Whilst it may seem justice has finally been done by Gideon Gono’s admission of failure and returning ZABG (Trust Bank, Royal Bank, Barbican ) to its rightful owners there is need to do a proper analysis on why someone would grab an asset for over 5 years, use it and abuse it and then return it. This is not how a normal country should function.
In the High Court case Trust Holdings Ltd. v Reserve Bank of Zimbabwe and Others (67/05) [2005] ZWSC 36; SC36/05 (5 September 2005) ,it was made clear Gono was abusing his office and Authority and was possibly involved in unjust self enrichment schemes. These must be documented ,exposed and rectified where possible.
The court papers say “It was common cause that when the curator sold the assets he did not act in terms of the Troubled Financial Institutions Act. It was also common cause that the transfer of the assets was not in compliance with s 25(1) of the Banking Act, which provides for the amalgamation of banking institutions.”
Gono tried to justify asset looting and unjust self enrichment but the High Court said: “That submission cannot be accepted because the principal objective in placing a banking institution under the management of a curator is not to liquidate the institution but to enable it to become a successful concern. Accordingly, the curator’s power to sell any asset or branch of the banking institution concerned could only be exercised in order to achieve that objective.
… placing a banking institution under the management of a curator is akin to placing a company under a judicial manager, the principal objective being to remove the causes of the financial difficulties experienced by the company so that the company can function normally.
In addition, the proviso to 55(1)(g) of the Banking Act is significant. It states as follows:
‘… if at any time he (the curator) is of the opinion that continued curator ship will not enable the banking institution to become a successful concern, he shall advise the Reserve Bank accordingly. That … is a clear indication that the principal objective of the curator ship is to enable the banking institution to become a successful concern. Such an objective cannot be achieved by selling all the assets of the banking institution.”
How ever since Gono had a scheme to later on Privatize the ZABG by selling it to his fronts and cronies he tried to justify selling assets of banks under curatorship even when the High Court had ruled that selling such assets was contrary to the initial objectives of reviving the operations of the affected Banks.
It was clear Gono was abusing his office and breaking the law at will. This is part of the reason why Zimbabwe remains a very high risk investment destination. There is too much power concentrated in a few individuals hands .One such individual is Gideon Gono. This is the reason why he insists on staying on at the Reserve Bank of Zimbabwe even though this is putting the whole GNU Agreement on the line .
In the court pares it was noted that “Accordingly, s 55(2) of the Banking Act does not authorize a curator to sell all the assets of a banking institution. It follows that the curator acted unlawfully and that the sale and transfer of the assets of Trust Bank to the ZABG were null and void, and of no force or effect.”
Despite such a clear rebuttal by the High Court of Zimbabwe Gono proceeded to seize these Banks with a view to later on Privatize them by selling to related parties thus engaging in corrupt and self enrichment schemes. This plan was ideal and feasible when Gono could print Zimbabwe dollars at will and pump into these zombie banks he had created. However the dollarization of the Economy put paid to any such hopes since Gono could not and can not print US$ which are required to properly capitalize these banks. This forced Gono to hand over the banks to the original Entrepreneurs whom he had previously scandalized and criminalized whilst grabbing their assets.
It has been clear that all the looted Banks are finding it hard to recapitalize under the dollarized environment. Previously Gono as an interested party would just print more Zimbabwe dollars and keep these inefficient looted banks on life support aided by making profits from distributing Zimbabwe dollars into the black market. Now all that is gone so Gono has no choice but to hand over the Banks to their original owners.
All the looted Banks Trust, Barbican ,Royal , Intermarket and Century/CFX Bank are having a had time to remain viable .In addition they are failing to recapitilize due to the underlying ownership wrangles.
This article appears courtesy of GMRI CAPITAL – www.gmricapital.com . It is original content generated for 3MG MEDIA.
Gilbert Muponda is a Founder of GMRI CAPITAL . He can be reached at; www.ZimFace.com and www.facebook.com/muponda
Email: gilbert@gilbertmuponda.com . Skype ID: gilbert.Muponda
Twitter ; http://twitter.com/gmricapital
Phone: 1-416-841-5542
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