The provisional judicial manager of the troubled Tetrad Investment Bank (TIB) has opposed a court bid by the holding company’s directors to dismiss him and maintains that the bank must be liquidated after failing to secure an investor to salvage the business.
The central bank last November suspended the bank from undertaking banking activities and extended its Scheme of Arrangement with creditors to January this year amid indications there was a $200 million capital injection being readied by Horizon Capital Consortium (HCC), reportedly made up of a Russian investor Sergey Pokusaev, the Zimbabwe government and other local investors.
However, after several creditors meetings and extensions, the bank’s shareholders have failed to present Pokusaev as requested by creditors, some of whom have expressed doubts over the Horizon rescue package.
A local representative of Horizon, Munyaradzi Kereke, attended a heated meeting in April where shareholders, led by chairman Harry Orphanides and acting managing director Eugene Mlambo pushed for the ejection of judicial manager Winsely Militala for recommending that the bank be liquidated.
During the meeting, Orphanides and Mlambo who Militala had suspended together with the finance executive, Ethel Chitanda, to facilitate investigations into certain transactions at the bank, called for his removal but were told that only the High Court had such powers.
Shareholders, represented by Miccah Moyo, chairman of Tetrad Holdings (Private) Limited last month applied for the removal of Militala from his position, challenging his reports which they said were inaccurate. They accused him of refusing to meet with the potential investor as well as demanding huge fees worth $144 000 for the work he had done since takeover last year.
However, in his notice of opposition, Militala challenged the application, which he said was improperly filed as Tetrad Holdings (Private) Limited was non-existent.
He also said the deponent, Moyo, had no board resolutions from the Holding company and Plus Financial, which owns TIB, authorizing him to make the application.
“In the absence of a supporting affidavit from Plus Financial to assure the court that Plus Financial is indeed a willing party, it is apparent that Plus Financial has been unwittingly dragged into these proceedings.
“Consequently, there is no application before the Court because First Applicant is a phantom and Second Applicant has not resolved to institute these proceedings,” he said.
Militala also said the omission to cite TIB, which is directly affected by the relief sought, was “fatal.”
Militala also challenged the applicants for failing to notify the central bank under whose ambit the bank falls.
“More importantly, the omission to cite and serve the Reserve Bank of Zimbabwe is also fatal to the application and the relief sought…..If the Provisional Judicial Manager of Tetrad Investment Bank is going to be replaced or changed in casu, it is critical for the RBZ to recommend the suitability or otherwise of the proposed Provisional Judicial Manager,” he said.
The application, he said, also failed to afford creditors an opportunity to be heard as they had an interest in TIB. Militala disputed the claims that he had failed to engage Horizon, saying that Mlambo and Orphanides were the only ones privy to the details.
“As the provisional judicial manager of TIB, I categorically state that I never refused to meet with the Horizon representatives before the creditors meeting. Rather, the local representative barred me from meeting with the actual investor,” he said.
Militala said Kereke communicated with him about a proposed meeting with principals in Government and upon enquiring about the details of the meeting, he was told an auditor would formally write to him and a meeting was set for April 15.
“The delegation did not pitch up for the meeting only to receive a letter way past the meeting time requesting various information in form of a due diligence inquiry. The letter also requested me to come and view a financial instrument in their custody,” he said.
Mililtala said in his subsequent correspondence he requested for the contact details of the investor and for him to personally attend the creditor’s meetings.
“It must be noted that I was advised by the investor’s local representative, BCA Consultancy in a letter dated 13 May 2015 that I have no business meeting with the investor and that I should “respect” the Non Circumvention Agreement in place,” he said.
Militala doubted the existence of the investor: “Quite curiously, the purported investor sent a ‘local representative’ who could not give concrete or certain answers to the creditors on when the transaction with the bank would be consummated.”
On the liquidation of the bank, he said his opinion was based on the information provided by management and employees.
“Going by the same records, it shows that the bank has continued to report significant losses since 2009 except for year ending 30 September 2011,” he said, adding that the bank started failing to meet its maturing obligations late 2013, a sign that it had serious solvency challenges and required urgent capital injection from shareholders.
Its assets are currently worth $42.7 million and liabilities $70 million.
“The bank should not be allowed to operate in this state henceforth. Several investment initiatives have been done already and have failed to consummate. The financial gap in my view is just as good as starting a fresh bank,” he said.
“I submit that I have not demonstrated gross negligence in my dealing with the Horizon investment. It is in my best interests to ensure that the bank is turned around if a valid and bankable proposal is presented but it would not be in the interests of justice to continue to erode the minimum that can be salvaged for all stakeholders in the current situation by letting the bank continue to bleed profusely.”
Militala said the application to remove him was motivated by emotions of vengeance.
“It is a manifestation of a personal grudge possibly due to the detailed contents of my report which exposed the mismanagement that was occurring at the Bank,” he said.-The Source
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