Windhoek-Windhoek High Court Judge Hannelie Prinsloo yesterday said she would endeavour to deliver her judgement on the final winding up of the Small and Medium Enterprises Bank (SME Bank) in November, after hearing extensive arguments from lawyers fighting the closure of the embattled bank in court.
The SME Bank, which is 65 percent owned by the Namibian government, 30 percent by Zimbabwe’s Metropolitan Bank, and 5 percent by Zimbabwean businessman Enock Kamushinda, finds itself under liquidation after it made questionable investments involving nearly N$200 million – money which has not been recovered – and had not paid back any returns when they became due this year.
SME Bank was also found to have violated a number of Namibian banking laws by investing depositors’ money in fertilisers, commodities and dubious unlisted investment vehicles.
Advocate Andrew Corbett, who appeared for the Bank of Namibia, instructed by Deon Obbes on instructions of Charles Visser, maintained that the SME Bank was basically insolvent and cannot be resurrected in any way whatsoever.
He further said that the opposition of the two minority shareholders to the winding up of the SME Bank is unfounded and devoid of merit.
“The fourth and fifth respondents seek to rely on inadmissible evidence, argumentative matters and unfounded assumptions and speculation,” Corbett charged.
He said the respondents, without qualifying themselves as banking experts, offered unsolicited advice as to the alternative measures the Bank of Namibia should have taken instead of seeking the winding up of the SME Bank.
Corbett asked the court to confirm the special order to finally wind up the SME Bank and to order that the Zimbabwean shareholders pay the costs of opposition, including the costs of one instructing and two instructed counsel.
When granting the provinsional liquidation order in July, Judge Prinsloo issued a special court order for the government, the Namibian Financing Trust, the Minister of Industrialisation, Trade and SME Development, the Minister of Finance, as well as two minority shareholders from Zimbabwe, to show cause, if any, why the court should not make an order that the bank be placed under a final order of winding up, and that the costs of the application be costs in the winding up of the SME Bank.
The government respondents did not oppose the application – only the Metropolitan Bank of Zimbabwe and Kamushinda’s World Eagle Properties company did.
When the case resumed in September, Sisa Namandje who represents the Zimbabwean shareholders, opposed the winding up and said he had instructions to fight the liquidation of SME Bank. The matter was then postponed for the parties to lodge their arguments.
Corbett argued that the grounds of opposition to the winding up of the SME Bank is that the Bank of Namibia should have taken exhaustive steps to save the SME Bank, given its mandate in Namibian society to provide credit to small and medium enterprises, to help raise and maintain the living standards of Namibian people. He said that this is based on a wrong interpretation of the applicable law. There is, he said, no foundation in the argument that the Bank of Namibia should have done more than it had prior to bringing the winding-up application.
Corbett said that even the “vague” indication by the minority shareholders to recapitalise the bank cannot save it as the majority shareholder, the Namibian government, is not willing to do so.
Advocate Anthony Bishop, who appeared for the Zimbabweans on instructions from Sisa Namandje, argued that the Bank of Namibia did not comply with the provisions of the Companies Act that regulates the winding up of a business entity.
He based his arguments on the contention that the Bank of Namibia lodged the application with the Master of the High Court instead of first registering it with the Registrar of the High Court. This, he said, nullifies the entire application.
According to Bishop, the application stands to be dismissed with costs since the Bank of Namibia did not meet its obligation to satisfy the requirements of the Act.
He asked the court to reconsider its earlier ruling that the Bank of Namibia did comply with the regulations of the Companies Act and issue a new order reflecting that the application for the winding up of the SME Bank is dismissed with costs, and to include one instructing and one instructed counsel.