Windhoek-Former board chairperson of the SME Bank, which is under an order of liquidation, George Simataa, yesterday said he and fellow directors have been made a sacrificial lamb in the bank’s controversial N$200 million investment, which he says was never sanctioned by his board.
The so-called investment, which Simataa says was first brought to his attention by Bank of Namibia Governor Ipumbu Shiimi in September 2016, was made with little-known South African entities and fear is mounting the money would never be retrieved.
Simataa said when he got wind of the controversial investment, he immediately followed up the matter by demanding board minutes approving such transactions.
Management could not produce such minutes and Simataa then approached his predecessor chairman, Frans Kapofi, for clarity but he too was not aware of the investment.
Simataa’s board, together with the bank’s Zimbabwean CEO and two other executives, was removed by the Bank of Namibia, leading to a protracted battle in the High Court.
He said the board was being unfairly targeted in that accusations, including calls to arrest and prosecute its members, were being made without first establishing facts on how the money was lost.
“To be honest, I personally and other board members were not aware of this money having been invested anywhere,” he said.
“I first heard about this money in September 2016 when the Bank of Namibia governor [Ipumbu Shiimi] called me to say, ‘Chairman, are you aware of this close to N$200 million invested in South Africa by your bank?’ I was not party to that decision and did not sign any papers in that regard.”
He pointed out what he considered a sharp contradiction between the mandate of the bank and the kind of licence it got to operate – saying this compromised the bank’s financial position.
“When this bank was being formed, there was a lot of resistance from many stakeholders, such as the Bank of Namibia. I wasn’t there during the formation but I have spoken to key people and read the literature.”
“Cabinet directed there should be an SME Bank with the mandate to access finance to smaller enterprises – people who did not have to give collateral. This mandate should have informed the kind of licence the bank was to get.
However, it transpired that the kind of licence they got was not any different from those of the existing commercial banks,” he said.
“That’s where the first problem started because there was contradiction between the mandate and the kind of licence the bank got. In other words, the bank was giving out loans without requiring collateral, as per its original mandate. They were giving out loans that are not secured, as per the mandate, but which was in violation of the Bank of Namibia licence conditions,” Simataa, who is secretary to cabinet, narrated.
“Loan recipients had a period within which they were to start paying back the loans. When we were appointed to the board, the main issue at the time was non-compliance by loan recipients. We had more non-performing loans than those that performed. When payments are not made, this is reflected in the reports to the Bank of Namibia for regulatory purposes, as non-performing loans.”
“Our view had always been that we needed to be lenient to these people because they are into small, start-up businesses as per the mandate of the bank. It was at this point that we realised the licence we had is a wrong one,” he added.
Pressed on why he contested in court the removal of his board, Simataa said the manner chosen by the Bank of Namibia to deal with issues at the bank compromised his integrity and reputation.
He was not challenging the general mandate of the reserve bank on SME Bank but the approach, he insisted.
“We had an issue with the illegal and unprocedural manner in which the governor removed us. I saw it as a way to tarnish my name. The press conference by the governor also made a lot of insinuations that we were to blame for this issue,” he contended.
“Also, he did not have the authority to remove us. What he should have done was to inform the shareholder to remove us, instead of him doing so. It’s not his job. I’ve never cried to go back to SME Bank and, frankly, I don’t want to go there.”
With the court granting approval for liquidation, the bank terminated employment of its 208 employees. State House, in a statement on Sunday, said due legal processes must be followed to bring the culprits to book.