BUSINESS mogul Aaron Mushimba’s battle to try and get City Savings and Investment Bank Holdings (CSIH), the former majority shareholder in the failed City Savings and Investment Bank (CSIB), liquidated after more than a decade, has been marred by allegations of large-scale fraud and and a futile chase after ghost shareholders.
At a special general meeting last week, Mushimba got the backing from those left on CSIH’s incomplete share register to ask the High Court to liquidate the company, which has been dormant since1998. The only asset left in the CSIH stall – once the backbone of what was supposed to be Namibia’s first black economic empowerment bank – is a three percent shareholding in Mushimba’s mining company PE Minerals, which owns an interest in Rosh Pinah Zinc mine.Also at stake is some N$1,8 million in a Nedbank Namibia bank account; dividends PE Minerals has been paying CSIH since 2005. These dividends need to paid to CSIH shareholders and the company must wind up, Mushimba says.Finding these shareholders has proved difficult. The only major shareholders in Namibia are Mushimba himself, Swapo-owned Kalahari Holdings and Namib Consolidated Investments (Namcom), the company established in 1992 to realise Government’s dream of CSIB. Mushimba had to get permission from the High Court to call last week’s general meeting because scanty shareholder information prevented CSIH to convene a proper meeting as prescribed by law.In his application Mushimba filed in the High Court, he said ‘extensive fraud’ perpetuated by key players in the establishment of CSIB might mean that there are shareholders who were never registered on the company’s register.Mushimba said the ‘ruling party’ in Namibia identified the need for a merchant bank in the country ‘during or about 1991’, and ‘set about strategising’ how to create it. Namcom would control CSIH to ensure that Namibians would have the controlling interest.CSIH, an unlisted company, was to have N$10 million in capital, of which N$6,6 million was to buy 66 percent of the shares in CSIB. The rest of the money was meant for operational expenditure and future investments, which would eventually result in CSIH’s three percent shareholding in PE Minerals, mineral rights holder of the mining licence for Rosh Pinah Zinc.To raise the capital required for CSIH, the company registered a prospectus in 1993, offering Namibians the exclusive right for the first 30 days to buy shares. The money raised, said Mushimba, was paid into a trust account for release once CSIB got its banking licence. A stock brokerage called Suprafin, with a ‘certain Zirk Engelbrecht’ as principle officer, was appointed to market the rest of CSIH’s shares.In his application, Mushimba said Engelbrecht ‘later turned out to be a person under investigation in [the] Republic of South Africa and also later in the United States of America for numerous irregularities of and concerning the trading in unlisted shares’. However, Suprafin bought shares in CSIH for nine Namibian cents each, which it then sold to investors in South Africa, the US, and possibly elsewhere for up to US$3 each, Mushimba said.Engelbrecht’s fraudulent activities did not stop here.Nigeria’s Merchant Bank of Africa (MBA) was supposed to be CSIH’s partner in CSIB, buying the remaining 34 percent of the shares in the bank for N$3,4 million.MBA got approval from the Nigerian Central Bank to transfer the money. However, ‘its directors through the assistance of Suprafin’s Engelbrecht instead applied these funds for other self-enrichment schemes,’ Mushimba said.This was the beginning of CSIH’s financial woes. Mushimba said ‘it soon became apparent that MBA has grossly overstated its ability and had in fact misinformed the Namibian promoters of the CSIB project, including senior members of the Namibian Government’.MBA never took up the 34 percent it was supposed to have in CSIB.The Nigerian Central Bank liquidated MBA and left CSIH scrambling for funds to secure that CSIB would have the minimum N$10 million as capital the Bank of Namibia required before issuing a banking licence.As a result, CSIH’s reserves were ‘depleted to virtually nothing’, Mushimba said.Bank Industry Malaysia Berhad, a bank owned by the Malaysian government, stepped in as technical partner, and money from the Government Institutions Pension Fund (GIPF) helped to capitalise CSIB.Mushimba and Peter Katjavivi, a minority shareholder in CSIH, remain the only two directors. The Nigerian partners have been missing for eight years, while the South African director has made no contact for at least six years, Mushimba said.He and Katjavivi have therefore ‘agreed to attempt to bring matters to a close in the best interest of all shareholders, by declaring a dividend, and resolving to liquidate the company’.* CSIB in 2002 changed its name to Swabou Bank Limited and eventually merged with FNB Namibia.
