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(LUSAKATIMES) Finance Bank shareholders face arrest

Finance Bank shareholders face arrest
Wednesday, December 22, 2010, 8:23

THE Bank of Zambia (BoZ) says some Finance Bank Zambia Limited (FBZ) directors face arrest after revelations that they allegedly awarded themselves huge loans running into billions of Kwacha without board approval.

And assistant director Bank Supervision Department Mbinga Kafunya said on Zambia National Broadcasting Corporation’s (ZNBC) open line live programme on December 21 that part of the bank’s findings were that some shareholders and directors obtained huge non-performing loans in billions of Kwacha.

Mr Kafunya said BoZ had been engaging FBZ since 2007 to try to normalise the situation but its efforts were in vain.

“What used to happen was that the directors would give each other loans without the board’s approval.

In some cases, a shareholder or director would direct that a loan be given to them. It reached a point where the bank was unable to pay its depositors,” he said.

And BoZ bank Supervision director Lameck Zimba said the central bank is studying breaches in the running of Finance Bank with a view to bringing culprits to book.

Mr Zimba said no-one should think they are untouchable and above the law. Mr Zimba said the decision by BoZ to take over FBZ was made in good faith and within the powers vested in the central bank.

He said BoZ had to protect the economy and the financial system.

Mr Zimba assured the nation that BoZ will not allow FBZ to close as it has solicited for government support to keep the bank afloat.

“The bank will continue operating normally and after the 90 days provided for in the law, we will make a decision. We will not allow Zambians who save with Finance Bank to suffer. We did our homework before taking over the bank,” he said.

Mr Zimba urged depositors to continue transacting normally. He thanked the people of Zambia for showing confidence in BoZ. Mr Zimba said the BoZ is only mandated to manage the institution and not to nationalise it. He also refuted media reports that the takeover of FBZ is intended to victimise one of the shareholders, Rajan Mahtani.

“How can we victimise one person when there are six shareholders of Finance Bank? We can’t take such drastic action to punish one individual because according to the law, no- one can own more than 25 per cent shares in a bank,” he said.

He said FBZ is a very strategic institution that should be maintained.

Mr Kafunya urged the people of Zambia to distinguish who is acting in public interest and good faith between the BoZ and some media institutions which have engaged in irresponsible reporting.

“Since December 10 when we took over the bank, not a single depositor has failed to get their money. So far, we are comfortable with the situation because we made projections before we took over and we are still within what we projected,” he said.

He also said the law allows the BoZ to appoint agents to manage a bank that has been taken over.

He said BoZ chose First Rand Company because it has handled such cases in Botswana, Namibia and South Africa.

[Zambia Daily Mail]

Labels: FINANCE BANK, LAMECK ZIMBA, MBINGA KAFUNYA, RAJAN MAHTANI

posted by MrK @ 2:17 PM