Timba family accused

Beleagured top banker Patterson Timba faces arrest after being nailed by a forensic audit for allegedly looting ReNaissance Merchant Bank (RMB) through fraudulent activities.

Timba had been the major shareholder of the bank, but it was later placed under the management of a curator.

A report compiled by BCA Forensic Audit Services - and marked "private and confidential" - reveals a trail of plunder of depositors' funds at the bank. It says the pillaging bordered on "criminality, fraud and theft".

Senior Reserve Bank of Zimbabwe (RBZ) officials are pushing for the police's fraud branch to take action.

Timba's looming arrest could be a throwback to 2004, when prominent bankers were arrested for corruption, following the closure of banks in the midst of hyperinflation.

RBZ officials told the Sunday Times on Friday steps were being taken to tackle the RMB situation.

"If you read the original RBZ investigation reports and now the forensic audit report, it's clear the bank was looted through criminal activities, fraud and theft. Depositors' money was simply stolen," a senior RBZ official said.

"If it was ordinary banking employees who stole, they would be in jail by now. But because this case involves men in suits, the wheels of justice tend to move slowly."

Minutes of two RBZ board meetings held on June 28 and September 27 reveal the central bank board resolved to call on the police to deal with the RMB crisis. If they do, police would rely on initial RBZ investigation reports.

The latest one is a two-volume, 1415-page forensic report dated October 11. The first volume has 706 pages while the second has 709 pages. A shorter version of the report, a 49-page summary prepared on August 15, says Timba and his partners, mainly Dunmore Kundishora, also a major shareholder and director, ran down the bank through systematic looting.

"Available evidence shows a total of $1018286.25 of depositors' funds were used to pay for Timba's expenses. The various payments adding up to this figure were done in violation of the Companies Act," the forensic report says.

It details a "Nick Leeson-type" of pillage, and the report also confirms findings of earlier reports that Timba siphoned off funds with his relatives through "related party transactions and insider loans".

"Investigations established that there was a total collapse in corporate governance structures at RMB, which resulted in Mr PF Timba, his father Mr PJ Timba, his brother Mr Stevenson Timba, his brother Mr Jameson Timba (the Minister of State in Prime Minister Morgan Tsvangirai's Office), his in-laws, George and Mary Mazhude, and other related parties accessing loans through various investment vehicles from RMB through RFHL's unfunded call-account numbers," the report says.

"The loans to the related parties have since matured but are still outstanding. The amounts have since been provided for in full. Related party borrowings, which were not approved by the board, were so rampant and to such an extent that it is appropriate to conclude that the intention was to loot the bank."

The report further states $313457.43 in depositors' funds was stolen, while $149913 was externalised. A further $100000 was suspected of being salted away.

It also says the transfer of $2-million to the Ugandan subsidiary was "criminal, amounting to theft and or fraud".

RMB, whose closure shook the market before a curator moved in, is wholly owned by RFHL, which also controls Renaissance Securities Limited and ReNaissance Capital Limited in Uganda.

In adition, RFHL owns 30.89% of Africa ReNaissance Corporation.

Timba was the chief executive of RFHL and a director of RMB.

RMB, technically insolvent, had negative capital of $16.7-million in April, against a prescribed minimum capital requirement of $10-million for merchant banks.

The capital position is projected to worsen to minus $39.3-million, if the contingent liabilities on account of RFHL - amounting to $22.6-million - are factored in. It would then require $49.3-million to comply with capital requirements.