The recent collapse of Interfin Bank Limited and Genesis Investment Bank is an issue of major public importance that Parliament should take seriously.
Interfin Bank was placed under curatorship for six months after being found in an unsound financial position while Genesis Investment Bank voluntarily surrendered its licence for failing to meet the minimum capitalisation requirements of $12 million.
Despite the far-reaching negative implications of this development, there has been deafening silence from Members of Parliament (MPs) when one would have expected that as representatives of the people the lawmakers prioritise this matter during parliamentary proceedings.
It is the mandate of the Portfolio Committee on Budget, Finance and Investment Promotion to oversee developments in the financial sector. The committee has a responsibility to summon the executives of the failed banks to give oral evidence on these developments.
The rules of Parliament empower a portfolio committee to summon any person to appear before it to give evidence on oath or affirmation.
The committees also have power to summon any person to appear before them and produce any documents that they require.
There is therefore nothing that should stop the committee from exercising these powers and report its findings and recommendations to Parliament for debate.
It is from this debate that the issues will be placed into the public domain and action most likely taken.
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In addition to the portfolio committee being seized with the matter, individual MP can also introduce motions on the issue for debate in the House.
Members should take a leaf from the recent motion on violence that was introduced and debated immediately following the murder of an MDC-T political activist in Mudzi District.
Motions should be current and respond to the issue in a timely manner.
Introducing and debating a motion long after the event has minimal impact.
The voice of Parliament should be heard loud and clear on the issue of failed banks because the negative economic implications are huge.
It is the public that has lost heavily from the illegal actions of a few greedy individuals.
Siphoning depositors’ funds through insider and non-performing loans accessed by the owners and their friends and relatives is a serious criminal offence.
The same applies to creative accounting in order to mislead the supervisory and regulatory authority. It is no secret that Interfin misled the Reserve Bank of Zimbabwe (RBZ) through creative accounting that it had met the required capital adequacy ratios.
The Banking Act is clear that a banking institution that violates capital adequacy ratios shall be guilty of an offence and liable to a fine not exceeding Level 10, which is $700.
Now that the laws were infringed upon, Parliament should be demanding answers on the actions to be taken in line with the relevant legal provisions. If the supervisory authorities (in this case the RBZ) and the prosecuting authorities are not taking any action, it is the duty of parliamentarians to raise these issues on the floor of the House.
I will dwell a bit on the role of the RBZ in supervising banks. Section 45 of the Banking Act clarifies that it is the responsibility of the Reserve Bank to continuously monitor and supervise banking institutions to ensure that they comply with the Act.
The central bank’s function of monitoring and supervising banking institutions may be exercised through the analysis of documents and information supplied to it and the inspection of documents and the obtaining of information at the premises of the banking institution concerned.
The banks’ supervisors have power, without previous notice, to enter the premises of a banking institution and search for books, records, accounts and documents pertaining to the banking business of the institution.
These powers of entry and search shall not be exercised with the consent of the banking institution or the person in charge of the premises. These are very strong powers.
I am not convinced at all that these powers were exercised by the supervisory authorities given the dramatic developments surrounding the collapse of these indigenous banks.
It is important for Parliament, through the Budget Committee, to investigate actions that were taken by the Reserve Bank prior to the placement of the banks under curatorship. If the finding is that the central bank slackened in its supervisory responsibilities, then the Governor should be answerable to Parliament.
There has been talk about the Minister of Finance planning to review banking legislation in order to address some of these problems. It is my view, however, that sometimes it is not about absence of legislation, but failure to enforce existing legal provisions. Our Banking Act and Reserve Bank Act are very good pieces of legislation. Just like many other statutes, they suffer from lack of enforcement. Parliamentarians therefore have a duty to familiarise themselves with key legislation that they pass and evaluate to what extent the laws are being enforced. This is exactly what oversight is all about. In 2011, Parliament passed the Deposit Protection Corporation Act. This Act establishes the Deposit Protection Corporation. In addition to administering the Deposit Protection Fund, one of the functions of the corporation is to keep the public informed on the rights of depositors in the event of a contributory institution becoming insolvent. The corporation has however been conspicuously silent when the Act requires it to inform the public. This behaviour is in violation of the law. The Portfolio Committee on Budget, Finance and Investment Promotion should summon the Corporation to explain its responsibilities following the collapse of the banking institutions. Those who have lost their monies expect to be compensated and nothing else. As the representatives of the people, lawmakers can become more relevant if they become fully conversant with the laws of the land and consistently, without fear or favour, monitor the implementation of these laws.
lJohn Makamure is the executive director of the Southern African Parliamentary Support Trust writing in his personal capacity. Feedback: [email protected]
