Maravi

Court stops BoZ from selling FBZ

Court stops BoZ from selling FBZ
By Chibaula Silwamba
Thu 30 Dec. 2010, 04:02 CAT

THE High Court has granted an injunction restraining the Bank of Zambia from selling Finance Bank Zambia Limited or interfering with its shareholding.

According to a ex-parte order for injunction granted to shareholders – Finsbury Investments Limited (first petitioner), Clarkwell Limited (second petitioner), Job Albert Samuel (third petitioner), Chewe Kanyanta Puta (fourth petitioner and administrator of the estate of Pat Bwalya Puta) and Patrick Chamunda (fifth petitioner) – against the Bank of Zambia (first respondent) and First Rand Limited (second respondent), Ndola High Court judge Munalula Lisimba restrained the central bank and First Rand Limited from interfering with the petitioners’ shares in Finance Bank.

“It is ordered and directed that the respondents Bank of Zambia and First Rand Limited be restrained and an injunction is hereby granted restraining them, whether by themselves, or by their servants or agents or any of them or otherwise howsoever from: (1) interfering with or dealing with in any manner whatsoever with the petitioner’s shares in FBZL; (2) selling FBZL whether as a going concern or its assets until after the inter-parte hearing of the application for the injunction on the 4th day of January, 2011 at 09:00 o’clock in the forenoon or until further order,” the injunction order dated December 28, 2010.

“Penal notice, if you the within named the Bank of Zambia neglect to obey this order, you, Dr Caleb Fundanga, the governor of the said Bank of Zambia will be liable to the process of execution for purposes of compelling the said Bank of Zambia to obey the same.”

In his affidavit, Finsbury Investments Limited chairman Dr Rajan Mahtani on behalf of the four other petitioners, stated that on December 10, 2010, the Bank of Zambia took possession of Finance Bank and terminated the services of the board, chief executive officer and senior managers and the central bank assumed the full and exclusive powers of management and control of the commercial bank.

He stated that the reasons for this action were never communicated to the shareholders. Dr Mahtani stated that on December 11, 2010, he sent a letter to Dr Fundanga expressing concerns over the decision taken by the Bank of Zambia and informed him that the shareholders were ready to meet and discuss with him whatever problems existed at Finance Bank.

Dr Mahtani stated that in the same letter, he indicated that if there were financial problems and breaches of the laws at Finance Bank, shareholders were willing to inject capital and put in measures to ensure the commercial bank complied with the relevant legal provisions.

Dr Mahtani stated that the Bank of Zambia sent a brief to shareholders dated December 22 titled ‘enforcement decision and order’ in which it had purported to terminate their shareholders’ interest in Finance Bank with immediate effect.

“The first respondent BoZ has indicated therein that each shareholder (petitioner) will be compensated for their shares at a value (as at the date of possession of FBZL) to be determined by the court pursuant to Section 84A (g),” Dr Mahtani stated.

“The First Respondent has also indicated that for the avoidance of doubt, each shareholder ceases to be a shareholder in FBZL forthwith and will be given notice when the First Respondent makes an application to court for the determination of the value of the shareholder interest in FBZL.”

He stated that BoZ had tried to justify its decision and that, according to the brief to the minister, the next step in the plan of action was to vest all the shares of Finance Bank in the Zambian government as a temporary measure.

Dr Mahtani stated that the ultimate goal was to split Finance Bank into two – the good bank and bad bank.

He said the good bank would be placed under a different entity and would be available for sale to interested parties with priority given to First Rand Limited.

Dr Mahtani stated that it was necessary to grant the application ex-parte with a return day of the inter-parte hearing because it was highly likely that once aware of this application, BoZ would take steps to frustrate this application.

“There is good reason for this apprehension,” Dr Mahtani stated.

He explained that on December 9, 2010 when he became aware that the Bank of Zambia was going to take possession of Finance Bank in a manner that would be in violation of the provisions of the banking and financial services Act, he applied for an injunction to stop the possession until after the hearing of the matter.

He stated that the court set December 14, 2010 as date for inter-parte hearing but the Bank of Zambia took possession of Finance Bank on December 10, 2010.

Dr Mahtani stated that the shareholders, therefore, started another case in court on December 13, 2010, demanding that the central bank show cause why possession should not be terminated but the ruling had not been delivered as at December 27, 2010.

According to the petition, current shareholders of Finance Bank - the sixth largest bank out of 20 banks in Zambia - are Finsbury Investments Limited (25 per cent), Credit Suisse Investments (40 per cent), JAT Samuels (6.5 per cent), Clarkwell Limited (25 per cent), Pat Bwalya Puta (2.5 per cent) and Patrick Chamunda (one per cent).

Labels: BOZ, CALEB FUNDANGA, FINANCE BANK, RAJAN MAHTANI

posted by MrK @ 5:36 PM