THE judge who last week ordered the final winding-up of the Small and Medium Enterprises Bank has described the technical points that the minority shareholders of the bank raised in an attempt to prevent the closure of the bank as a game of smoke and mirrors.
Apart from the technical points raised by the SME Bank's Zimbabwean minority shareholders, the Metropolitan Bank of Zimbabwe and Worldeagle Properties, the two advanced very few substantive reasons to show why a final order for the winding-up of the bank should not be granted, judge Hannelie Prinsloo said in her judgement on the Bank of Namibia's application to have the SME Bank closed.
The two shareholders were "paying lip service to how they imagine the SME Bank can be rescued from its dire straits, but propose no plan of action to do so", judge Prinsloo stated in her judgement, which became available yesterday.
She also remarked that it was "astounding" that the two shareholders were denying that the SME Bank was insolvent from a liquidity point of view, bearing in mind that when she gave the provisional order for the bank to be wound up, its liquid assets had dwindled to a meagre N$3,8 million.
The two shareholders also only paid lip service to a willingness to recapitalise the SME Bank, while the bank's majority shareholder, the Namibian government, has indicated in no uncertain terms that it would not inject additional money into the failing financial institution, judge Prinsloo noted.
The Metropolitan Bank of Zimbabwe and Worldeagle Properties hold a 35% stake in the SME Bank, while the Namibian government, through the Namibia Financing Trust, owns 65%.
With the two Zimbabwean shareholders' efforts to stave off the final winding-up of the SME Bank having failed in the High Court last Wednesday, one of their lawyers, Sisa Namandje, has informed the bank's liquidators, Ian McLaren and David Bruni, in a letter that his clients have instructed him to appeal to the Supreme Court against judge Prinsloo's decision.
Judge Prinsloo also noted in her judgement that the Bank of Namibia requested the SME Bank's shareholders in writing, at the end of May, to inject additional capital of N$359,1 million into the bank.
That was not done, though, and even the promised repayment N$188 million from a South African company, Mamepe Capital, with which the bank had supposedly invested close to N$200 million, would not have been sufficient to meet the bank's capital requirements, she said. Undertakings from Mamepe Capital that repayments totalling N$188 million were to be made to the SME Bank by the end of September have come to naught.
Judge Prinsloo also noted that Namibia's National Energy Fund has called up an investment of N$368,4 million that it placed with the SME Bank, while the Government Institutions Pension Fund called up an investment of N$100 million shortly before the provisional winding-up order was granted in July.
If regard was given to the bank's factual circumstances, which did not change much since the granting of the provisional order, it was clear that "the bald statements and allegations" made by the two minority shareholders were untenable, she stated.
There did not appear to be an actual dispute of facts on the merits of the matter, and the technical objections raised by the two shareholders "indeed appear to be a game of smoke and mirrors", she said.
"There is still no doubt in my mind that [the] SME Bank is still commercially and factually insolvent, and will be unable to honour its commitments to its investors," judge Prinsloo said.
She remarked that she was not convinced of the good faith of the two shareholders, and that they contributed unnecessarily to the ballooning of the volume of documents in the case before her. Judge Prinsloo ordered the two shareholders to pay the Bank of Namibia's legal costs in the matter.
Namandje and South African lawyer Anthony Bishop represented the two Zimbabwean shareholders.
Senior counsel Andrew Corbett, assisted by Deon Obbes, represented the Bank of Namibia on instructions from Charles Visser of the law firm LorentzAngula Inc.