BoN refuses to budge

Despite a demand from lawyers representing the under-fire SME Bank board and management to have the Bank of Namibia reverse its decision to place the SME Bank under curatorship, the central bank remains unmoved.

The Bank of Namibia was given until yesterday to reinstate the board led by cabinet secretary George Simataa.

The board claimed through their lawyer, Sisa Namandje, that the central bank's decision to remove them from office about two weeks ago was unlawful.

The board consists of Simataa, Milka Mungunda, Petrina Nakale, Ozias Bvute and Enock Kamushinda, who is also a minority shareholder in the bank.

The bank's CEO, Tawanda Mumvuma, as well as two exco members, were also suspended pending an investigation by the Bank of Namibia.

Yesterday, the central bank maintained its position regarding the SME Bank curatorship.

“The action of the Bank of Namibia taken on 1 March remains in force at this stage,” the central bank's spokesperson, Kazembire Zemburuka, said in an email response.

The SME Bank was placed under curatorship because of questionable investments in South African financial instruments.

Between N$181 million and N$196 million is alleged to have been invested in South Africa. New Era last week reported that SME Bank funds were deposited into the Venda Building Society (VBS) Mutual Bank. Money was also placed in a cash management company called Mamepe Capital.

The report claimed there were major withdrawals after the funds had been deposited into the accounts of the two South African institutions.





The Bank of Namibia has appointed a new board as well as a chief executive officer in the interim. However, this is now being challenged by the suspended board.

“Having considered the matter we have advised our client that your actions announced on 1 March 2017 are null and void and are fundamentally flawed, inter alia on the following grounds: You have no power to remove from office a director or officer in terms of section 56(2) of the Banking Institutions Act,” Namandje wrote to BoN governor Ipumbu Shiimi. According to Namandje, the Bank of Namibia further has no power to appoint an interim board or a chief executive officer.

“In respect of your purported appointment of a purported interim board of directors, the Bank of Namibia has no power to do so except to make an order in terms of section 56(2)(a)(iv) to a banking institution (SME Bank Limited) to appoint a person as a director of a banking institution or for such a person to advise the banking institution in relation to the proper conduct of its business and to specify that the person so appointed shall be paid the remuneration by the banking institution.

“Accordingly, should you have felt there was a need for a new director or directors to be appointed, your powers were and remain limited to requiring SME Bank Limited through an order in writing, addressed and delivered to SME Bank Limited, to appoint directors, not to make such an appointment yourself as you did,” the lawyer added.

It was further claimed that SME Bank clients were either withdrawing their deposits from the commercial bank or contemplating withdrawals, which Namandje argued was detrimental to its day-to-day operations.

“In view of the aforesaid we have been instructed to demand that you furnish us with an extract of the Bank of Namibia board meeting of 24 February 2017 in relation to this matter, and to revoke your unlawful decision of that day by close of business on Monday, 13 March 2017, failing which an urgent application, to be heard on 30 or 31 March 2017, shall be brought for interim relief pending judicial review, which application will be filed and served on 14 March 2017,” the firm said.