eBusiness Weekly
Hebert Zharare
Equity Properties has approached the Master of the High Court demanding the removal of Deposit Protection Corporation chief executive John Chikura and his agent, auditor Ngoni Kudenga as Interfin Bank liquidators on allegations of abusing payments by the bank’s clients.
Chikura and Kudenga also face an $11 million lawsuit emanating from prejudices Equity Properties suffered due to alleged misrepresentation of facts.
The property firm, which is also a debtor and depositor to troubled Interfin Bank, reportedly suffered heavy financial losses after the liquidators refused to release their Deed of Transfer for prime residential land held by the bank despite clearing its $3,2 million debt.
The property company argues that Interfin Bank accounts should be prepared by an independent public accounting firm and audited by an autonomous auditor instead of the liquidators.
Interfin Bank was placed under liquidation in 2015.
Information at hand indicates Equity’s Tittle Deeds for land worth millions of dollars was taken from Interfin Bank by Jayesh Shah’s company, Al Shams Global BVI Limited (Al Shams Global) without the property company’s approval.
The transaction was done in suspicious circumstances where the contra accounting entries for the money loaned by Al Shams Global to the troubled bank including related loan repayments are not being disclosed by the liquidators.
Reports say the absence of such disclosure enables Al Shams Global to claim the position of a preferred creditor.
In documents lodged with the Master of High Court on Thursday last week, copies of which are in the possession of Business Weekly, the property firm gave 30 days of its intension to sue Chikura and Kudenga for $11 million.
Equity objects to the accounts being prepared by the liquidators of Interfin Bank.
“We hereby give you a notice of 30 days that we intend to (a) apply to the court in terms of Section 273 of the Companies Act for the removal of the liquidator of Interfin Bank, its representative and agent.
(b) To sue the liquidator of Interfin Bank, its representative and agent for $11 million for damages unless.
( i) The liquidator upholds our Settlement Agreement including releasing our Deed of Transfer within the next 30 days (from October 20).
(ii) The liquidator, its representative and its agents give an acceptable reason why they should not be sued for such damages.
“(Equity management also wants (iii) The liquidator including its representative and agent agree to convene a meeting of creditors where various issues regarding the conduct of the liquidator or its representative or its agent are put to a vote of creditors in terms of Section 289 of the Companies Act.
(iv) The money we paid is put into a trust account jointly controlled by DPC and Al Shams Global and our Tittle Deed is released in the meantime while DPC is pursuing its legal cases with Al Shams Global. Whoever wins the court case between them wins money in the trust account as per the court order. This arrangement will not prejudice us any further,” reads the documents in part.
Chikura yesterday said the DPC was going to respond to the charges using relevant channels.
“I am going to respond to that. It’s not correct. Since they have written to the Master of the High Court, we are also going to respond through the Master of the High Court. We cannot comment on the issues raised to you, mind you the Master of High of the High Court is a Court of law,” he said.’
In the 15 page document Equity raised 42 reasons why Chikura and Kudenga were supposed to be booted out as Interfin Bank liquidators. The property firm also justified the $11 billion lawsuit against the two.
Details are that on 17 December 2015, Equity Properties and Interfin Bank signed a settlement agreement where the property company agreed to repay $3,2 million in the form of Treasury Bills. In turn the financial institution agreed to release Equity’s Deeds of Transfer within 10 days.
As per the agreement, on February 23, 2016, the property company paid $3,2 million as full and final settlement of the amounts due to the bank, but over a year down the ladder, the liquidators are yet to release the Deeds.
The matter then came to a head when the DPC disclosed that Interfin Bank had released the mortgage bonds and the deeds to Al Shams Global.
However, it emerged the mortgage bond released to Al Shams Global was cancelled by the courts under case number HC 3987/13 and that the property company had not signed the Acknowledgement of Assignment as required by section 5.1 (a) of the Security Assignment Deeds between Interfin Bank and Mr Shah’s company.
There is also a court order HC 3924/13 directing Equity to pay Interfin and not Al Shams Global, making Mr Shah’s company’s holding onto the Deeds an unlawful double claim.
“It appears Interfin Bank borrowed from Al Shams Global and purportedly sold certain Bankers Acceptances issued by Equity Properties and accepted by Interfin Bank, to Al Shams Global as party of such borrowing.
However, the mentioned Bankers Acceptances were not endorsed by us as required by the Bills of Exchange Act hence the Bankers Acceptances were not saleable or transferrable to Al Shams Global from Interfin Bank.”
The property company was shocked by the DPC actions of signing the Settlement Agreement and promised to deliver the Title Deed in 10 days, without disclosing that they did not have the said documents in their custody and that the bank had already transferred them to Al Shams Global.
Hence the liquidator and his agent’s misrepresentation resulted in the property company suffering financial prejudice of $11 million.
“Among other things, we were not able to carry out our housing development programme, transfer Tittle Deeds to our stands purchasers (over 300 of them), use our tittle deeds to raise money to pay off our creditors including Zimra.
“Our failure to pay Zimra resulted in a garnishee order on Equity Properties. Despite such prejudice, the liquidator became uncooperative including not responding to our letters or updating us on the matter.
“We were left with no option but report the liquidator and his agent to the police under case HRE CENT CR: 1591/4/16 at Harare Central Police Station.
The liquidator and Al Shams Global are creating another supervening impossibility of performance against Equity Properties by withholding our tittle deeds,” reads the documents in part.
The property company said previously it was prevented from paying the Interfin debt that ended up ballooning to $3,2 million due to external factors beyond its control.
During Dr Gideon Gono’s tenure as Central Bank Governor, the property company was owed money indirectly through its sister company, Time Bank of Zimbabwe Limited, which the apex bank was refusing to payback, resulting in the company underperforming.
“Interfin Bank was aware of this situation before the appointment of the curator.
“We therefore expected the Interfin Bank under the curator to also understand our situation because curators of banks report to the RBZ and get directions from the RBZ but for an unclear reason, the curator of Interfin Bank at that time disregarded the supervening impossibility of performance.”
Instead, Interfin Bank took Equity Properties to court over loan default and got a provisional judgement.
The property company questioned the relationship between the Central Bank and Al Shams Global given that the bank entertained reports against Equity from Al Shams, without giving it the right to respond.
However, under the leadership of Dr John Mangudya, the Central Bank settled the debt that it indirectly owed to Equity Properties, and part of the money that was used by Equity Properties to clear the Interfin debt to the last cent.
“Furthermore as a depositor, we have not yet been paid our deposit by the liquidator of Interfin Bank including the statutory payment of the first $500.
“We have ceded part of o ur deposit in Interfin Bank to other people. Both Equity Properties and its cessionaries of the deposit have not been paid, and as depositors, we are legally permitted to exercise certain rights over the liquidator,” he said.
Al Shams Global sued Equity Property under circumstances the property company say were “flimsy and dismissible” for the same money that had already been paid in accordance with a court order to Interfin Bank by Equity Properties.
“We (Equity Properties) then also sued Al Shams Global and succeeded to get a court order to attach its property to enable us to claim damages of $10 million. If we can sue or countersue Al Shams Global and succeed whenever it makes frivolous claims, why is DPC not also suing Al Shams Global for the return of our Tittle Deeds,” reads the document in part.
The property company said besides demanding the tittle deeds back, it also wanted depositors of Interfin Bank to be paid back their money, but it’s now more than a year before anyone has been paid by the liquidator and his agent from the money it paid. The depositors bemoaned that their money risked being eroded by inflation, adding all the depositors had the right to receive a share of the $3,2 million the property firm paid.
The money is, however, reportedly at risk of being all taken by Al Shams Global alone at the expense of other depositors.
It is noted that the Supreme Court ruling in case number SC 359/16 and the High Court in case number HC 6644/15 ruled that DPC and Al Shams Global should uphold the agreement between them namely 1)The Security Assignment Deed between Interfin Bank Al Shams Global; and 11) The Security Trust Deed between Bank and Al Shams Global.
Instead of enforcing the Supreme Court judgement DPC has devoted its energy on applying for a rescission of a different court judgment in an effort to reinstate a mortgage bond on Equity’s property, which was cancelled previously by the court.
“Instead, we expected the liquidator to get a warranty of execution against Al Shams Global under the above mentioned Supreme Court Ruling. Hence we kindly request your office to look into the liquidator’s competences in handling these legal cases.”
The legal boob resulted in Al Shams Global being given all the money it claimed from Interfin Bank in a court order at the expense of other depositors, and worse the liquidator misread such court order as if it included the one paid by Equity yet the court did not include such amount.
In a matter that raised concern, the lawyers being used by DPC to resuscitate the mortgage bond are the same lawyers Al Shams Global is using against Equity Properties to claim money that has already been paid to Interfin.
The objection by Equity Properties will make it difficult for the liquidator to wind down Interfin Bank unless he addresses the issues raised.
