![SME Bank millions ‘unrecoverable’]()
SME Bank millions ‘unrecoverable’Liquidation is necessary, says Schlettwein The finance minister says winding up the SME Bank is the only viable option for the government.
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OGONE TLHAGE
There is no hope that the Bank of Namibia will ever trace the investments made in South Africa by the SME Bank, according to finance minister Calle Schlettwein, prompting decision-makers to liquidate the embattled bank.
The other reason was that the SME Bank did not fulfil its mandate of serving small and medium enterprises.
“We must be aware that they were operating under a retail licence, the reason why the regulator [Bank of Namibia] had to step in was because the prudential requirements were at risk of not being complied with. The SME Bank does not have the ability to pay out all of its depositors, if that happens, then the Bank of Namibia is obliged to step in.”
Schlettwein pointed out that the money invested in South Africa might never be recovered.
“There were efforts by the South African Reserve Bank to trace the money, those efforts failed. It appears that it may be gone, that is the main cause of its liquidity. That’s the first point. The second is that its mandate was to serve small and medium enterprises. If looking at its structure, it did not.
“It served other targets, it became a financial institution not lending itself to SMEs. The conclusion can be that it did that mandate not being fulfilled. Thirdly, it would be very irresponsible to use tax money to compensate for money that was invested outside, the banking institutions act does not allow for that.
“We will try to close the bank in a manner that all the depositors get their money back, we are curbing the losses. We are aware that others will be affected. A failing bank with a slow economy is a no-go, a failing bank will weaken the economy, we have to close the bank.”
There was an option to recapitalise the SME Bank, Schlettwein said.
“We had a choice to pump another N$500 million into the SME Bank, would the SME Bank have been okay?” Schlettwein said of discussions held to decide the fate of the embattled lender.
He pointed out that the SME Bank’s loan book would be left untouched and that no loan would be written off.
Another High Court bid for SME Bank
Meanwhile, the DTA has said that it would approach the High Court to allow the National Assembly to debate a motion calling for an inquiry into the affairs of the SME Bank.
The DTA had called for a debate but the request was shot down by the Speaker of the National Assembly, Peter Katjavivi, who said because the matter was being heard in court, the National Assembly could not discuss it.
Speaking to Namibian Sun recently, Venaani said it was strange to him that the SME Bank debacle could be discussed in public, but not the National Assembly.
“It is a shame that the Speaker blocked a debate on the matter to call for a commission of an inquiry. I am stunned that parliament cannot discuss the SME Bank. All the other interested parties can do it but not the people’s elected representatives,” he said.
According to him, efforts were being made to protect those implicated in the SME Bank saga, which according to him explained the resistance to the DTA’s bid for an inquiry.
The DTA was in the process of approaching the High Court with a view to have the merits of a commission of inquiry debated, said Venaani.
“We are approaching the High Court with a view to open up the debate for a commission of inquiry into the SME Bank. We will have our day in court, the people’s elected representatives are being trampled on,” he said briefly via telephone.
“We need to restore confidence in the SME Bank,” said Venaani of the DTA’s motivation to call for an inquiry into the shenanigans at the embattled lender.
“The intention of the SME Bank was to support SMEs and not institutions like Woermann Brock which has been operating for over 100 years. The mandate of the SME Bank has been circumvented by providing loans to the likes of Woermann Brock.
“Loans have been given to directors of the SME Bank and these directors of the SME Bank have not even read the King Report. As a board member, you should know you are the guarantor of the rules,” Venaani previously said.
SME Bank employees raise concerns
With the fate of the SME Bank already decided, its 208 employees have asked why the government had not involved them in its liquidation process discussions.
“Employees question why the majority shareholder is not addressing employees on this matter, fully knowing that the Namibian employees are suffering the consequences of other people’s action that led to money being lost,” the employees said in a letter to trade minister Immanuel Ngatjizeko signed by SME Bank acting CEO Benetus Herunga.
The employees asked if there was a possibility of redeploying them to other state-owned financial institutions.
“We are requesting the government as the majority shareholder to come up with an alternative for the employees not to end up unemployed by either opposing the closure of the bank or by incorporating the employees in state-owned institutions or other financial institutions,” the letter read.
They charged that they were being made to pay the price while the Zimbabwean executives responsible for the mess had secured employment in their home country.
“We understand that the expatriates who were in charge of the SME Bank are already employed in their country while the Namibian employees are suffering the consequences. If there are no other options but for the bank to close, we want commitment from our government to ensure job security,” they said.
Dubious investments laid bare
According to Bank of Namibia governor Iipumbu Shiimi, between N$181 million and N$196 million was invested in questionable financial instruments in South Africa.
“The Bank of Namibia’s considered view is that such investments have the potential to cause instability if they are verified to be unsound.
“The Bank of Namibia has assumed control of the operations of the SME Bank to allow for an objective and thorough assessment of the investment portfolio of the SME Bank to make a full determination of the soundness of these investments.”
According to Shiimi, the answers given by the implicated persons were not satisfactory and resulted in their suspension.
The nearly N$200 million that the SME Bank Namibia invested with two little-known South African entities was withdrawn from these companies’ bank accounts less than two months after the deposits had been made from Namibia, New Era has reported.
SME Bank funds flowed into a troubled bank, called Venda Building Society (VBS) Mutual Bank, as well as into a cash-management firm, called Mamepe Capital – both South African entities.
There were major disinvestments (withdrawals in layman’s terms) immediately after the money was deposited with the two institutions. Furthermore, very little interest was earned on the amounts deposited.
According to confidential reports seen by New Era, SME Bank deposited N$70 million with VBS Mutual Bank between 12 August and 14 October 2016.
A further N$181 million was placed in the hands of Mamepe Capital between 22 August and 8 November 2016.
Within two months, withdrawals amounting to N$69.8 million were made in the period between 13 October and 8 November 2016.
The interest earned on deposits with VBS Mutual Bank in that period include N$460 239 and an additional N$68 143 recorded as interest accrued by 31 December 2016.
This is according to documents detailing the dealings between SME Bank Namibia and the two South African financial institutions.
Mamepe Capital, acting as fund managers, received N$150 million on 22 August. That amount was followed up with another deposit of N$25 million on 1 September and a final deposit of nearly N$6 million on 8 November.
Interestingly, the withdrawals of the same funds started less than two months after the deposits were made with the two institutions. An amount of N$2.7 million was withdrawn on 13 October 2016, followed by a withdrawal of N$37.1 million the next day. About two weeks later, on 26 October, an amount of N$10 million was withdrawn, followed by N$20 million on 8 November.
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