Timba in US$16 million National Social Security Authority Loot

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…Patterson Timba claims retribution

THE National Social Security Authority (NSSA) has filed criminal charges against former ReNaissance Financial Holdings Limited (RFHL) group chief executive officer (CEO), Patterson Timba, claiming the top banker swindled the defunct financial services giant of US$16 million.
But Timba has hit back, claiming NSSA had taken to retribution after he queried a multi-million dollar transaction in which the compulsory pension fund was selling shares to a Johannesburg Stock Exchange (JSE)-listed insurance group, Sanlam.
In his letters to NSSA exclusively obtained by the Financial Gazette this week, Timba fired a broadside at the pension fund, alleging that the pay-as-you-go pension scheme was planning to transfer assets owned by indigenous Zimbabweans to foreigners at a time President Robert Mugabe’s administration was championing indigenisation under the controversial black economic empowerment law.
Sanlam is South Africa’s biggest insurer and has been scouting for opportunities in Zimbabwe.
Last year, it bought a 40 percent stake in Masawara Investments Mauritius (MIM), which runs a life and short-term insurance and asset management business in Zimbabwe.
MIM is a unit of AIM-listed Masawara Plc.
RFHL was taken over by NSSA in 2012 and rebranded to First Mutual Holdings Limited (FMHL), which controlled ReNaissance Merchant Bank (RMB).
RMB was later rebranded to Capital Bank and converted into a retail bank.
This was after a Reserve Bank of Zimbabwe (RBZ) investigation unearthed what it claimed was corporate delinquency, before absolving Timba this year.
The issues highlighted by the RBZ audit included non-performing insider loans advanced to RFHL top executives, including Timba.
Capital Bank failed to stand the heat and filed for liquidation after initially going through curatorship.
Confidential documents obtained by the Financial Gazette indicated that NSSA has informed the Zimbabwe Republic Police that Timba was at the heart of transactions that prejudiced the bank of about US$16 million. In a letter to the officer commanding Harare Central Police Station dated December 2, 2016, NSSA said thousands of struggling pensioners had been prejudiced by Timba’s actions.
“National Social Security Authority holds a significant beneficial holding in Capital Bank Limited (formerly ReNaissance Merchant Bank Limited), which has since applied for liquidation following curatorship,” NSSA said.
“A forensic report was conducted on Capital Bank and its associated companies by the RBZ and by KPMG which revealed a significant number of criminal transactions undertaken by Mr Patterson Timba in his personal capacity, or shows him to be the beneficiary, or nexus of such transactions. NSSA wishes to file a formal criminal complaint against Mr Timba for such crimes inter-alia; fraud and theft in excess of the sum of US$16 million; forgery and making false statements; corruptly using false documents; corruptly concealing a transaction from a principal. Please may you commence investigations into these matters…,” the letter reads in part.
Timba’s case is the latest in a series of measures implemented by the Robin Vela-led NSSA board, which was appointed in 2014 with the specific mandate to clean up the mess at the authority.
Last week, NSSA announced the departure of 15 managers as part of its rationalisation exercise.
The pension fund fired four executives last year after audits unearthed financial mismanagement and profligacy, with top managers spending on top-of-the-range cars and mansions when pensioners were struggling to survive.
The action against Timba would be the first where NSSA has pursued an investee in one of its units to recover its dues.
Senior executives at NSSA said this week that this could mark the genesis of a long effort to recover money lost through sleaze at the authority, which has battled to execute its mandate since formation in 1994.
Millions more have been lost through poor investment decisions.
In 2011, the RBZ conducted an investigation on RFHL and associated companies.These were ReNaissance Securities, Afre Corporation and First Mutual Limited.
The investigation was triggered by insolvency of the financial services concern, which was said to have a US$16,7 million black hole.
“The investigation revealed that the bank’s losses were a result of non-performing insider loans and related party exposures amongst them gross violations of laws and regulations such as the Banking Act ….and the Criminal Codification Reform Act,” said NSSA in its letter to police.
The report revealed that there had been manipulation of financial records and submission of incorrect financial records, including understatement of provisions.

NSSA board chairperson Robin Vela

NSSA board chairperson Robin Vela

It  said RFHL had engaged in non-permissible activities through the use of a special purpose vehicle, which had not been approved by the RBZ, while it failed to comply with internal policies and procedures, along with the corporate governance irregularities.
“The investigation showed that the RFHL group corporate structure was greatly abused by the group CEO, Mr Patterson Timba, who directed the day-to-day operations of Capital Bank in total disregard of regulatory requirements, corporate governance and best practice standards. Mr Timba was found wanting on the following offences: processing of RFHL payments without the requisite approval of the bank’s managing director and finance director; owning in excess of the stipulated maximum shareholding in the bank permitted for a single individual. This was worsened by his misrepresentation of this shareholding, which was held through a façade of trusts such as the Bethel Trust and Duncar Trust, which belong to Mr Timba’s family. His shareholding was proven to also be held through officers of the company whose shares had been paid for through Bethel Trust,” it added.
“It is to note from above that Mr Patterson Timba, as group CEO of RFHL, at many occasions was in gross violation of the law and regulations for which he may be criminally and personally liable. Mr Timba can be held criminally liable under section 75 of the Banking Act,” said NSSA.
Timba said he was yet to receive the letter.
However, he told the Financial Gazette that he had fallen out with NSSA after resisting a three-way deal in which NSSA is said to have proposed the merger of FMHL and ZimRe Holdings Limited (ZHL), and then parcel out shareholding to Sanlam.
Timba has written to NSSA protesting the transaction.
“Our client has become aware that you are involved in a transaction that will result in the merger of Afre Corporation with the business of ZHL. The plan being to then dispose of a significant portion of the merged entity together with management control to a foreign entity, who we currently understand to be Sanlam Group of South Africa,” Timba’s lawyers, Muza & Nyapadi wrote to NSSA last week.
“The so-called agreements which purportedly bestowed NSSA with the majority shareholder status in Afre Corporation are, as you are aware, currently under challenge by our client in the High Court of Zimbabwe. Our client’s challenge is premised on the fact that the individuals who purported to be RFHL directors in the consummation of these ‘agreements’ had been dismissed from the board by RFHL shareholders at an extraordinary general meeting.
“Though NSSA is not a direct party in this matter, you are fully versed with it since you took it upon yourselves to appoint lawyers for the dismissed directors as well as paying their legal expenses. On this point, we wonder how your board justifies using pensioners funds to pay for legal fees for persons not employed by the authority. An appeal… was also lodged with our client to the Reserve Bank of Zimbabwe. NSSA is party to this litigation. It is through these purported agreements that NSSA illegally acquired RFHL’s principal assets, Afre Corporation and ReNaissance Merchant Bank Limited (later illegally name-changed to Capital Bank Corporation Limited),” said the letter, which was dispatched to NSSA general manager, Elizabeth Chitiga, on December 2, 2016.
The JSE, the Zimbabwe Stock Exchange and Sanlam were also copied the letter, among other interested parties.
“We are in possession of legal opinion by your lawyers, which clearly advised you that proceeding to takeover RFHL’s principal assets without the approval of RFHL shareholders in a general meeting would be a violation of (the law) yet despite this sound advice you proceeded with the illegality.
“Our client had hoped that with the change of guard at NSSA, the institution will begin to respect due process … but it appears the lawlessness and malice are now so institutionalised at the authority.
“These actions by the NSSA board and management continue to expose NSSA to extensive damages and lawsuits, a case in point being HC1561 in which our clients have lodged a claim of damages in excess of US$500 million against NSSA and others. Assuming these legal challenges do not move you at all, our client contends that perhaps this moral fact might. Having illegally alienated the majority assets of an entity owned by indigenous Zimbabweans, you are now proceeding to sell the same to foreign parties,” the lawyers said.-Fingaz

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