A DEAL is a deal. That was the bitter lesson a Bulawayo company that tried to capitalise on high interest rates offered by a troubled bank learnt when its funds totalling $541 million were frozen after the bank was placed under curatorship.
Farmcor invested a total of $541.8 million with Trust Bank between September 14 and 21 last year. The money was expected to mature on September 24 and September 28, but the bank was placed under curatorship on September 23 after all attempts to keep the bank afloat had failed.
Trust Bank reportedly owed the central bank $1.5 trillion that had been ploughed into the troubled financial institution under the central bank’s Troubled Banks Fund.
Farmcor wrote to the curator, Peter Bailey, on September 24 seeking authority to withdraw $350 million to enhance its viability but was told that the curator was unable to release any funds for a minimum of six months.
Not happy with the curator’s response, the company wrote to the Ministry of Finance, Economic Planning and Development on October 5 but did not receive any response.
The company took the curator, the Reserve Bank of Zimbabwe and the Ministry of Finance to court seeking an order to have the funds released, but had the case thrown out.
Justice Nicholas Ndou said Farmcor was no different from any other creditors. From its application, Farmcor had demonstrated that it relied a lot on press statements in the media, Justice Ndou said.
It had been apparent from way back in December 2003 that Trust Bank was a troubled bank. As a reasonable depositor, Farmcor should have weighed the risk of leaving such a large sum of money in a troubled bank.
What was also interesting was that all the deposits had been made within 10 days of the bank being placed under curatorship.
The first deposit of $5.4 million was made on September 14 and was expected to mature on September 28. Two deposits, one for $105.9 million and the other for $160.9 million, were made on September 17 and were expected to mature on September 24.
The last deposit of $269.7 million was made on September 21 and was expected to mature on September 28.