THE Minister of Macro-economic Planning and Investment Promotion, Obert Mpofu, has been slapped with a $16 million lawsuit for failing to surrender immovable assets to the liquidator of his now defunct Allied Bank Limited. The assets were part payment of the subscription for the 1, 243, 797, 496 ordinary shares in the capital of Allied Bank at a subscription price of $22,5 million.
Allied Bank Limited was in February this year placed under liquidation. This followed the cancellation of its operating licence by the Reserve Bank of Zimbabwe in January this year after it became clear that the financial institution was grossly undercapitalised and faced chronic liquidity challenges.
The Deposit Protection Corporation (DPC) was appointed Allied Bank Limited liquidator. The DPC is an autonomous statutory body formed in 2003 by the government through the Deposit Corporation Act to administer the Deposit Protection Fund and compensate depositors in the event of a bank’s closure.
According to the summons filed at the High Court in Harare, Trebo and Khays (Private) Limited, Minister Mpofu, his wife Sikhanyisiwe, Khanondo Safaris and Tours (Private) Limited and Moya Security (Private) Limited — are listed as defendants.
Minister Mpofu and his wife own the three companies. The court papers show that in April this year, Trebo and Khays undertook a contractual obligation to transfer to Allied Bank five properties in Bulawayo and one in Harare. The six properties, according to the court papers, have a combined value of $16,790,000 in terms of the subscription agreement between the company and the bank.
The second to fifth defendants represented by the second (Minister Mpofu) and third (Sikhanyisiwe) undertook on or about April 5, 2012 to transfer to Allied Bank Limited (in liquidation) the properties registered in their names… hereto in part settlement of the first defendant’s contractual obligation to pay the subscription price as aforesaid,” read part of the summons issued on September 2 this year.
In breach of the agreement, the DPC says Minister Mpofu has refused to surrender the properties prompting the claim against him. Before its closure, Allied Bank had widened its losses to $4,2 million in the six months to June 2014 from $2,4 million recorded in the same period in 2013 due to a decline in operating income and a spike in interest expenses.
The DPC has the capacity to pay off Allied Bank’s depositors up to the maximum insured limit of $500 per depositor per account and any balances above $500 will be recompensed through the liquidation process upon realisation of assets. About $1,3 million is expected be paid to Allied Bank’s depositors as deposit insurance payments.
Payments to depositors will be done through mobile phone transfers, cash and bank transfers. Allied Bank was a member of the Deposit Protection Scheme as membership is mandatory for any banking institution registered in terms of the Banking Act (Chapter 24:20) and the Building Societies Act (Chapter 24:02).
It was the sixth bank to have its licence cancelled by monetary authorities since the adoption of the multi-currency regime in 2009. The others are Royal, Genesis Investment, Trust, Interfin and Capital banks. The DPC has engaged seasoned lawyer Sternford Moyo of Scanlen and Holderness to represent it in the dispute that has spilled into the High court.
Minister Mpofu is still to respond to the summons.