13 February 2013

Zimbabwe: Civil Servants, Investors Lose U.S.$2 Million

THOUSANDS of civil servants and investors lost nearly US$2 million to a money lending firm that went bust. Befus Savings and Credit Co-operative Society, which had a stop order facility with the Salary Services Bureau, reportedly collected millions of United States dollars from investors.

The investors were promised a 10 percent monthly return on their investment. This money would then be lent to civil servants at a high interest rate. However, the firm is failing to refund the investors and civil servants who had funds deducted from their salaries long after they had cleared the debts.

Befus collected over US$4,6 million from investors.

The High Court has since placed the company under the judicial management of Dr Cecil Madondo of Tudor House Consultants Private Limited.

Some civil servants claim that the firm at times deducted more than was due, throwing them into financial problems.

Dr Madondo yesterday said he had instructed the SSB to stop deducting people's funds pending an assessment of the firm's operations.

"What the victims are saying is true and the company was placed under judicial management in terms of High Court order H.C 10429/12," he said.

"We are in the process of preparing a detailed statutory report in terms of the Companies Act Chapter 24:03. We have to establish, among other things, whether the interest rates Befus was charging were in terms of the law.

"The report will contain an account of the general state of the affairs of the company and the reasons why the company is unable to pay its debts or is probably unable to meet its obligations."

He said the report would contain a statement of the firm's assets and liabilities and its list of creditors.

It would also include contingent and prospective creditors while the amount of each creditor's claim would be part of the report.

"All creditors should contact our offices so that they collect and complete claim forms in preparation of the first meeting of creditors and shareholders, scheduled to take place at the office of the Master of High Court on a date to be advised," Dr Madondo said.

Befus treasurer Mr Takecare Nyabanga said those owed would be refunded.

"We are under judicial management, but we are in the process of refunding," he said.

Those affected said some investors even sold houses expecting to make "quick money."

"Some people and even companies invested large sums of up to US$200 000 and they used to get something like US$20 000 per month," said Mr James Mazonde.

"Some had sold their assets like houses but the company abruptly stopped paying the interests and failed to give them initial deposits."

Another victim, who is a teacher, said his money was deducted after he had completed servicing his loan.

"I took US$500 from Befus and they were deducting US$100 per month.

"I paid everything for the months we had agreed, surprisingly they are still deducting it," he said.

Zimbabwe Teachers Association chief executive Mr Sifiso Ndlovu warned members against being part of such schemes without verifying their authenticity.

"There is nobody who comes to help for nothing and we have seen many people falling prey to bogus schemes," he said.

"Civil servants are vulnerable because of low salaries and they end up being exploited but the best for them is to always verify the authenticity of the schemes."

For a union or co-operative to get a deduction facility, it has to apply to the SSB for approval.

The company is given a deduction code when it meets specific requirements.

The deduction code and stop order form signed by the State employee is used to effect deductions.

The Usury Act controls the deductions and one cannot deduct over 30 percent of an employee's salary.

Thousands of civil servants were last year left in the lurch when an organisation that initiated a nationwide grocery scheme allegedly swindled them of their money.

Corporate Stationers, deducted US$10 from each civil servant who joined the scheme on the pretext that they would deliver 20kg rice, 20 litres cooking oil, 20kg sugar, 5kg sugar beans and 24 bars of soap after every three months.

The company, however, gave the members 20kg rice six months after the beginning of the scheme.

Hundreds of civil servants, most of them teachers, were allegedly duped of their cash by a housing trust which has been deducting money from their salaries after promising them residential stands.

The trust is allegedly owned by Harare-based businessman and musician Energy Mutodi and was operating under the name Zim Trust Housing Finance.

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