Mthuli And The Fall of Barbican Bank Limited
30 June 2020
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Why did and how could President Mnangagwa appoint Professor Mthuli Ncube to be the Minister of Finance?

By Goodman Tamuona Musariri

Introduction :
|” Barbican Bank Limited , a wholly owned subsidiary of Barbican Holdings Limited was licenced as a commercial bank in December 2002 and commenced operations in July 2003.”|

• The Bank faced serious liquidity challenges largely emanating from the funding of sister companies such as asset management companies and group subsidiaries in South Africa as well as non performing insider loans.

• The Bank engaged in fraudulent foreign exchange activities to fund operations of foreign subsidiaries.The bank used local depositors’ funds to support it’s operations in South Africa , London and Zimbabwe.

• Poor corporate governance practices were at the centre of the challenges that faced the bank .There were no seperate and independent boards for each subsidiary and the holding company .In addition , there was over domineering by the Chief Executive Officer – Professor Mthuli Ncule – who was one of the major shareholders.

• The group mixed banking and non-banking business despite an earlier undertaking by management do desist from the practice after being warned of the dangers of such practice by the Reserve Bank.

• The bank also abused Reserve Bank Liquidity support by funding non-banking activities such as purchase of shares in various counters on the stock exchange.

• A Corrective Order was issued to the bank on 13 January 2004 , to address the identified deficiencies and irregularities.

• The Reserve Bank subsequently determined that the institution was insolvent and illiquid .The board and shareholders failed to resolve the challenges faced by the bank resulting in the Reserve Bank placing the institution under Curatorship on 15 March 2004.

• The Curator confirmed that the bank was both insolvent and illiquid and hence explored possible ways to recapitalize the bank.

• Shareholders subsequently made half hearted proposals which fell short of fully addressing the liquidity and solvency challenges facing the bank .

• In view of the above , recommendations were made to incorporate assets of the bank into Zimbabwe Allied Banking Group (ZABG) in January 2005 , as part of the implementation of the Troubled Bank Resolution Framework.

MAJOR CAUSES OF PROBLEMS OF BARBICAN BANK UNDER AND OWNED BY PROFESSOR MTHULI NCUBE:

|” Barbican Bank owned and run by Professor Mthuli Ncube who was still appointed the Minister of Finance was a disaster .It was an institution with deep-rooted structural anomalies , inadequate risk management systems , poor corporate governance practices , liquidity and solvency challenges which failed to adjust to the macroeconomic environment .”|

Inadequate Risk Management Systems
|” Barbican Bank under and owned by Professor Mthuli Ncube operated with risk management systems and poor management information systems. Consequently , controls were inadequate to mitigate the risks the bank was exposed to, leading to total failure of Barbican Bank.”|

Poor Corporate Governance

|” Barbican Bank owned and managed by Professor Mthuli Ncube was replete with poor corporate governance structures, characterized by improperly constituted board of directors , poor board oversight, inexperienced management , and undue influence or dominance by Professor Mthuli Ncube and a few shareholders who were related to him ?.”|

Diversion from Core Business to Speculative Activities

|”Professor Mthuli Ncube used Holding Company to evade regulation as depositor funds were channeled to associate companies and /or related parties such as asset management or investment Companies, which were not regulated. In addition ,Barbican Bank abused liquidity support from the Reserve Bank to fund non-banking subsidiaries and associates’ requirements.”|

Rapid Expansion
|” Professor Mthuli Ncube led rapid and ill-planned drives which were not sychronized with the overall strategic initiatives of the institution which exposed the bank to greater risk of loss. Consequently , the capital base of Barbican bank could no longer sustain the excessive expansion programme which was ill-planned in the first place?. The saddest part played by Professor Mthuli Ncube on this point is that the aforesaid rapid expansion was funded by depositors’ funds as opposed to equity?.”|

Creative Accounting

|” Barbican Bank owned and managed by Professor Mthuli Ncube was misrepresenting their financial condition , while some were tampering with the information systems to conceal losses by creating fictitious assets and understating expenses and liabilities.?”|

Overstatement of Capital
|” The Barbican Bank owned and managed by Professor Mthuli Ncube overstated it’s capital positions by under-providing for non-performing loans , while falsifying transactions to conceal undercapitalisation . In some instances Barbican bank under the direction and control of Professor Mthuli Ncube was involved in ellicit and unethical practices involving the use of depositors’ and borrowed funds to create an illusion of adequate capitalization thereby violating the Banking Act and the Companies Act.”|

High Levels of Non-performing Insider Loans

|” Poor corporate governance practices, weak underwriting and monitoring standards, as well as the aforesaid ill-planned growth contributed to excessive levels of Non-performing Insider loans and Politically Exposed Loans (PEPs) who included Senior ZANU P.F and Government officials. Barbican Bank under the ownership , control and management of Professor Mthuli Ncube disregarded set prudential lending limits notably to insiders and related parties. In some cases , interest was not charged on insider loans and the loans were eventually written off without board approval . As a result of illicit dealings with insiders and related parties and / or due to operational losses , Barbican bank failed to meet the prescribed Prudential capital adequacy ratios ?”|

Unsustainable Earnings

|” The high paper profits that were recorded by Barbican Bank prior to 2004 were largely a result of revaluation of assets in sympathy with inflation and exchange rate developments in the market .In some cases , Barbican Bank even went as far as declaring dividends from the unrealized profits arising from investments in Long-Term assets which were experiencing an asset bubble. Significant losses were recorded when asset prices crashed. In a bid to enhance earnings in the face of increased competition and high operational costs , the imprudent Barbican Bank , engaged in non-core activities which were not sustainable and in some cases non permissible all commanded by the now Minister of Finance , Professor Mthuli Ncube brought back from fugitive life through a highly questionable ministerial appointment by President Dr. Mnangagwa?”|

Chronic Liquidity Challenges

|” Barbican Bank owned, managed and solely controlled by Professor Mthuli Ncube did not have comprehensive liquidity and funds management strategies and policies .The poor board oversight and lack of adequate liquidity risk management systems further aggravated the liquidity problems . Long-term non performing assets were recklessly funded through short-term liabilities , in an environment of rising interest rates??.

PATRONAGE , STATE CAPTURE AND IMPUNITY UNDER A SYSTEM OF KLEPTOCRACY CAN ONLY EXPLAIN THE APPOINTMENT OF THE ONCE FUGITIVE : Professor Mthuli into a Minister of Finance ? ?

• The appointment of Professor Mthuli Ncube after the fall of Barbican Bank remains an ‘Evil Under the Sun that put a poisonous odour fuelling a culture of impunity in public life that has seen corruption rise to frightening levels?

• Ministers are appointed at the pleasure and mercy of the President and both are subject to Parliamentary Oversight.

• May ZACC accept my probity against Barbican Bank as a REPORT against CORRUPTION.

• Following the background of the Fall of Barbican Bank : “Would we as serious Citizens as Sovereign be misled to think that the President by Dr.Mnangagws and his Minister : Professor Mthuli Ncube, a former fugitive of massive corruption and externalization of FOREX be credible and reliable guided by a competent real long-term vision not the fictitious 2030 rhetoric , guide the economy to attain a stable , prosperous , and healthy economy with the following characteristics:

(1) Low and stable inflation?

(2) A stable currency?

(3) A stable financial sector?

(4) Free of distortions?

(5) Adequate foreign currency reserves?

(6) Full employment?

(7) Food security?

(8) Policy consistency and credibility?

(9) Predictable policies and actions?

(10) Free of corruption?

(11) Sustainable economic growth?

(12) World-Class infrastructure?

(13) Reliable sources of energy?

(14) Sound social services delivery?

• I say , God Forbid and a big No! . There was no way Professor Mthuli Ncube who failed Barbican Bank would succeed to turn around the economy!!!

• On the other hand, Zimbabweans across the political divide must awaken to the UNCONSTITUTIONALITY of the ultra Vires ZANU P.F Central Committee unsanctioned and unlawful gathering of 19 November 2017 which adamantly violated Section 38 of the ZANU P.F Constitition.

• Combining Dr. Mnangagwa who was reinstated unlawfully back into the Central Committee by an Ultra Vires ZANU P.F Central Committee plus the return of the former EXTERNALIZATION MONGUL FUGITIVE without trial , Zimbabweans must lay the root cause of the declining performance in governance in our society at the door of the assassins of the citizen as sovereign.

WHO ARE THE ASSASSINS ?

• |” They are those who have captured the state. Capture of the polity which is characterised by a patronage-driven system in which a small ruling elite, political associates, legislators and public servants are provided with jobs in return for loyalty, regardless of their performance. Capture of key sectors of the economy following from the extension of these clientelistic practices into the private sector domain, including state-owned enterprises , for the benefit of a minority at the expense of the majority.?”|

CONCLUSION:

|”As citizens we need to engage in reasoned conversations about what matters and how we, as the sovereigns of this land , can stop the risks that are threatening our dreams .We need to shift the frame of reference from politics of fear and patronage , to assert ourselves as sovereigns and defend our constititional Democracy. We need to signal a shift from subjects to citizens and be ready to undertake the journey to the future we envisage for ourselves.”|

And

|” It was an Ultra Vires ZANU PF Central Committee unsanctioned gathering or an unlawful caucus that unilaterally reinstated an expelled V.P back into a Central Committee which the expelled V.P had gotten into it by APPOINTMENT of the former late President : Cde R.G Mugabe and supposed to serve at his pleasure and mercy of the late Mugabe who never resigned from ZANU PF but only purported to have resigned from his sovereign post as an elected National President and Head of State and Government.”|

• It is quite imminent from the above that an ULTRA VIRES ZANU PF UNSANCTIONED CENTRAL COMMITTEE GATHERING , imposed a president on ZANU PF who went on to declare an illegitimate General Election of 2018 and winning it through the Constitutional Court after Chamisa even upto this day – disputed the result and our now declared President ,Dr. Mnangagwa appointing the likes of the former fugitive of the background readily available at the RESERVE BANK OF ZIMBABWE to be a Minister of Finance ignoring all the Criminal allegations that led to the fall of Barbican Empire??”|

  • |” The process of transition from the authoritarian , discriminatory and inequitable socio-economic and political system has not yet transformed our political ,socio-economic relations to align them with the value system we adopted in our national constitution. Zimbabwe is at risk of growing cynicism towards the democratic values and human rights culture we espouse”.|

THANK YOU!

Probes :
Chairman : Goodman Tamuona Musariri
Cde Jiribada
Prophet Bokolings ?????

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