COMMENT - MDC Finance Minister Tendai Biti Raids Social Security Fund.
Biti’s Renaissance rescue slammed
by Business Reporter
24/05/2011 00:00:00
BUSINESS leaders and trade unions have slammed Finance Minister Tendai Biti’s US$20 million rescue of Renaissance Merchant Bank with most accusing the minister of double standards and adding that the deal was also a waste of public funds.
Biti recently said up to US$20 million dollars of National Social Security Authority (NSSA) funds would be pumped into the troubled bank to prevent a possible sector-wide contagion. Renaissance was threatened with collapse after chief executive, Patterson Timba – who was also a key shareholder in the institution – failed to repay a US$5 million loan secured from businessman Jayesh Shah to recapitalize the institution.
However, businessman Phillip Chiyangwa said the murky deal was a waste of public funds and accused the government of double standards.
Said Chiyangwa: "Let the market be determined by market forces. Why would the Minister of Finance want to interfere in a business transaction between two individuals?
"If it was proper for the Government to intervene in such situations, why then is the same Government not intervening to bail out Mutumwa Mawere?
Chiyangwa wondered where the government would draw the line noting that several other companies were struggling around the country and needed assistance with recapitalization.
“Are we going to see all banks that have problems being bailed out?
“Things should be done properly. If someone borrows on certain conditions, no one should then try to interfere," he said.
Indigenisation and Economic Empowerment Board chairperson David Chapfika said it was curious that the Finance Minister had rushed to bail out a privately owned bank while refusing to support several public enterprises which were also struggling.
"We are aware that there are several parastatals that would require intervention, but Minister Biti argues that there is no flexibility yet he intervenes in private business” Chapfika said.
"It is my considered opinion that public funds should be first made available for the existing mandate."
Trade unions also weighed-in insisting that NSSA funds should be used on projects that benefitted workers.
"If NSSA invests in a bank, workers are not going to benefit directly. They should at least invest in housing because most workers face accommodation problems,” said ZCTU acting secretary general, Japhet Moyo.
"The money contributed to NSSA is for workers and thus it should benefit them directly," he said.
Jacob Gwavava of the ZFTU added: "He (Minister Biti) says he cannot increase civil servants' salaries because of liquidity constraints yet he can direct NSSA to put money on things that are not going to benefit workers directly.
"NSSA money is for workers. It should be used in areas where workers will benefit directly, for instance building houses for workers.
Biti tries to use civil servants’ money to bail out Timba
ReplyDeleteSaturday, 21 May 2011 23:09 Top Stories
Sunday Mail Reporter
FINANCE Minister Tendai Biti is covertly instructing the National Social Security Authority (NSSA) to invest about US$20 million into Renaissance Merchant Bank in a bid to bail out his embattled friend Patterson Timba who plunged his bank into a crisis after he failed to repay a US$5 million loan.
It is understood that some officials at NSSA are refusing to follow the minister’s instruction, saying it would be absurd to take civil servants’ money and give it to a private institution that got itself into trouble through financial indiscipline.
Civil servants are the biggest contributors to NSSA and, ironically, Minister Biti wants to use their money to bail out his friend even though he has repeatedly refused to have their salaries increased.
In a letter dated May 16 addressed to the general manager at NSSA, Mr James Matiza, made available to The Sunday Mail, Minister Biti said Cabinet had proposed that NSSA invest US$20 million into the troubled bank. Said Minister Biti: “In recent weeks, the Press media has carried a number of articles related to developments concerning Renaissance Financial Holdings Limited (RFHL).
“In order to maintain stability in the banking sector and to prevent bank failures similar to those of 2003/4, Cabinet has proposed that it is in the national interest for NSSA to invest an amount of about US$20 million in Renaissance Merchant Bank (RMB).”
However, investigations by The Sunday Mail revealed that Cabinet had not made the said proposal as Minister Biti had only brought the matter to the Council of Ministers which is just a referral station in terms of Government transactions.
Top Government officials privy to the goings-on in Cabinet said what they were aware of was that Minister Biti had indicated to the Council of Ministers the state of affairs in the banking sector where he said there was extreme indiscipline.
He suggested to the Council of Ministers that he wanted to approach the Minister of Labour and Social Welfare, Ms Paurina Mpariwa, to get NSSA to bail out Renaissance Merchant Bank. NSSA falls under the Ministry of Labour and Social Welfare.
The sources said the Council of Ministers then asked Minister Biti to submit a comprehensive report to Cabinet and “there is no record in Cabinet that sanctions the approach of NSSA”.
An official at NSSA said: “Why should we bail out Renaissance Bank, a non-State actor, using money largely collected from civil servants when Government is failing to address issues raised by the same civil servants? Do you think civil servants would want to hear of such an arrangement?
(Continued...)
ReplyDelete“There are many parastatals that are undercapitalised; reports say the RBZ faces closure; AirZim is almost collapsing; the same goes for NRZ, but despite these public institutions we have never been asked to bail them out. What is so special with Renaissance Merchant Bank?”
A dossier made available to The Sunday Mail by a top official at Renaissance Merchant Bank showed that there was serious breakdown in good corporate governance practices, there was an overbearing influence of founder members and major shareholders and incestuous financial dealings.
It is alleged that Mr Timba and RHFL converted to their own use funds negotiated and received by the bank while the former would obtain loans on the back of money market deposits placed by the bank.
The report shows that as at March 31 2011, the bank had accumulated losses amounting to US$16,49 million. The losses were emanating from non-performing insider loans amounting to US$12,59 million.
The official said the solution being sought by Minister Biti to bail out Renaissance using NSSA funds was reminiscent of the measures that the RBZ used to bail out some companies due to sanctions.
The official said after discovering that investigators from the RBZ had unearthed the “total collapse of corporate governance structures” at his bank, Mr Timba rushed to Minister Biti even though procedurally he should have approached the RBZ.
It is understood this did not go down well with the Governor of the Reserve Bank of Zimbabwe, Dr Gideon Gono, who had to be called for the meeting at Minister Biti’s office while Mr Timba was already there.
Repeated efforts to get a comment from Dr Gono on this matter were fruitless as he was not answering his phone. A representative of a civil servants’ body who spoke on condition of anonymity because “this issue has not yet been brought to us” said: “Minister Biti can’t pay us and he should leave our money. He and his friend should look elsewhere. Ngavangoibata mari iyoyo, we will go into the streets.”