Algeria, February 5, 2018

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SME Bank liquidators get more powers

THE liquidators in charge of the winding-up of the Small and Medium Enterprises Bank have now been authorised to take legal action outside Namibia in an attempt to recover the N$175 million the bank appears to have lost to a dubious South African company.

The bank's liquidators, David Bruni and Ian McLaren, had their powers expanded on Friday by deputy judge president Hosea Angula in the Windhoek High Court.

In terms of the order, the liquidators have been authorised to institute legal proceedings in South Africa, Zimbabwe and any other country to have their appointment as liquidators recognised, and to recover any property or funds of the bank. The deputy judge president also authorised them to pay out amounts of up to N$25 000 to depositors of the SME Bank.

The bank currently has at least N$60 million at its disposal for deposit liabilities.

Bruni informed the court that the bank had 23 259 depositors, with total deposits of about N$1,05 billion. Of those depositors, 13 153 have deposits below N$100, and they stood to receive a total payout of about N$533 000 from the bank, according to figures cited by Bruni.

The depositors with deposits below N$25 000 will be paid out a total of N$16,8 million, while the 390 larger depositors, with deposits exceeding N$25 000, will at this stage receive a total of N$9,75 million (N$25 000 per depositor), Bruni indicated. Regarding the Banking Institutions Act, deposit liabilities up to an amount of N$25 000 per depositor are given preference over the claims of other creditors when a bank is wound up. The Bank of Namibia took over the management of the SME Bank at the start of March last year, after discovering that a large investment which the SME Bank had placed with a Johannesburg-based company, Mamepe Capital, appeared to have been lost.

As a result of the expected loss of the investment, the Bank of Namibia asked the High Court in early July last year to order the provisional winding-up of the SME Bank. High Court judge Hannelie Prinsloo issued an order for the provisional winding-up on 11 July, and on 29 November – with the bank's Zimbabwean minority shareholders stubbornly opposing the application for it to be closed down – found that the SME Bank was factually and commercially insolvent, and ordered that it should be finally wound up.

The Namibian government, through the company Namibia Financing Trust, owns 65% of the shareholding in the SME Bank, while the Metropolitan Bank of Zimbabwe is a 30% shareholder and the Zimbabwean company Worldeagle Properties has a stake of 5%.

Bruni recounted in his affidavit that “contradictory, unreliable, highly questionable and suspicious” information had been provided to the SME Bank and its auditors about the status of its investment with Mamepe Capital, and that the SME Bank's management also misrepresented to the Bank of Namibia where and with whom they had invested money in South Africa. According to Mamepe Capital, N$175 million was invested in fertiliser bought from a Lebanese company. That transaction, in particular, had to be investigated urgently and the funds traced as soon as possible, Bruni stated. The expected investment losses in South Africa amounted to N$174,4 million, Bruni also informed the court. Senior counsel Raymond Heathcote, assisted by Jesse Schickerling on instructions from Francois Erasmus, represented the liquidators with the hearing of their urgent application on Friday.

namibian



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