Liquidators hunt N$1bn
Court papers claim that a new legal challenge brought by Enock Kamushinda is aimed at pressuring President Hage Geingob to intervene politically.
The liquidators of the SME Bank claim that Enock Kamushinda, the Metropolitan Bank of Zimbabwe (MetBank) and World Eagle Investments should be held liable for N$1.028 billion and N$60 million, plus 20% annual interest since July 2017.
These amounts have emerged in the latest court papers filed in the saga. However, no further explanation was given on how the liquidators came up with the N$1 billion figure. Tania Pearson, former legal advisor of the SME Bank who was retained to assist in the investigation into the missing millions, on behalf of liquidators David Bruni and Ian McLaren, filed a counter-application to Kamushinda's latest attempt to frustrate the liquidation process.
Pearson maintains that the new application brought by Kamushinda is driven by an “ulterior motive”, which is to pressure President Hage Geingob to intervene, through the Namibian government, to bring about a political resolution of the SME Bank liquidation.
Moreover, she said, the motive is to “cover up the massive fraud and theft” perpetrated at the SME Bank, which is being exposed in the liquidation process. Geingob is cited as first respondent in Kamushinda's latest application.
'Subterfuge and fraud'
Exposing the “subterfuge and fraud” committed at the bank, Pearson states that Kamushinda and fellow Zimbabweans Ozias Bvute and Tawanda Mumvuma were the only three directors who continuously served on the board of directors of the SME Bank since its inception.
Kamushinda had served as the acting chairperson of the board from 30 April 2015 to 1 September 2016.
During that time, between December 2013 and January 2017, at least N$247.6 million was electronically transferred directly from the SME Bank to the “recipients of the stolen funds”. The liquidators maintain that the theft was perpetrated “mainly” by Kamushinda, Mumvuma (former CEO), Joseph Banda (finance manager), and the three assistant accountants in the finance department, Chiedza Goromonzi, Simbarashe Magombedze and Valentine Garikayi.
The thieves' modus operandi, it is stated in court papers, was to issue false payment instructions to the treasury department of the SME Bank for payment. Between December 2013 and about January 2015 most of these fraudulent payments were reflected in the SME Bank's accounts. To hide their tracks, the culprits in the finance department allegedly used different account numbers interchangeably with different names. The preferred method to disguise such payments was to prepare batch payment instructions and include the false payments in these, the liquidators charge. During October 2014 and early 2015, external auditors BDO Namibia questioned a number of transactions and wanted to do a physical inspection and verification of certain assets.
When the perpetrators realised that expenses of about N$80 million, ostensibly for computer systems, could not be justified, they changed tack and identified Mamepe Capital, owned by politically connected South African Mauwane Kotane's company, as a front to cover up the “grand fraud”. From then on, the “computer software and hardware” items were entered as “investment – Mamepe Capital”, and transactions previously reflected in the computer expense account were changed accordingly. On 24 February 2015 three amounts of N$20 million and N$11.4 million were “disguised” as “valid investments”.
Details of misappropriation
The court papers state that Goromonzi and Magombedze in August and September 2016 prepared a list of all stolen fund transfers made since December 2013, which they backdated and reflected as “Investment – Mamepe Capital”. They then created false acknowledgements by Mamepe Capital, which were copied or printed on a letterhead of Mamepe Capital.
On 5 October 2016 the governor of the Bank of Namibia (BoN), Iipumbu Shiimi, wrote to the SME Bank to say that the DBO auditors would be re-evaluating the bank's audited financial statements for the financial year ending in February 2016. Pearson points out that the SME Bank until then had never complied with its obligation under the Banking Institutions Act to provide the BoN with audited financial statements.
Under pressure
Pearson states that as pressure from the BoN and BDO auditors mounted, Mumvuma, Kotane and Andile Ramavhunga (the now disgraced CEO of the looted VBS Mutual Bank) then devised a new “scheme” through which the N$247.6 million was siphoned off to 27 companies. These companies, Pearson says, are all connected to each other through addresses or shareholders and/or members or proprietors, with all having a “historical connection with one another”.
She said at 20% interest per year, the full outstanding balance by the end of October 2018 amounted to N$415 million. She says the N$257.6 million was limited to amounts transferred from the SME Bank's accounts in Namibia held by entities in South Africa, with the exception of one, as well as petty cash withdrawals and other fictitious payments made in Namibia.
These amounts have emerged in the latest court papers filed in the saga. However, no further explanation was given on how the liquidators came up with the N$1 billion figure. Tania Pearson, former legal advisor of the SME Bank who was retained to assist in the investigation into the missing millions, on behalf of liquidators David Bruni and Ian McLaren, filed a counter-application to Kamushinda's latest attempt to frustrate the liquidation process.
Pearson maintains that the new application brought by Kamushinda is driven by an “ulterior motive”, which is to pressure President Hage Geingob to intervene, through the Namibian government, to bring about a political resolution of the SME Bank liquidation.
Moreover, she said, the motive is to “cover up the massive fraud and theft” perpetrated at the SME Bank, which is being exposed in the liquidation process. Geingob is cited as first respondent in Kamushinda's latest application.
'Subterfuge and fraud'
Exposing the “subterfuge and fraud” committed at the bank, Pearson states that Kamushinda and fellow Zimbabweans Ozias Bvute and Tawanda Mumvuma were the only three directors who continuously served on the board of directors of the SME Bank since its inception.
Kamushinda had served as the acting chairperson of the board from 30 April 2015 to 1 September 2016.
During that time, between December 2013 and January 2017, at least N$247.6 million was electronically transferred directly from the SME Bank to the “recipients of the stolen funds”. The liquidators maintain that the theft was perpetrated “mainly” by Kamushinda, Mumvuma (former CEO), Joseph Banda (finance manager), and the three assistant accountants in the finance department, Chiedza Goromonzi, Simbarashe Magombedze and Valentine Garikayi.
The thieves' modus operandi, it is stated in court papers, was to issue false payment instructions to the treasury department of the SME Bank for payment. Between December 2013 and about January 2015 most of these fraudulent payments were reflected in the SME Bank's accounts. To hide their tracks, the culprits in the finance department allegedly used different account numbers interchangeably with different names. The preferred method to disguise such payments was to prepare batch payment instructions and include the false payments in these, the liquidators charge. During October 2014 and early 2015, external auditors BDO Namibia questioned a number of transactions and wanted to do a physical inspection and verification of certain assets.
When the perpetrators realised that expenses of about N$80 million, ostensibly for computer systems, could not be justified, they changed tack and identified Mamepe Capital, owned by politically connected South African Mauwane Kotane's company, as a front to cover up the “grand fraud”. From then on, the “computer software and hardware” items were entered as “investment – Mamepe Capital”, and transactions previously reflected in the computer expense account were changed accordingly. On 24 February 2015 three amounts of N$20 million and N$11.4 million were “disguised” as “valid investments”.
Details of misappropriation
The court papers state that Goromonzi and Magombedze in August and September 2016 prepared a list of all stolen fund transfers made since December 2013, which they backdated and reflected as “Investment – Mamepe Capital”. They then created false acknowledgements by Mamepe Capital, which were copied or printed on a letterhead of Mamepe Capital.
On 5 October 2016 the governor of the Bank of Namibia (BoN), Iipumbu Shiimi, wrote to the SME Bank to say that the DBO auditors would be re-evaluating the bank's audited financial statements for the financial year ending in February 2016. Pearson points out that the SME Bank until then had never complied with its obligation under the Banking Institutions Act to provide the BoN with audited financial statements.
Under pressure
Pearson states that as pressure from the BoN and BDO auditors mounted, Mumvuma, Kotane and Andile Ramavhunga (the now disgraced CEO of the looted VBS Mutual Bank) then devised a new “scheme” through which the N$247.6 million was siphoned off to 27 companies. These companies, Pearson says, are all connected to each other through addresses or shareholders and/or members or proprietors, with all having a “historical connection with one another”.
She said at 20% interest per year, the full outstanding balance by the end of October 2018 amounted to N$415 million. She says the N$257.6 million was limited to amounts transferred from the SME Bank's accounts in Namibia held by entities in South Africa, with the exception of one, as well as petty cash withdrawals and other fictitious payments made in Namibia.
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