Interfin directors face  legal action Farai Rwodzi
Farai Rwodzi

Farai Rwodzi

Business Reporter
Interfin Bank directors have been accused taking advantage of the bank’s curatorship period to hide assets and placing some of their companies under judicial management to avoid legal action for insider loans worth $90 million.

Interfin liquidator agent Mr Ngoni Kudenga of BDO Zimbabwe last week told the bank’s creditors that they have been facing challenges in collecting the bank’s debts as some of the debtors took advantage of the two year curatorship to hide their assets.

“We have an institution which was owned 60 percent by three players, Mr Farai Rwodzi, Mr Jerry Tsodzai and Mr Tim Chiganze. The bank was put under curatorship in 2012 and then liquidation in December 2014 and this provided an opportunity for some debtors to hide assets.

“During the period of curatorship, Mr Kudenga said the curator made initiatives to raise capital for the bank and two recapitalisation plans were proposed but failed to materialise. The bank’s related parties owe about $90 million constituting 52 percent of the total debt.

“That is where we have a major problem because some related parties took advantage of the curatorship period and they got time to place their companies or assets under either judicial management or liquidation.

“Once you put a company under liquidation or judicial management it means any legal action against that person will not be effective,” said Mr Kudenga.

He said some of the related debtors went ahead and protected themselves by putting everything under judicial management.

“We are also looking at ways to deal with those debtors in their individual capacity and also see how those loans were acquired in the first place.

We will leave no stone unturned in as far as the insiders are concerned and there is no way we can leave them walking free,” said Mr Kudenga.

He said the collapse of the bank was also worsened by the acquisition of CFX in 2009.

“Some of the reasons behind the collapse of the bank were non-performing loans. Sometime in 2009, Interfin bank acquired CFX and for the transaction to take place shareholders borrowed $3 million from Al Shams Global. The loan including interest ended up being paid by Interfin bank. The money has not been paid back to date,” said Mr Kudenga.

As a result of the challenges faced by the liquidator, Interfin creditors approved payment from debtors by way of properties in view of the current economic conditions that have resulted in constrained liquidity and depressed property prices.

The Deposit Protection Corporation was also authorized to hold on to properties until the next creditor’s meeting in the event the liquidator fails to dispose a property at fair market value. The liquidator was further authorised to lease out any properties that are not immediately disposed as contemplated.

DPC chief executive John Chikura said the liquidity challenges have impacted significantly on the debtor collection process with most collections coming in the form of properties. This is expected to continue as the bank hopes to make the bulk of collections through taking over of security inform of buildings.

DPC is also in discussion with the liquidator of Apex Holdings for the takeover of a building in Bulawayo valued at $630 000 that was offered as payment for a related party loan of $1 658 643 but was not transferred until Apex went into liquidation

“We would prefer a situation where such recovered properties are disposed through private treaty as opposed to going to through the Sherrif so that we maximize recoveries,” Mr Chikura added.

DPC estimates that it will recover a measly $17 million from a loan book totaling $167 million due to weak loan origination procedures and lengthy curatorship period. He said creditors are expected to receive only 13c for every dollar they are owed.

One of the creditors from Equity properties proposed that the liquidator should accept treasury bills as a form of payment and desist from insisting on cash payments.

“There are a number of borrowers who want to repay their loans using TBs, but it is not clear whether the liquidator of Interfin will accept them as a form of loan repayment or not,” said Equity properties.

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