ReNaissance bail out plan mired in politics
The National Social Security Authority (NSSA) general manager James Matiza on Thursday updated the board on the government’s proposal for the pension fund to invest in ReNaissance Financial Holdings Limited (RFHL).
Last Thursday’s board meeting followed the May 17 indaba where Finance minister Tendai Biti made a formal approach to the pension fund to invest US$20 million in RFHL, a move that would bail out ReNaissance Merchant Bank (RMB). Biti told NSSA that the proposal had been approved by cabinet.
A wholly owned subsidiary of RFHL, RMB is technically insolvent with a negative capital base of US$16,6 million attributed to poor corporate governance by the founding directors. The founding directors — Patterson Timba and Dunmore Kundishora — have already been banished from holding any senior position in any banking institution for five years.
NSSA said last week an auditing firm would evaluate whether it makes sense or not to invest in RFHL. “In the light of the difficulties in which Renaissance has found itself in, we consider it prudent to seek the assistance of an auditing firm in examining the financial institution’s current position and future prospects.
“The firm will be asked, after evaluating the business, to make a recommendation on the proposed investment,” Matiza said. The auditing firm would then present a report to the board’s investment committee, according to people familiar with the developments. It its report, the auditing firm, would use the Reserve Bank of Zimbabwe audit of RMB which unearthed serious financial transgressions at the bank attributed to its holding company and founding directors.
While NSSA is working towards investing in RFHL, Jayesh Shah, the businessman who blew the whistle on Timba, is taking his fight to another level after reporting the RFHL founder to the police on Tuesday “for obtaining money by false pretences”. Shah insisted that Timba had reneged on an agreement in which the Indian businessman was entitled to half of the not less than US$25 million capital-uplift over a US$5 million loan.
If it was not for the capital uplift of no less than US$25 million, Shah would not have given Timba the money on a low-interest rate of 9% per annum at a time banks were quoting rates of over 50% per annum, sources said on Friday. Timba was not answering his mobile phone on Friday but later told Standardbusiness to send questions via short message service (SMS). He did to respond to the inquiries.
The NSSA-RFHL deal is now threatening to split cabinet along political lines with Zanu PF ministers against the intervention. This has seen a number of articles appearing in the state-controlled media attacking Biti for intervening to save RMB from collapse, a move they allege would kill confidence in the banking sector. The Zimbabwe Standard