Zimbabwe’s cash-strapped government is set to lose nearly $600 000 which is locked up in Allied Bank — majority owned by transport minister Obert Mpofu — while municipals and other state departments are owed over $2.5 million following its collapse early this year, with chances of recovering all the money slim.
The Reserve Bank of Zimbabwe in January cancelled the bank’s operating licence as it was no longer in a safe a sound condition.
According to the bank liquidator’s interim report, the financial institution collapsed due to, among other factors, negative core capital, illiquid toxic assets, management shortcomings, gross undercapitalisation, persistent losses, abuse of depositors’ funds, high volume of non-performing loans and bad corporate governance.
Claims presented during a meeting at the High Court recently, show that government ministries, parastatals and municipalities are among creditors owed by the bank.
The indigenisation ministry is owed $333 491 while the education ministry is owed $228 760.
Government parastatals and municipalities whose funds are also locked in the bank include Bulawayo City Council which is owed $495 000; City of Gweru $5 000; NRZ Pension Fund $25 000; TelOne $2 000; National Social Security Authority $807 000 and the Zimbabwe Revenue Authority $1.2 million.
The bank, which emerged from the ashes of the Zimbabwe Amalgamated Banking Group – was created by the central bank in 2004 to warehouse the assets of three troubled banks.
When the High Court approved the bank’s liquidation in February, its assets were recorded at $25.8 million while liabilities stood at $34.4 million.
However, according to the law, statutory bodies and secured creditors are paid in full once assets of a company being liquidated are sold while the rest are paid on a pro-rata basis.
“…liquidation costs are paid first, and then the residue is distributed in order of the following preferences – secured creditors, preferent creditors and the balance is lastly paid to the concurrent creditors (unsecured),” read a report to creditors by the liquidator’s agent, Cecil Madondo.
The report however, did not list the government ministries as secured creditors, making it highly possible that they will lose some of the money depending on the amount realized from the sale of the bank’s assets.-The Source
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