Maravi

K350 billion leaves Finance Bank

K350 billion leaves Finance Bank
By George Chellah and Maluba Jere
Wed 15 Dec. 2010, 04:00 CAT

FINANCE Bank has recorded withdrawals of more than K350 billion as uncertainty over the bank’s future increased among corporate and individual depositors.

And Lusaka High Court judge-in-charge Philip Musonda has reserved ruling to December 27, 2010 on whether or not shareholders of Finance Bank Zambia Limited (FBZL) should be granted an injunction to restrain Bank of Zambia (BoZ) from taking possession of the bank.

According to sources within FBZL, the bank had continued recording high withdrawals following the BoZ take-over last week Friday.

“Just like you have reported today Tuesday, as of yesterday we actually recorded withdrawals in the range of K350 billion by both individuals and corporate depositors of the bank. You must understand that out of the approximately K350 billion, about K250 billion alone was from the main branch at the head office,” the sources said.

The huge withdrawals also sent panic within the bank forcing the new managers, First Rand Bank to instruct all branches to phone and assure top 20 depositors that their money was safe and the bank was still sound.

“Of course some of the people called were still doubtful of our assurances,” the sources said.

The sources disclosed that the huge withdrawals were an indication that people had lost confidence in Finance Bank.

“You can see, it is clear that people have lost faith in the whole exercise by the central bank that is why they are withdrawing money from the bank at this very fast rate because banking is based on trust,” the sources said.

“I doubt if we are really capable of meeting the withdrawals of about K350 billion from our coffers. At this stage, it’s obvious that the K1.2 trillion you wrote about is the one that is now being used to make things look stable within the bank.”

And ministry of finance sources complained that they had now learnt that the decision taken by BoZ governor Dr Caleb Fundanga was not even brought to the attention of the central bank’s management committee.

“This decision on Finance Bank never involved the BoZ management committee. We are told that it was only a few people who dealt with this issue. I say so because had the decision on Finance Bank involved the management committee, they would have come up with a better option,” the source said.

“There were better options in dealing with Finance Bank instead of this highly suspicious scheme as accurately reported by The Post. But having read what you have exposed, we now understand why even the management committee was kept in the dark about this whole scheme.”

Kasama Central PF member of parliament Geoffrey Bwalya Mwamba popularly known as GBM yesterday said he transferred over K1.5 billion from Finance Bank on Monday.

“I transferred that money to another bank because I don’t want to sink with Finance Bank. It happened to me when I was dealing with Meridien Bank. I almost sank with them because immediately I withdrew the money over K2 billion at that time the bank went under,” Mwamba said.

“The same thing applied to Commerce Bank. The same applied again to Credit Africa Bank (CAB), when I withdrew my money that bank went under. I feel that Finance Bank is no longer safe. I don’t want to sink with them or lose my money.”

He said it was clear that Finance Bank had become a political bank.

“And those of us who are in the opposition should be careful because our accounts will be scrutinised. Fortunately, in my case I have never been in minus with Finance Bank. I have always been in credit for fear that if you borrow they can embarrass you,” Mwamba said.

“That’s why I transferred over K1.5 billion from one account and today Tuesday I am doing the same from another account because it’s not safe anymore.”

Chongwe MMD member of parliament, Sylvia Masebo, was also found at Finance Bank’s Mulungushi branch yesterday instructing bank staff to transfer undisclosed amounts of money to other accounts.

And judge Musonda has reserved ruling to December 27, 2010 on whether or not shareholders of FBZL should be granted an injunction to restrain BoZ from taking possession of the bank.

Judge Musonda reserved ruling to that date after an inter-parte hearing in chambers yesterday.

The shareholders of FBZL have asked the court to declare that powers vested in the BoZ by the Banking and Financial Services Act chapter 387 of Zambia can not be used to deprive the shareholders of a financial service provider of their interest in the said entity and vest the same in the government.

The shareholders also want an injunction restraining BoZ or its agents from taking possession of FBZL or otherwise from depriving them (shareholders) of their interests in FBZL until after the trial of the court action or a further order.

According to a statement of claim filed in the Lusaka High court recently, Finsbury Investment Limited, Clarkwell Limited, Job Albert Samuel, Estate of the late Pat Bwalya Puta and Patrick Chamunda are seeking an injunction against BoZ.

They stated that BoZ was about to act in breach of the provisions of the Bank and Financial Services Act by taking possession of FBZ and transfer the same to the government.

The shareholders argued that the action by BoZ would not compensate them in any way.

After reading the affidavit, judge Musonda said the case was best suited for an inter-parte hearing considering the complexity and urgency of the matter.
And judge Musonda has allowed Attorney General Abyudi Shonga to join the proceedings.

In an affidavit in support of ex-parte summons for leave for a non joinder of party, Shonga applied to join the proceedings pursuant to Order 15 Rule 6 (2) (b) (ii) of the Supreme Court practice 1999 edition.

He stated that the case before court raised a wide public interest and policy saying FBZ was a bank in which the depositors (public) were likely to be affected by the outcome of the case.

Shonga explained that as custodians of public interest and policy, it would be in the interest of justice to have the state join as an intervener.

He said there would be no prejudice to any of the parties to the action if the state joined the proceedings.

Judge Musonda has asked the parties to file written submissions in the case on December 17, 2010.

Labels: BOZ, CORRUPTION, FINANCE BANK, GBM, GEOFFREY MWAMBA, PHILIP MUSONDA

posted by MrK @ 3:16 PM