ZIMBABWE'S capital markets regulator says investigations into a fraud storm involving FBC Holdings and one of its majority shareholders over a disputed US$3,4 million in management fees and allegations of overstating financial statements by over US$10 million will be finalised once Turnall plays ball in the probe.
Noel Hayes, an investor in FBCH and Turnall Holdings, through his investment vehicle LHG Malta Holdings, is also accusing FBCH of "misrepresentations, fraud and material non-disclosures", which resulted in his suffering serious financial prejudice.
Documents show Hayes is accusing FBCH, which controlled a significant stake in Turnall before disposing of its 58% equity, of violating the Securities Act and Zimbabwe Stock Exchange listing requirements. As a result, he is demanding over US$1 million in compensation.
Securities and Exchange Commission of Zimbabwe (SECZ) chief executive Tafadzwa Chinamo told the Zimbabwe Independent this week that Turnall was yet to furnish the commission with a report over the issue. In February this year, Chinamo told Hayes' legal representatives that investigations were ongoing. FBC dismissed Hayes' claims saying he should take his matter to the courts.
"There has been little scope for us to do much. We have asked FBC to respond to the allegations and they have given us their report. We have also asked Turnall for their report and we are still waiting for that report. Once we get everything, then we will finalise the case," Chinamo said in an interview.
FBC Bank, the flagship unit of the financial services group, in 2010 acquired 58,32% equity investment in Turnall through realisation of pledged security on a non-performing loan. After restructuring, the bank eventually held 10,42% shareholding of Turnall with the remainder being held by the group.
SECZ is investigating the allegations which pose a serious reputational risk to the bank.
LHG, a Maltese-domiciled company, became one of the majority shareholders after it bought significant shareholding in Turnall held by FBCH. The banking group had a management contract with Turnall. The National Social Security Authority is the majority shareholder in FBCH.
After acquiring a major stake in Turnall, LHG got a seat on the manufacturing firm's board.
However, the deal later went sour. Hayes said afterwards he discovered fraudulent activities by FBCH and Turnall. This led to the current fallout. In the aftermath of that, Hayes unleashed his lawyers on FBCH.