The High Court of Zimbabwe has recognised the liquidation of the Small and Medium Enterprises Bank in Namibia in a step that paves the way for the bank’s liquidators to recover the bank’s assets that may be in Zimbabwe.
The news outlet New Zimbabwe on Monday reported that High Court judge Siyabona Musithu granted an application by SME Bank liquidators Ian McLaren and Dave Bruni to be recognised as the bank’s liquidators in Zimbabwe.
Musithu also recognised the Namibian insolvency proceedings in respect of the SME Bank, declared that McLaren and Bruni are entitled to administer SME Bank assets located in Zimbabwe, and that they are allowed to approach the High Court of Zimbabwe to register and enforce judgements granted by Namibian courts.
The Metropolitan Bank of Zimbabwe (Metbank), which is a minority shareholder in the SME Bank, opposed the liquidators’ application, arguing it was legally flawed, time-barred, incompetent and that Namibia was not a designated country for the registration of foreign judgements under Zimbabwean law, New Zimbabwe reported.
However, Musithu dismissed all the preliminary objections before ruling in favour of the liquidators.
The judge found that the legal requirements for recognising the Namibian insolvency proceedings had been met.
While recognising the foreign liquidation proceedings, Musithu emphasised that the ruling did not automatically register or enforce the Namibian judgements, saying any such application would have to be brought separately before the Zimbabwean courts.
The Bank of Namibia had the SME Bank wound up in July 2017.
In October 2020, High Court acting judge Collins Parker found that the former deputy chairperson of the SME Bank’s board of directors, Zimbabwean banker Enock Kamushinda, took part in the looting of the bank when some N$247 million was stolen from it before its closure.
Parker declared Kamushinda liable for the liabilities of the SME Bank, and also declared Kamushinda, his company World Eagle Investments and Metbank were liable for the debts of the SME Bank.
Parker also granted a judgement against Kamushinda, World Eagle Properties and Metbank for the payment of N$1.02 billion to the liquidators of the SME Bank.
He further granted a judgement against Metbank and World Eagle Properties for the payment of N$121 million and N$20 million, respectively, to the SME Bank’s liquidators in respect of the two shareholders’ outstanding payments for their shares in the SME Bank.
Parker found that evidence placed before him showed “Kamushinda has taken part, or concurred, in the carrying on of the business of the SME Bank recklessly or fraudulently”.
He also stated: “If the truth be told, it is plain that the monies stolen from the SME Bank were for Kamushinda’s personal gain, not for the benefit or prosperity of the SME Bank. The conduct of Kamushinda evinces a lack of any genuine concern for the SME Bank’s prosperity.”
Parker noted that according to evidence which the liquidators provided to the court, they established that more than N$247 million had been transferred from accounts of the SME Bank and stolen by Kamushinda through his companies Crown Finance and Heritage Investments.
“No other adjective than ‘stolen’ can sufficiently and affirmatively describe the act perpetrated against the funds of the SME Bank,” Parker said.
Kamushinda was closely involved in the establishment of the SME Bank and was a director of the bank and deputy chairperson of its board of directors.
He left Namibia shortly before the Bank of Namibia took over the SME Bank’s operations at the start of March 2017.
The Supreme Court stated in a judgement delivered in March 2024 that the orders given by Parker against Kamushinda, Metbank and World Eagle Investments in October 2020 could be executed, as an appeal that they had filed against the High Court’s judgement had lapsed.
In the Supreme Court’s judgement, appeal judge Dave Smuts said: “The prima facie criminal conduct on a rampant scale […] is of massive proportions, involving the theft of more than N$247 million from a registered bank to the detriment of its several deposit holders and creditors.”
Smuts said there was evidence indicating that Kamushinda not only contravened the Companies Act by recklessly carrying on the business of the SME Bank, but that numerous payments to which he was a party constituted more serious crimes like theft and contraventions of the Prevention of Organised Crime Act.
The SME Bank’s liquidators were able to establish that more than N$247.5 million was stolen from funds held by the SME Bank, with this money mostly transferred to entities in South Africa, Smuts recounted in the Supreme Court’s judgement.
He stated: “The large-scale misappropriation of SME Bank funds was, according to the compelling evidence provided by the liquidators, perpetrated by Mr Kamushinda and identified individuals who were employed in the finance department of the SME Bank, all of whom were, like Mr Kamushinda, Zimbabwean nationals.”
He also recounted that the liquidators provided evidence that some of the stolen money was in turn transferred to Crown Finance Corporation and Heritage Investments, which were both owned or controlled by Kamushinda.
The Bank of Namibia licensed the SME Bank at the end of November 2012.
The central bank approved a 30% shareholding in the SME Bank for Metbank and 5% shareholding for World Eagle Investments, while the remaining 65% of the shares in the bank were held by the Namibian government, through the Namibia Financing Trust.
