… all transactions frozen
Five years ago my friends sold up their house and downsized to a small cottage. Unable to work due to illness and unable to maintain their home, they were left with no choice. They decided that they would invest the money received from the sale of the house and, because they were no longer receiving an income, they would live off interest received from that investment. Their pension, which they paid into religiously every month of their working lives, is now worthless: they get a monthly payment of $40 000 - just enough to purchase half a loaf of bread. They did not have any children and have no living relatives.
Although they battle to pay their monthly expenses, they felt confident that they would be able to financially support themselves for the rest of their lives. They had steered well clear of all the ‘dodgy’ banks that have been springing up over the past few years and instead of taking any risks, they put their whole life savings in the trust of a well known, well respected financial management company.
This week, disaster struck! Notice was given by the Reserve Bank of Zimbabwe that Sagit Finance House Limited is closed, pending liquidation. My friend was unconcerned as she had not banked with them. And then, she received a phone call to inform her that her money was placed by her investors into an account at Sagit. All transactions have been frozen. Their money is gone! The management company is apologetic. Someone else told me how she had tried to console another pensioner who had also lost everything: “He was sobbing hysterically. I could not get him to stop crying,” she said.
In the past there have been stories of old age pensioners committing suicide. They would rather die than become a burden to anyone. Pride and dignity get in the way, and many choose to suffer, rather than ask for help. I worry about my friend’s future.
In a bid to help her understand, I tried to find out what had happened. I am not a financially minded person at all, but I saw red when I read the public notice printed in the newspaper. It states:
- SFH has a capital deficit of $93.06 billion
- Identified potential shareholders are debtors with non-performing loans
- 95% of a total loan book of $123.79 billion comprise of non-performing loans
- The institution has been siphoning depositors’ funds to underwrite convoluted non-banking business
- SFH made a loss of $106.10 billion for the year ended 31/12/2005
Maybe I have a simplified understanding of what that advert means but the facts seem pretty clear to me. Non-performing loans of (95% of) $123 billion, of which ‘most are insider loans’, and a financial loss of $106 billion. I am sure any 10 year old child can work out that there is a problem there. ‘Unorthodox insider dealings’ has to be the understatement the year!
How can this happen? Who is ultimately responsible for allowing this bank to continue operating under those conditions? Where is the security net? Where the hell was RBZ and Gideon Gono when this hole was being dug? One of mugabe’s election campaign promises was ‘no safe havens for corrupt bankers’. His big threat certainly seems to have had no effect on stopping the corruption but then again, it’s a case of follow my leader isn’t it?
March 14th, 2006 08:52
The ‘financial management company’ was playing some sort of game.
No one handling investments, with any sanity at all, would invest all the funds into one institution or bank; absolutely unheard of.
What game then is taking place ?
If a sleezy financial management company knew that Sagit was about to fail, maybe they might leave a very modest sum of money with Sagit, and claim that ‘all had been lost’. Could be years, if ever, before their deception would be discovered. Maybe someone at Sagit approached sleazy financial management saying ‘ give me, soon to be unemployed and leaving the country me, z dollars and i will give you official Sagit deposit receipts for as much as you want.
So, no, i do not believe the sleazy financial management company at all; there is no way that they would have invested, or simply placed on deposit, all the money with Sagit.
Your friends, and many others, are being defrauded, and Sagit may not be involved at all, except to give cover for the malfeasance.
Let me repeat; this is close to my field of work, and never, ever, ever, would all the funds be put into one institution or investment.
My intuition suggests that sleazy financial management had actually been on the slippery slope for a long time, using ‘investment funds’ from new clients to keep the interest or dividend cheques flowing to all clients, supplementing whatever of the original capital given to them to invest that was left, given the financial turmoil in Zim.
The closing of Sagit gave them the opportunity to stop what had been a good investment program in what had been a prosperous country, but had become a Ponzi scheme as things continued to deteriorate in Zim.
March 15th, 2006 06:09
Let’s follow this thread of thought:
1. The rule of law is based upon the sanctity of private property.
2. ZANU-PF policies for years have been expropriating private property, in violation of the principles of the rule of law.
3. With the theft of private property by official government policies in Zimbabwe, why would anyone be surprised by theft in the nation’s banks regulated by the expropriating government?
March 15th, 2006 09:49
Anybody still in possesion of “money” should quickly get rid of it. Buy a fishingrod and a rowing boat for Lake Kariba, the chances of your survival has already improved. A bicycle could also be good investment. My heart bleeds.