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NSSA general manager Mr James Matiza gives oral evidence before the Parliamentary Portfolio Committee on Public Accounts yesterday flanked by Secretary for Public Service Mr Ngoni Masoka, NSSA investments director Mr Shadreck Vhera and NSSA finance and administration director Ms Memory Mukondomi

Zvamaida Murwira Senior Reporter
Former Finance Minister Tendai Biti allegedly abused his position to direct the National Social Security Authority to sink US$20 million into troubled Capital Bank (formerly Renaissance Merchant Bank) despite indications that the project was not viable, legislators heard yesterday.
NSSA general manager Mr James Matiza told the Parliamentary Portfolio Committee on Public Accounts that they turned away two attempts by Renaissance Financial Holdings Limited’s major shareholder, Mr Patterson Timba — brother to MDC-T secretary for external relations Mr Jameson Timba — to get the authority to invest in his project.

Mr Matiza was responding to findings by the Comptroller and Auditor-General Ms Mildred Chiri in her 2012 report, which unearthed several irregularities in NSSA’s financial affairs.

Mr Matiza said NSSA eventually invested US$30 million in Capital Bank after Mr Biti directed the authority to bail out the troubled institution.

“In order to maintain stability in the banking sector and to prevent bank failures similar to those of 2003-4, Cabinet has proposed that it is in the national interest for NSSA to invest an amount of about US$20 million in Renaissance Merchant Bank,” wrote Mr Biti in a letter dated May 16, 2011.

However, Mr Sam Sipepa Nkomo, who was Water Resources Minister in the inclusive Government, yesterday called out Mr Biti saying there had never been any such Cabinet decision.

“I was not a loafer in Cabinet. I do not remember that issue coming to Cabinet,” said Mr Sipepa Nkomo.
Contacted for comment, Mr Biti initially denied writing the letter Mr Matiza gave to legislators yesterday.

“He (Mr Matiza) must have been drunk. That must have been a fraudulent letter. I do not communicate through the general manager, but the parent minister. I know the law. I reported this to Cabinet and it was resolved that Government should keep out of Renaissance and NSSA should use its discretion whether to go in or not,” said Mr Biti.

Mr Biti latter called The Herald seeking to withdraw his earlier comments disowning the letter.
“I cannot confirm a letter on events that occurred three years ago unless I have seen it to establish if it has my signature. What I can categorically deny is that we influenced NSSA to go into Renaissance.

“NSSA took its own decision after realising that they were getting Afre shares for a song and so they were satisfied with the deal.
“The whole thing was done by the curator, NSSA, and the Reserve Bank of Zimbabwe,” said Mr Biti.

Former NSSA board chair Mr Innocent Chagonda, who was an advisor to MDC-T during inter-party talks that led to the formation of the inclusive Government, confirmed seeing the letter but said the authority did not act on it.

“We did not go into Renaissance Merchant Bank pursuant to that letter. We went there after we were satisfied that it was a viable project after we received a presentation from (Mr) Regis Saruchera, the curator,” he said.

Mr Matiza told Parliament that Mr Timba first approached NSSA to loan RFHL against Afre (now First Mutual) shares but the proposal was declined resulting in him returning with another offer.

“He gave us a story that there were German investors who were willing to put US$140 million into RMB on condition that a local investor puts some money to stabilise the bank,” said Mr Matiza. That proposal was also shot down, he added.

He said it was then that they received the letter from Mr Biti.
“Now this is what changed the whole thing. The curator was aware of this. He asked for a presentation to the whole board. During his presentation he said if you invest US$24 million the bank will turn around, you will make profit,” he said.

Lobengula MP Mr Sam Sipepa Nkomo (MDC-T), a member of the Parliamentary Committee, asked why Mr Matiza took instructions from someone who was not his line minister.

Mr Sipepa-Nkomo asked when Mr Matiza would resign for failing to apply due diligence by going into a venture he knew was akin to sinking millions of pensioners’ funds into a bottomless pit.

Hurungwe North MP Cde Reuben Marumahoko (Zanu-PF) concurred, saying Mr Biti should have written to the parent ministry as Finance Minister Patrick Chinamasa did last week.

Minister Chinamasa wrote to his Public Service, Labour and Social Welfare counterpart Nicholas Goche asking him to “persuade” NSSA to pay off Capital Bank depositors’ US$40 million.

If NSSA pays the money, this would see the authority’s exposure to Capital bank surging from US$39 million to US$106 million.
Breaking down the US$24 million that he said Mr Biti directed them to pour into Capital Bank, Mr Matiza said US$8,4 million was conversion of NSSA deposits in RMB to equity, US$5,9 million was assumption of an Econet debt by RFHL, and a cash injection of US$9,8 million resulting in the authority acquiring an 84 percent stake in the institution.

He said US$9 million was for new business while collections from the debtors’ book of US$49 million would be directed to settlement of old depositors’ dues.

“Explanation was given that the bank failed to collect money owed by debtors (and) therefore started using funds injected by NSSA to pay old depositors,” he said.

After the US$9million was chewed up, the bank returned to NSSA for another request for money, which was granted to the tune of US$19,9 million through money market investments.

He said after it became clear that Capital Bank could not be turned around, a meeting of all stakeholders agreed to wind up the bank where, after disposal of assets, there was a shortfall of US$4,5 million.

When subsequently asked to present a winding up position, Capital Bank management presented figures with a shortfall of US$13,2 million, meaning that within five months the bank’s funding gap had worsened by 193 percent.

This, he said, prompted NSSA to insist on a liquidation route where creditors would share what was available.