert Muponda has ignited controversy over the merger, five years ago, between CFX Merchant Bank and Century Bank as it emerged he is seeking to recover shares he claims were fraudulently converted into the CFX Bank.

The businessman claims the merger was arranged to "hide the true nature" of the illegality of the transfer of ENG shares in Century, which he claims, prejudiced shareholders and creditors.

Muponda alleged that 309 million ENG shares in Century were disposed of in a special bargain sale, but the total number of shares that shareholders and creditors of the company lost was 900 million.

The shares in dispute were however, disposed of by ENG liquidator to pay the depositors. Muponda skipped bail three years ago and is believed to be in the United States.

He remains a specified person in Zimbabwe.

However, CFX through its lawyer Mr Chinake of Kantor & Immerman said the disposal of the shares was done above board.

He said Muponda's claim could not be legally enforced in court adding that any claims should be levelled against the liquidator of ENG. Had Muponda wanted to launch litigation, he should have done it within three years from the date, which his claims arose.

The transaction was done in 2004. Mr Chinake said in terms of the Prevention of Corruption Act, Muponda is not able to conduct any material transaction on his behalf in respect of any companies he has invested in.

He said the merger between Century Bank and CFX Merchant Bank was conducted in full compliance with the Companies Act, and was approved by the central bank and the Zimbabwe Stock Exchange.

All the necessary public documents were published to members and creditors and it is at this juncture that Mr Muponda ought to have made a claim. "He did not do so. The creation of CFX Financial Services following its curatorship was effected through a scheme of arrangement by the High Court.

There is, therefore, a court order sanctioning the current shareholding in CFX Financial Services," said Mr Muponda. The shares, which were sold by the liquidator were part of ENG assets sold to raise money to pay depositors.

ENG was the first financial institution to collapse following changes ushered in by the Reserve Bank of Zimbabwe in December 2003. The youthful directors of the company failed to pay investors their dues, prompting the intervention of the monetary authorities.

At its peak, ENG was one of the fastest growing financial institutions, but its world crashed when it was placed under liquidation.