21 September 2017

Zimbabwe: Court Annuls NSSA Bank Takeover

The High Court yesterday nullified transactions made by three former Renaissance Financial Holdings Limited (RFHL) directors after they were fired in 2012, effectively reversing the National Social Security Authority (NSSA)'s controversial acquisition of the financial institution.

High Court judge, Justice Owen Tagu, declared that the RFHL board of Christopher Chetsanga, Collin Kahuni and Monica Mukonoweshuro had been "validly dismissed from their directorship" of RFHL at an extraordinary general meeting (EGM) of January 25, 2012.

He ruled that any business the three had "purportedly undertaken" on behalf of RFHL soon after the EGM was "null and void and of no force and effect".

Chetsanga and his board had, soon after their dismissal by shareholders, signed off agreements facilitating the takeover of RFHL by NSSA, which had targeted a cache of assets held by FMHL, whose assets are valued at $248 million, according to the company's latest balance sheet.

FMHL has interests predominantly in the insurance sector.

The ruling will affect NSSA's acquisition of FMHL, which was on the basis of its assumption of a controlling interest in RFHL.

NSSA has a 51,33 percent stake in FMHL, followed by Capital Bank Corporation Limited, which has a 20,08 percent shareholding.

Capital was a unit of RFHL which had been rebranded from Renaissance Merchant Bank.

The judgement, made after the case had been referred back to the High Court by the Supreme Court following an appeal by NSSA of an earlier judgement, is likely to tear up the planned takeover of short-term insurer, NicozDiamond, by FMHL).

FMHL's planned takeover of NicozDiamond, majority-owned by NSSA, was voted for by shareholders at EGM held over a fortnight ago.

Patterson Timba, who controlled RFHL before NSSA's takeover, had apparently warned NicozDiamond and former majority shareholder, Zimre Holdings Limited, against the transaction, arguing that it could be embroiled in a shareholder dispute that was at the courts.

Timba, then RFHL's chief executive officer, appeared vanquished after allegations of delinquency at RFHL's subsidiary, RMB that resulted in the financial institution being placed under curatorship.

The Reserve Bank of Zimbabwe cleared Timba a few years ago.

Timba declined a request for comment, referring enquiries to Thabani Mpofu, the advocate who was instructed by his lawyers in the case.

Mpofu was not answering calls to his number and had not responded to messages left at his offices.

Observers are likely to watch how NSSA's board chairman, Robin Vela, will react to the judgement, considering that he has been very critical of the executive that ran NSSA when the deal was made.

Vela, who was appointed to the NSSA board in 2015, sacked several NSSA executives, including former general manager, James Matiza.

The executives were accused of mismanagement and graft, which resulted in poor investments that drained the pension fund.

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