Ex-CFX workers challenge merger

Ex-CFX workers challenge merger

By Martin Kadzere

FORMER CFX Bank workers have taken steps to reverse the merger of the financial institution with Interfin Banking Corporation.

The retrenched workers wrote to the Registrar of Banking Institutions through their lawyer objecting the amalgamation which they said was done before outstanding staffing issues were resolved.

Interfin gained a controlling stake in CFX late last year after underwriting its US$10 million rights offer, which drew a 1,98 percent response from the existing shareholders.

This resulted in the reverse takeover of CFX by Interfin and the latter was subsequently listed on the Zimbabwe Stock Exchange in April.

However, nearly five months after amalgamation, 61 former CFX employees want the merger undone until some outstanding legal issues are finalised.

The former workers also want clarity on why the transaction was deemed a merger when in fact it was a take over of CFX under which the merged institution had an obligation to assume CFX assets, liabilities and staff.

"Our clients are extremely concerned about the fact that the Memorandum of Agreement by Interfin and CFX Bank Limited is dead silent on the fate of CFX Bank Limited employees who had been targeted for retrenchment," reads part of documents lodged with the Registrar of Banks by the workers’ lawyers Matsikidze and Mucheche Legal Practitioners.

"To the extent that the MoU between Interfin and CFX is mute on the status of CFX employees earmarked for retrenchment, the agreement which gave rise to the merger is a legal nullity.

"Our clients are of the firm and immutable view, and rightly so in our view, that the merger is no more than a gimmick to eliminate all CFX Bank employees earmarked for retrenchment via the back door without compliance with the mandatory provisions of the Labour Act.

"The merger of the two banking institutions inflicts grave violence to the provisions of the Labour Act which enshrines the rights of employees on transfer of undertaking in that the MoU is silent on the rights of the employees particularly (those) who had already been served with notices of intention to retrench.

"It is our considered view that the merger of the two banking institutions is in fraudulem legis in that it fails to guarantee the rights of the employees on transfer of undertaking as embodied in the Labour Act," read the document.

Interfin managing director Mr Raymond Njanike, however, said the move by the former workers was a "misguided approach" as there was no basis for putting the merger on hold.

"These are shareholders issues and how then does a worker block the merger and what are the merits?" asked Mr Njanike.

"The purpose was to save these two institutions from collapse and we had blessing from all regulatory authorities. It is a circle and if things improve, we will recall them."

CFX approached Interfin after the Finance Bank of Zambia aborted plans to inject fresh capital into the financial institution on fears of litigation threatened by former ENG director Gilbert Muponda, whose subsidiary Century Bank merged with CFX in 2004