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like a “tuckshop.”
Minister Biti said this on Tuesday in the House of Assembly during the second reading of the Deposit Protection Corporation Bill and reiterated the position during yesterday’s question-and-answer session.
The Minister took a swipe at Renaissance Financial Holdings’ major shareholder Mr Patterson Timba, fellow shareholders and management for running the financial group like a “tuckshop” without following corporate governance procedures.
RFH owns 100 percent of RMB.
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“There was a total breakdown of the sha-reholder, management and the board. We had a situation where management was both the shareholder running it like a tuckshop – kabottlestore kekumusha kaya, vatete vauya endai mupiwe masweets, mainini Lucia vauya itai kuti vapiwe mabhanzi,” he said on Tuesday.
The Minister said it was wrong and un-lawful for Mr Timba to borrow money to buy equity for a bank.
“If you have to borrow, it means hauna mari, so keep away from a bank. What happened is that people went to borrow to make equity contribution which is a reflection that you should not have been a banker at all because the presumption ndeyekuti kana wada bank urimbozha, urishoroma, saka hauchanokwereta because ukakwe-reta urikunyepera vanhu,” he said.
He said several briefcase companies were formed to hide the identity of the owners who in most cases would be the same people as a cover for the “incestuous relationship.”
“If you go at Afre, RTG and Rennaisance, you will find that there are essentially two or three people that are owning these institutions, but when you go to the company’s share register there is a whole plethora yetukwambo twakahwanda . . . this and this Private Limited, this and this Trust,” he said.
Yesterday, he said some of the goings on at the bank were illegal and said the due process of the law should take its course.
“Due process must take place and those who have broken the law must be brought to justice,” he said.
He bemoaned the fragmentation of fina-ncial service laws saying there was need to have a single regulatory authority covering banks, insurance and the Zimbabwe Stock Exchange as that would provide enhanced oversight function.
Yesterday, Minister Biti said the Go-vernment had an obligation to protect depositors’ funds.
“Government has no capacity and no intention of bailing out any failed bank.
“As Government we have a duty to protect depositors. Most of our depositors are ordinary men and women, who work so hard and put their money in financial institutions assuming they are well run,” he said.
He said it was necessary to ensure that RMB survives as it was sitting on US$66 million in depositors’ funds and its collapse would cause turmoil in the banking indu-stry and related sectors.
Minister Biti, however, said the majority of banks in the country were well run and urged people to maintain their deposits.
Minister Biti said he did not instruct the National Social Security Authority to invest US$20 million in Renaissance Merchant Bank, but urged the authority to use its discretion in establishing the prudence of the proposal.
He said while the Insurance Act empowered him to direct an insurance firm like NSSA to invest in any entity, he allowed the authority to make its own independent decision.
He said with NSSA sitting on US$130 million cash coupled with a good asset base of Renaissance Finance Holdings (RFH) represented by its equity in Rainbow Tourism Group and Afre, the parastatal was to make its own due diligence before making an independent decision to go in or not.
“A myth has been created by some quarters that we have directed NSSA to give money – we have not, but I want to say this, we could have done that.
“In terms of Section 26 (A) of the Insurance Act, the Minister of Finance has got powers of directing the deposits of insurance companies into what are called “prescribed assets,” he said.
“I have got powers of directing Zimre, Afre and Old Mutual, NSSA to say put your money there, I could have acted on that matrix.” The Minister has been under fire for making an order for NSSA to invest in Renaissance Merchant Bank in his bid to bail out Mr Patterson Timba without securing Cabinet approval.
He had only taken the case to a Council of Ministers chaired by Prime Minister Morgan Tsvangirai, which is just a referral station in terms of Government transactions.
Deputy Prime Minister Arthur Mutambara said: “As a Government we believe in the stability of the financial sector so that we do not have a run on deposits.
“As a Government we will do all we can to retain confidence in that institution (RMB) because it is depositors money.
“Once we have problems in one bank it will have a domino effect on the financial sector.”
Minister Biti castigated the people he regarded as loan sharks whom he said capitalised on the cash crunch in the economy to charge usurious rates to borrowers.
The loan sharks, the Minister said would earn US$3 million from a loan of US$ 5 million; something he said was too much an interest.
“To say it is usurious it’s an insult of the word usury. Hachisi chimbadzo, we have to find a new lexicon and these are the kind of things that were happening,” said the Minister.
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