Afre Corporation says it has lost over $6 million through exposure to ReNaissance Financial Holdings following interparty financial transactions emanating from a $12 million loan ousted chairman Patterson Timba borrowed from business tycoon Jayesh Shah, but failed to pay back in full.
Yesterday the group said it was putting in place measures to recoup the funds which could have uncovered the bank’s liquidity standing at a time when bankers were trying to instill confidence in depositors.
“The group’s exposure to the ReNaissance Financial Holdings group and P F Timba is approximately $6,4 million. Legal counsel has been sought and recovery is being pursued,” the company said in a statement.
Lack of adherence to corporate governance was cited as one of the reasons why the interparty transactions took long to be detected.
In the statement, Afre said it had set up a Related Party Transaction Committee as a means of ensuring that corporate governance matters were enforced and enhanced.
The Ministry of Finance and the Reserve Bank of Zimbabwe three weeks ago directed the Zimbabwe Stock Exchange to suspend trading in Rainbow Tourism Group (RTG) and Afre Corporation shares pending investigations after the unearthing of irregular inter-company transactions.
The suspension has however been lifted under as yet unclear circumstances.
According to Afre, the independent committee to be chaired by John Chikura and includes Daud Dube and Misheck Manyumwa, is not aligned to any of the major shareholders of the company.
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Chikura was recently removed from the Securities and Exchange Commission board due to possible conflict of interest.
“This initiative is part of various measures taken by the board to uphold shareholder and policy holder interests in all of the group’s business activities,” Afre said.
Afre also announced the appointment of TN Holdings group chief executive officer Tawanda Nyambirai as non-executive chairman.
He will be deputised by Misheck Manyumwa. Other members that have been appointed include George Nyashanu, Sibusisiwe Ndhlovu, Tracy Mpofu, Krison Chirairo and John Gould.
In their suspension of Afre on the ZSE, Finance minister Tendai Biti and RBZ governor Gideon Gono said they had noted with concern notices from the two firms advising on issues that potentially breach sections of the Securities Act.
“The ministry is concerned with the goings-on at Afre and RTG. Of late we have seen fliers and notices of rights offers and EGMs, which in our view have potential of breaching Section 85 of the Securities Act,” said Biti.
Biti also directed the Commissioner of Insurance to carry out investigations at Afre subsidiaries, namely First Mutual Life, FMRE, Tristar and Pearl Properties (Private) Limited in the wake of suspected irregular inter-company transactions at Afre and RTG.
The suspected irregular inter-company transactions at Afre and RTG emanate from a $12 million loan extended by business mogul Jayesh Shah to former Afre executive chairman Timba.
