BCC loses $1m in tottering banks

THE Bulawayo City Council (BCC) has reportedly lost more than $1 million invested in financial institutions that have collapsed due to mismanagement and economic problems affecting the country.

BY MTHANDAZO NYONI

According to latest council minutes, the local authority invested about $1,048 million in four banks — Tetrad Investment Bank, MetBank, Allied Bank and AfrAsia Bank.
Some of the banks have since folded, while others are tottering on the brink of collapse.

The local authority’s finance department on March 29 reported that the city council conducted business with some financial institutions, which folded between 2014 and 2015.

“City of Bulawayo was involved with some of them in one way or another and the collapse or closure of these financial institutions resulted in some losses to council. Every effort was being made to recover the money that was lost,” the council minutes read.

The local authority had investments totalling $536 221,13 in Tetrad Investment Bank, when it was placed under judicial management on January 29, 2015.

A claim was submitted to the Master of High Court on March 6, 2015. A scheme of arrangement was made and creditors owed above $100 000 were to be paid $5 500, $4 500 be written off and the balance converted to ordinary shares of $0,10 each.

Council was paid $5 500 on November 29, 2017 and issued with 5 262 220 shares valued at $526 222.

Council reportedly held an account with Metbank between 2011 and 2014. In 2014 the bank experienced liquidity challenges, leading to council closing the account on February 14, 2014. The account had a balance of $146 513 that the bank had failed to remit to the Zimbabwe Revenue Authority.

“Of that balance, $6 513 had been used partly to pay creditors that had accounts with the bank and another part was withdrawn in cash. The bank paid the balance of $140 000 in instalments between January 2016 and December 2017. Interest of $32 512 accrued on the balance was still outstanding. Efforts were being made to recover it,” the minutes read.

The local authority also had $476 544 in money market investments placed with Allied Bank, whose licence was cancelled by the Reserve Bank of Zimbabwe on January 8, 2015.
BCC is also owed $2 287,40 by the now defunct AfrAsia Bank, which folded on February 24, 2015.

Councillor James Sithole said there was need for council to confine itself to more established banks that have stood the test of time and Councillor Charles Moyo also said council should not gamble with ratepayers’ money through buying shares.

BCC town clerk, Christopher Dube said Metbank was disputing the amount it owed council.

He further explained that shares from Tetrad Bank were also a scheme of arrangement for compensation.

2 Comments

  1. Poor investment decisions there,, those banks were high risk from the word go.

  2. Agreed ko sei makasiya old mutual,baclays,standard necabs?

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