THE Criminal Investigation Department (CID) Asset Forfeiture Unit has obtained a warrant of search and seizure against Tetrad Investment Bank (TIB) management and directors in a case of fraud and money laundering.
The search warrant against the now defunct bank – which has a US$13 million asset portfolio – and its directors was issued yesterday in terms of Section 50(1)(a) as read with Section 288 of the Criminal Procedure and Evidence Act (Chapter 9:07).
The matter involves money laundering as defined in Section 8 (1)(a)(b) of the Money Laundering and Proceeds of Crime Act (Chapter 9:24) and fraud under Section 36 of the Criminal Law (Codification and Reform) Act (Chapter 9:24).
CID’s Detective Sergeant Tanyanyiwa Mangena of the Asset Forfeiture Northern Region is investigating the case. The complainant is the State.
The accused are the bank and its directors, Messrs Harry John Orphanides, Misheck Mpiwa Chiwayo, John Alexander Brydone Graham, Michael Phillip Seton Gaisford, Andre Lourenco Vermaak and Appolinaire Ndorukwigira.
Although their names still appear in the CR14 – the document that gives directors’ details and secretaries of the company – Mr Gaisford is late while Mr Ndorukwigira resigned in a huff four days ago amid infighting within the board and chaos in management.
Mr Ndorukwigira, a Harare-based Burundian economist, stormed out of a preparatory meeting and subsequently resigned, throwing the financial institution into turmoil.
The move jeopardised the bank’s critical Extraordinary General Meeting (EGM) due in a week’s time to discuss the future of the institution which retains a significant residual value with an asset portfolio of about US$13 million.
The EGM – scheduled for 16 December – is contentious as the board wants to use it to change the bank into a property management company and entrench itself against shareholders’ will and interests.
Directors also want to remain in charge of the money-spinning property portfolio for personal benefits.
In his resignation letter written to the board, dated 5 December 2022, Mr Ndorukwigira said he quit because he strongly objected to the agenda of the upcoming EGM, particularly the proposal to transform the bank into a property management company.
After the resignation of Mr Ndorukwigira, a former special adviser to the executive secretary of the African Capacity Building Foundation, the bank’s board now comprises Messrs Chiwayo, Graham, Orphanides and Vermaak, all of them Zimbabweans.
The other accused party in the police case is Tetrad Creditors Group Trust (TCGT).
According to minutes of the Annual General Meeting dated September 2022, TCGT was formed after a scheme of arrangement in 2015 which converted depositors into shareholders.
TCGT claims to represent 70.71% of shareholders through proxies and uses this opaque structure to control bank’s affairs.
There has been a refusal by TGCT to allow an inspection of proxies who represent shareholders’ interests whom they claim to have. The purported proxies are used by directors to control the affairs of the bank. Directors want to use the proxies to vote and pass resolutions at an EGM to entrench themselves.
The board has been name-dropping to shareholders that they have a blank cheque to do what they want at the bank, claiming protection from some officials at the Reserve Bank of Zimbabwe.
This comes amid a heated row between shareholders and directors for the control of the closed bank.
Shareholders led by Mr Jackie Levey and Mr Dimitri Divaris are battling it out with directors led by Mr Vermaak and trustees such as Mr John Pybus for the heart and soul of the bank.
The bank is now owned by its shareholders, not Tetrad Holdings as was the case before the debt-to-equity scheme of arrangement.
Lack of return on investment for eight years has fuelled a shareholders’ revolt at the bank whose directors are battling with the crisis as it spins out of control.
Against this backdrop, a host of minority shareholders are now increasingly growing impatient with the directors and executives running the bank’s affairs.
Besides lack of return on investment, the shareholders are complaining about lack of audited financial accounts. They have not received audited financial accounts for the past three years. The last financials they received were qualified statements for 2018 which only came in 2022.
The other big issue troubling shareholders is the impression that management and directors are benefitting from the bank’s diversified property portfolio from which they are receiving rentals, while equity stake holders get nothing.
Based on this, Mr Dimitri Divaris, son of the late modelling and fashion icon Mrs Kiki Divaris, has filed criminal charges against the bank’s directors and TCGT.
Atherston & Cook represent Mr Dimitri.
In a letter to Tetrad and its directors through their legal practitioners Gill, Godlonton & Gerrans, Mr Divaris raises key contentious issues and accuses the board of dishonesty and lies.
“We thank you for your letter of 7 December 2022. Since receiving your letter, our client has learnt of the resignation of your client’s chairman of the board. In his letter of resignation, the former chairman of your client expressed concern over the unavailability of the company accounts and in addition over the inexplicably hurried manner with which the remaining directors of your client wish to proceed with the EGM,” Mr Divaris’ letter says.
“You mentioned in your letter that audited accounts will be available within 10 days, presumably from the date of your letter, which means your client intends to furnish the long-awaited audited accounts a day after the EGM.
“Judging from the intended resolutions to be passed at the EGM, it is clear that the resolutions if passed will change the shape and direction of the company. It is the intention of your client’s directors to call members to make that momentous decision in the absence of audited financials.
“Our client’s view is that denying members of the company’s financial information critical for them to make informed decisions is grossly unreasonable and clearly suggests bad if not evil intentions. This is particularly so when one considers that those audited financials will be available a day after the doomsday. More importantly, for almost 4 years, members has been asking for financials, audited or unaudited and these have not been availed.
“We completely disagree with your client’s interpretation of the RBZ letter dated 7 January 2022 in which your client suggests that it was barred by the RBZ to inform or advise members of the financial standing of the company whether by management accounts or audited accounts. Our client certainly cannot remain in the dark with regards to the financials and be expected to define the path for the bank while groping in the dark.”
The letter continues:
“We are also concerned by your clients notice of EGM. Our attention has been drawn to the penultimate paragraph of the notice which reads as follows: ‘The Directors are advised by the trustees of the Tetrad Creditors Group Trust that the proxies held by the Tetrad Creditors Group Trust are still valid.’
“Our understanding is that the Tetrad Creditors Group Trust formed in 2015 and whose beneficiaries were creditors of the bank has ceased to exist. We draw your attention to clause 9 of the said Trust’s Trust Deed and the fact that all the beneficiaries of the Trust have graduated to become shareholders, ceased to be creditors and thereby leaving the Trust with no beneficiaries as was intended. “Clearly as was envisaged the Trust should have been wound up and to the extent that there were no formal proceedings to wind the Trust up, it cannot be said that the Trust is still in existence.”
The letter says Tetrad directors are dishonest and are lying about the status of the Trust and trustees.
“We took the liberty to confirm the current position of the Trust with one of the former trustees, Mrs Nokuthula Moyo, who confirmed that not only was the trust wound up, but she is also no longer a trustee. Mrs Moyo has also confirmed that she has never been in touch with the directors of your clients for more than a couple of years.
“Accordingly, we find it very dishonest for your client to state that the trustees, Mrs. Moyo included, had expressed views to the directors with regards proxies by the Tetrad Creditors Group Trust. Our client demands that there should be honesty, transparency and integrity by the directors of your client in their dealings with the assets of the many groups of people of such huge diversity. There are hundreds of shareholders whose interests have to be protected and who deserve to be guided based on concrete and proper financials of the company. These people should not be muzzled by a few people, being the directors. Members’ interests and rights have to be protected.”
Tetrad was closed by the RBZ in December 2013. It was then placed in provisional liquidation in 2015.
The following year, it was placed in final liquidation.
During its judicial management, a scheme of arrangement was devised to converted depositors’ funds and creditors’ dues into shareholding, with TCGT and directors – now facing criminal fraud and money laundering charges – taking control of the bank.