Beverly scandal that rocked banking

Source: Beverly scandal that rocked banking | Sunday Mail (Business)

Assistant Editor

Intermarket Holdings Limited (IHL)’s bid to buy Beverly Building Society (BBS) in 2003 set off a chain of events that saw the ambitious bank being put under curatorship while the building society was subsequently acquired by CBZ Holdings under “questionable” circumstances.

However, recently gathered evidence suggests that IHL — which was formed by veteran banker Mr Nicholas Vingirai after he left London in 1990 where he was engaged as a money markets expert by the Commonwealth — fell victim to a plot hatched by rivals in the banking industry to prevent its ascendancy, especially at a time when it was finalising the acquisition of BBS through London-based Andrew Weir & Company (AWC).

The deal could have helped Intermarket Building Society eclipse CABS, a prospect that unnerved some market players.

But it was the bid to buy BBS that stirred up trouble for Intermarket, as offshore payments estimated at US$2,7 million that were made to finalise the transaction were conveniently used to raise allegations of externalisation against Mr Vingirai.

He was accused of negotiating and signing the deal without authority from the regulator.

In 2004, the RBZ-appointed curator Mr Ngoni Kudenga made a court application seeking to attach the banker’s immovable assets after claiming he had “reportedly fled the country and his whereabouts are unknown”.

“All efforts to contact the first respondent has failed,” claimed Mr Kudenga in the court filing.

The veteran banker, however, insists he was in constant contact with the curator and even organised a meeting in Johannesburg that did not materialise after Mr Kudenga reportedly noted he had not been given permission by his principals to attend.

According to an affidavit dated July 14, 2004, the court order was used to sell Mr Vingirai’s personal investments such as Zimbabwe Stock Exchange-listed shares, as well as those of his investment vehicle, Transnational Holdings Limited, which wholly controlled IHL.

New twist

But in a curious twist of events, it was later “discovered” that the funds that were allegedly externalised and deposited into personal offshore accounts were in fact funds paid to Andrew Weir & Company in London for the acquisition of BBS by IHL in 2003.

The transaction had been approved by RBZ in June 2002.

Interestingly, the funds paid to Andrew Weir & Company were later repatriated at the instruction of the central bank.

In a letter to Intermarket directors — who were essentially Finhold directors that had effectively controversially taken control of IHL under their “Project Goliath” plot — ZBFHL then company secretary Mr Charles Kathemba indicated that the London-based company had made an undertaking to settle its indebtedness through making a cash payment of US$700 000 and an additional $250 million in local currency.

But the exchange rate that was used to calculate the $250 million debt — equivalent to the US$2 million debt that was outstanding — was not the one prevailing in the market at the material time the repayment was made, but was instead the rate that was applicable at the time AWC initially offered to repatriate the funds originally paid to it by IHL.

“Members of the Board are advised that RBZ, in its capacity of exchange control authority of Zimbabwe, has exceptionally approved a revised offer from AWC (Andrew Weir and Company) to settle its indebtedness . . . It will be noted that the payment under (ii) is not in fact at the prevailing rate because it is not the current equivalent of US$2 million (being the balance after payment of US$700 000) . . .

“It would appear RBZ has made this decision primarily in order to facilitate the consummation of an unrelated transaction — the acquisition of Beverly Building Society by CBZ Holdings Limited,” wrote Mr Kathemba in a letter seen by The Sunday Mail Business.

Overall, it meant Beverly Building Society was subsequently transferred to CBZ for a song.

Questions were raised why the value of the building society was heavily discounted through a prejudicial deal to Intermarket when the curatorship process was ostensibly meant to rescue the financial institution.

Further, although there were claims the IHL and BBS deal had not been sanctioned by the Reserve Bank of Zimbabwe, a legal opinion given to the curator by Atherstone and Cook proved otherwise.

“There has been some suggestion that Mr Vingirai was not authorised to enter into that agreement. I think that at our meeting it was conceded that was not an argument that could be pressed. Mr Vingirai was the group chief executive, and, in any event, clients obtained a document indicating that he was fully authorised to act. Further the provisions of Section 12 of the Companies Act would not enable Intermarket to contest the authority of Mr Vingirai,” wrote the attorneys to the curator and new IHL leadership.

Notwithstanding the advisory, the curator proceeded to demand and force a repayment of the funds remitted for the Beverly acquisition from Mr Vingirai and have his personal investments reportedly worth tens of billions of dollars sold.

It was double jeopardy for the businessman, whose personal accounts and investments were cleared out purportedly to recover the “externalised funds”, while his THL also lost Beverly on the cheap to CBZ.

Even after the RBZ and the curator realised that the externalisation allegations were false, the assets that were seized have not yet been returned. Transnational Holdings Limited — Mr Vingirai’s investment vehicle — is still trying to recover its assets after a Government-brokered settlement agreement in May 2016. Although RBZ advisors Grant Thornton valued THL’s possible stake in ZBFHL at 38,70 percent, the entity however agreed to settle for a revised 33 percent.

Government has duly transferred its 22,7 percent shareholding in ZBFHL to THL, while 11 percent remains outstanding.

The recent decision by NSSA to sell its 37,8 percent equity in ZB to Datvest Nominees makes the transfer for the remaining stake to THL seemingly impossible.


  • comment-avatar
    Mukanya 1 month ago

    Nicholas Vingirai being a professional businessman failed to read the signal to grease-palm ZANUPF…. hence the flopping of his business endeavours…