Windhoek-The controversy swirling around the SME Bank and Bank of Namibia (BoN) took centre stage in Windhoek High court last Friday when the bank’s sidelined directors and executives tried to convince the court their removal from their posts was illegal and has caused irreparable damages.
BoN took a decision on February 24 to remove Tawanda Mumvuma, Joseph Banda, Enock Kamushinda, Alec Gore, Ozias Bvute and George Simataa from their posts with immediate effect, following the discovery of questionable investments that did not conform to sound investment principles and reportedly placed the bank’s stability at risk.
SME Bank had invested N$231.8 million in a South African company, Mamepe Capital, and a South African bank, VBS Mutual Bank, of which N$196 million is said to still be with the two South African financial institutions, while only N$37 million – including interest of N$1.7 million – had reportedly been returned to SME Bank.
These investments were seen to be risky by the central bank and an interim board, consisting of Dennis Khama, Melani Tjijenda, Ali Ipinge and Fanuel Kisting, with Benestus Herunga as acting CEO, was appointed to.
The six former directors and executives through their legal team argued in court that the decision taken by the central bank on February 24,
which came into effect on March 1, was in effect unlawful and invalid. The applicants further stated that they were never given any opportunity to explain themselves and that their reputations have subsequently been destroyed.
“Because of the far-reaching effects, the officers will never be able to hold any office in any financial institution,” explained Advocate Vincent Maleka on behalf of the applicants.
In terms of Section 56 of the Banking Institutions Act of 1998, a director or officer found by the central bank to be ‘no longer fit to hold office’ and to the effect that such an officer is removed, he/she may not hold any office in any banking institution after their removal from office.
However the BoN, the chairperson of BON, the board of directors, SME Bank Ltd and seven other respondents have made it known through court submissions that it was entirely within the central bank’s mandate, which is lawfully supported by Section 56 of the Banking Institutions Act, to remove directors and executives and appoint an interim board at SME Bank.
Further, the respondents asked that the application be dismissed and struck from the court roll.
SME Bank is jointly owned by the Namibian government through the Ministry of Industrialisation, Trade and SME Development and Metropolitan Bank of Zimbabwe (MetBank).
A ruling is expected to be handed down in the matter on April 19.
Advocate Vincent Maleka – supported by Sisa Namandje and Mbushandje Ntinda – represented the applicants, whilst Deon Obbes represented the ten respondents.