Part of the missing N$200m from the SME Bank could have been taken to Zimbabwe where it was used to fund the ongoing command agriculture programme that started in August last year when the so-called investment was made in South Africa. Bank of Namibia documents show that The SME Bank made three deposits with two South African financial institutions before the money disappeared into three accounts of companies that cannot be traced.
In August 2016, the Zimbabwean government announced a massive US$500 million agriculture project and called on private companies to invest.
In that same month, the SME Bank management – three of whom were Zimbabweans – started transferring money into two South African financial institutions.
The money was later paid into four other accounts that belong to shadowy companies - Asset Movement Financial Services, DMA Consultants, Moody Blue and Transparency.com.
While the fate of the money put into other three companies’ accounts - Asset Movement Financial Services, Moody Blue and Transparency.com – is not known, The Villager has traced the money that was deposited into DMA Consultants to Zimbabwe’s Windmill Fertilizer. It is not immediately clear at the moment who owns DMA Consultants and what connection is there between Metbank, the technical partner, and Enock Kamushinda, the SME Bank minority shareholder.
Although there is nothing about DMA Consultants anywhere on the search engines, the fact that this company was one of those that received money from Mamepe Capital, the links are too visible to ignore.
CONNECTING THE DOTS
An invoice obtained by The Villager from an SME Bank source shows that DMA Consultants asked Mamepe Capital to order fertilizer on its behalf from Rawfert Offshore Sal on 3 May 2017.
The invoice whose number is FO549P1006 shows that 30,700 metric tonnes of the mono ammonium fertilizer was being bought from Morocco and should be delivered to the Mozambican port of Beira on 31 July 2017.
Mono ammonium phosphate is a widely used source of phosphorus (P) and nitrogen (N). It’s made of two constituents common in the fertilizer industry and contains the most phosphorus of any common solid fertilizer.
The amount on the invoice is US$14, 490, 400. Since DMA Consultants cannot be traced and Mamepe Capital could not say whose company this is and where it was registered, the dots connects to Zimbabwe.
The dots also connects very well when one considers that one of the companies that also deal with Rawfert Offshore Sal, Windmill Fertilizer that is at the centre of supplying to the Zimbabwean government uses the port of Beira as a pick-up point for its orders.
Last week The Namibian reported that Mamepe Capital director Mauwane Kotane said that he knew where the money was invested and that he cannot “in terms of the mandate and agreement between ourselves and the SME Bank” reveal the details.
In the documents, Shiimi said: The Bank is now informed – for the first time (this not having been disclosed by SME Bank’s directors and its officers) – N$175 million (and contrary to the provisions of section 39 of the Act) was invested in a consumable product (fertilizer).
“The nature of the investment in the commodity was purely for trading purposes… The maturity will equally be informed by the capacity of the various vendors to sell the product.
“The investment is held under a Product Consignment Note on behalf of or in the account of Mamepe Capital (Pty) Limited held by the supplier of the fertilizer, Rwafert Offshore Sal.”
Rawfert Offshore Sal contact person Karim Farsoun refused to talk to The Villager on Tuesday although he told The Namibian that he had never heard of Mamepe Capital and neither did he deal with any company linked to the financial institution.
Farsoun, however, admitted that he deals with Metbank that clinched an US$8 million with the Grain Millers Association of Zimbabwe to clean up the silos that had not been used ever since white farmers were driven out the land.
The Namibian claims that Farsoun said there was a fake document produced by people who knew about the company’s stock in warehouse in Mozambique.
The Villager could not establish the details of the forged invoice. Windmill Fertilizer did not respond to questions sent to them on whether they had ordered any products through DMA Consultants and Mamepe Capital despite asking for emails.
In December 2016, The Herald reported that fertilizer firms told the Parliamentary Portfolio Committee on Agriculture, Mechanisation and Irrigation Development that they could not meet demand due to lack of foreign currency to import raw materials.
Some of them, the paper said, had raw materials and fertilizer stocks in their warehouses, but cannot release them before paying their external suppliers as the inputs are held under collateral management agreement. All this is coming when the Zimbabwean government has a massive command agriculture programme underway.
It all comes after The Villager has established that the former SME Bank chief executive officer Tawanda Mumvuma and the former finance manager Joseph Banda who skipped the country in February to avoid the probe into the missing millions are back at Metbank.
WHY METBANK & SME BANK MONEY?
Metbank Zimbabwe owns 30% shares in the SME Bank and is a technical partner. In fact, most of the managers who were used to siphon money from the SME Bank were seconded from Metbank Zimbabwe.
Enock Kamushinda, the SME Bank minority shareholder, is the founder of Metbank Zimbabwe and still has influence in the way the bank is run.
It is not a secret that Metbank has never been fully capitalised and that it survived Zimbabwe’s turbulent economic period largely because of Kamushinda’s patronage of the ruling party Zanu-PF. Kamushinda is also close to the Zimbabwean president Robert Mugabe and a well-known funder for Zanu-PF.
The Zimbabwean government launched the Targeted Command Agriculture programme in August 2016 that is meant to help about 2, 000 farmers to each produce 1, 000 tonnes of maize.
At the time, the government of Zimbabwe said the command agriculture programme would cost US$500 million.
Each farmer whose land is close to a water body would receive US$250 000 worth of inputs. In return, each farmer is required to commit five tonnes per hectare towards repaying of the loans.
Earlier court documents Shiimi presented in court when he defended the Bank of Namibia’s move to take over the SME Bank management, show that the so-called investments in South Africa started when the government of Zimbabwe announced plans for the command agriculture.According to Shiimi’s papers, The SME Bank made three deposits with Mamepe Capital and VBS Mutual Bank between 12 August and 6 September 2016.These deposits, he said, were: N$10m and N$150m made to Mamepe Capital on 22 August and then another deposit of N$25m that was transferred from Mamepe Capital to VBS Mutual Bank on 31 August 2016.
“The total investment purportedly made during that period, being from 12 August to 6 September 2016, was N$185m, which exceeded the approval limit of the chief executive officer and therefore required the SME Bank board of directors’ approval,” Shiimi said.
Although the SME Bank’s internal controls state that the chief executive officer can authorise investments amounting to N$150m, it also states that the amount should not be split and or paid over a period of time.
VBS Mutual Bank provided one account for SME Bank, while the maturity sheet provided by Banda to the Bank of Namibia showed three different accounts. When the Bank of Namibia started asking questions around the investment, the management at the SME Bank was not forthcoming.
Both the chief executive officer Mumvuma and the finance manager Banda gave conflicting explanations about the investment and the SME Bank’s financial status.
In his documents Shiimi said that on 30 September 2016, Banda told the Bank of Namibia’s examiners [Karin Elago and Immanuel Hawanga] that the alleged investments placed with VBS were apparently treated as one call account with different placement and maturity dates.
Banda, Shiimi further said, misrepresented to the examiners during a meeting held on 26 September 2016 that VBS Mutual Bank would pay N$50m by 30 September 2016 but by 11 October 2016 when he met the examiners again, the funds had not been paid.
Shiimi also said that on one hand, Mumvuma told the Bank of Namibia on 12 September 2016 that there had not been any withdrawals from large depositors and that the top depositors’ balance was N$779,7m as at September 2016.
According to Shiimi, on the other hand, Banda said that there was an outflow of N$172,8m compared to inflows of N$102,1m since 31 July 2016 to September 2016.
THE PAINFUL TRAIL OF SME BANK CLOSURE
The Windhoek High Court ruled on Tuesday that the SME Bank should go into provisional liquidation following the failure to recover the money invested in South Africa.High Court judge Hannelie Prinsloo made the provisional ruling after the Bank of Namibia had sought an order to shut down the SME Bank because the government cannot bail it out any more.
In June this year, both Shiimi and the trade minister Immanuel Ngatjizeko appealed to the government for a N$350 million bailout to keep the bank afloat.Finance minister Calle Schlettwein, however, said the government did not have money and if the bank cannot recover theN$200 million from South Africa then it should be shut down.The closure of the bank will leave 208 people with no jobs
The Windhoek Master of the High Court appointed provisional liquidators for the Small and Medium Enterprises (SME) Bank that was shut down Tuesday.
In a press release issued Tuesday, the Bank of Namibia said that the Master of the High Court had appointed Windhoek-based Ian McLaren and David Bruni to wind up the affairs of the SME Bank until September 2017.
FORGED BANK STATEMENTS
A VBS employee, Nhlanhla Mduduzi Nkuna, who was contacted by the Bank of Namibia, said that SME Bank management deposited N$10m only in an account they hold with the financial institution.
Nkuna further said that even this money was withdrawn on the same day – 11 August 2016 – when it was deposited.
“No other amount was deposited into this this account for that period. This means that the account was only active for one day,” Shiimi told the court.
Furthermore, Nkuna, Shiimi said, told an SME Bank employee, Venencia Olobilwe that as of 23 March 2017, the SME Bank investment account with them had N$458,855.
Nkuna’s statement to Bank of Namibia officials was different from what the SME Bank management told their auditors, BDO Namibia, regarding the investment.
According to Shiimi, SME Bank management submitted an account to BDO that showed that the account with VBS had N$185,3m.
On 10 January 2017, another invoice that was purported to have been sent from VBS to the Bank of Namibia showed that there was N$153,8m in the account as of 31 December 2016.
No such amounts, said Shiimi, are evident in the latest statement received on 23 March 2017.
In view of this, he said, the information presented by Banda, Mumvuma and VBS to BDO “is contradictory, unreliable, highly questionable and suspicious”.
VBS head of treasury Phopi Mukhodobwane, Shiimi said, told Olobilwe that the account statements presented earlier by Banda and Mumvuma as issued by VBS appear different from their normal system-generated statements.
This, in fact, is according to Shiimi’s documents he deposed with the High Court last week when he sought an order to shut down the SME Bank.
Rawfert Offshore Sal that is based in Beirut was established in 2004 and primarily sells rock phosphates for fertilizers.
The Lebanese company has operations in Zimbabwe, South Africa and other African countries.
WHAT THEY SAY ABOUT SME BANK
The future of SME Bank workers: I can't tell you what the future of those workers is like, but of course when it comes to these aspects we are very much aware of this. Let's see how the liquidation process goes.
Is liquidation the best damage control?
Yes we believe that liquidation of the SME bank is a very necessary step, provided that the need to provide access to affordable funding to SMEs is replaced by an arrangement that is soon to develop. But the SME bank in its form did not deliver on that. If you look at the loan book it was not SMEs that got the loans and the viability of the bank is questionable. We assisted it with capitalisation and it failed over and over and i think the time has now come to protect public resources, tax payers' money. Instead of throwing money at the problem we have to terminate and use those public monies for more effective ways to fund SMEs.
First let us get the liquidation off our back, if there is wrong doing of any criminal nature yes of course they will be pursued and they will be brought to book. Recovering of the funds will be a litigation process; we have to establish whether criminal activity was there. The time where there is no consequence for wrong doing is over!
Economist Mally Likukela, Twilight Capital Director
Should SMEs financing have been done by private sector?
It is not who is having responsibility; it is about how they finance SMEs. There are countries like Malaysia and Singapore where SMEs financing and development is very much a public sector issue. Government is running this and it's going so well.
Then you look at other countries again where government gives the SMEs financing role to private sector and it's going so well. It is not really who is doing it, but the capacity and the understanding of the sector.
For 27 years now, the private sector has been financing SMEs, the commercial banks. So government was just trying to fill up that gap.
Unfortunately the people (private sector) that were entrusted with that responsibility did not accept the responsibility, they accepted only the position. Financing SMEs is a bigger responsibility, but it can be done by the private or public sector.
Is liquidation the best damage control method?
Actually it is not. The (central) bank actually needs to do more. They will save the clients but there is damage to the credibility of the financial system because the way investors view this is that there is a potential for something bigger to happen. So the Bank of Namibia has to manage the credibility risk that this incident has created. Just saying we are going to close this is not enough?
People are beginning to ask, where was the Bank of Namibia all this while? So they have an issue here, their supervisory capacity is in question. What is the forward strategy to manage the credibility risk both to the system and the central bank as a supervisor?