Judgement reserved for SME Bank closure

The supreme court yesterday reserved judgment in an appeal case to stop the closure of the Small and Medium Enterprises Bank.

Two companies, Metrobank of Zimbabwe and World Eagle Properties, all owned by Zimbabwean minority shareholder, Enoch Kamushinda are seeking a supreme court ruling to set aside a High Court decision to wind up the bank.

This came about due to SME bank having gone bankrupt after shady investments in South Africa led to huge losses, prompting the central bank to close it.

Represented by Anthony Bishop, the applicants submitted that the central bank rushed to seek closure of the bank when it knew that things had not been well and failed to take necessary steps to replace the incompetent management.

Taken over by a better managing team, Bishop further said, the bank could have been recapitalised so it continues to act out its mandate as a tool for upliftment for the marginalised of Namibia.

However, Supreme Court Judge Sylvester Mainga wanted to know if there was solid evidence that indeed the bank had uplifted the marginalised, to which Bishop admitted that there was none.

 

Bishop, however, argued that the trade minister and that of finance should have been ordered to file affidavits to explain to the court why an order for recapitalisation of the bank was not possible or viable by its 65% ultimate shareholder, the government.

 

Ahead of the closure of the bank, the finance minister, Calle Schlettwein had written to the bank that treasury did not have funds to resuscitate the bank.

 The lawyer also submitted that the liquidation order should have been extended and have the government, the trade and finance ministers directed to file affidavits setting out all facts material to the application, which fell within their knowledge.

 

“Alternatively, the court should have exercised its wide discretion not to order the final winding up and dismiss the liquidation application or granted other appropriate relief,” said Bishop who was also appearing together with lawyer, Sisa Namandje.

 

Judge Mainga, however, had issues with the minority shareholder of the bank saying that he failed to make a monetary offer to resurrect the bank when the Bank of Namibia invited him to do so.

 

Judge Dave Smuts also wanted to know what steps had been taken in that direction, if there were any.

Council for the state countered that the decision to close the bank was imperative given that as far as the central bank was concerned, the solvency and liquidity of the SME Bank was critical to the economy’s overall financial stability.

 

Led by lawyer Cobert, they submitted that the SME Bank had nothing special about it that separated it from all other banks as it was granted the same licence as others.

He took issue with why the appellants would seek to stop a process that was meant to recover stolen funds.

As far as he was concerned, it was important to safeguard the savings of the depositors and thus the appellants’ “opposition is unreasonable”.

 “The level of mismanagement (at the bank) is disheartening, especially for depositors,” he added.