Gono fires entire RMB board and executive

The ministry of Finance and the Reserve Bank of Zimbabwe (RBZ), Gideon Gono moved Wednesday fired the entire board and executive of Renaissance Merchant Bank (RMB) group and its flagship arm.\r\n

Finance minister Tendai Biti also announced that a new investor would pour US$17 million in RMB to shore up its capital base. RFHL has been in the news for the past three weeks after it had borrowed money from controversial Indian businessman, Jayesh Shah to recapitalise RMB.

RFHL was now failing to re-pay the US$12 million loan and Shah was now claiming 60% equity in the bank.

Biti said the measures were necessitated after the central bank’s investigations discovered some incestuous relationship among the parties.

The problems at RFHL were also affecting AFRE Corporation since it had 32% in the insurance group. Biti said the trading of AFRE and Rainbow Tourism Group (RTG) shares on the Zimbabwe Stock Exchange was suspended to ensure that the companies’ share prices are not affected.

RFHL is a shareholder in RTG while RFHL founder Patterson Timba chairs the board of the hospitality group.

Biti said there have been misdemeanours at both RFHL and RMB where three shareholders had direct and indirect interest of over 70% against the set rules. An individual is supposed to have a maximum 10% shareholding in a bank while for corporate it is supposed to be 25%.

He said there was also no separation between the shareholders and management and the respective boards failed in their oversight roles, he said.

He said the bank was undercapitalised and “there were attempts to capitalize it using borrowed funds which is illegal.

RBZ boss Gideon Gono said the measures taken were corrective steps and are not an attack to the indigenisation or empowerment programme.

“They are times where we have to rise above those matters. We should avoid creating conglomerates of indiscipline,” he said.

“There were issues of corporate cannibalism and incestuous relationship which has compromised corporate governance.”

Source: RadioVop