Hope for SME Bank depositors

THE provisional liquidators of the Small and Medium Enterprises Bank have been authorised by the High Court to pay out the money that 98% of the bank’s depositors have in their accounts at the bank.

In an interim order granted by Windhoek High Court judge Nate Ndauendapo on Friday last week, the SME Bank’s joint provisional liquidators, Ian McLaren and David Bruni, have been authorised to pay the bank’s deposit liabilities up to amounts of N$25 000.

In the same order, the master of the High Court, Elsie Beukes, has also been authorised to call a first meeting of creditors of the SME Bank. The interim order is in effect until 17 January at this stage.

The order allows the provisional liquidators to return the money that 98% of the SME Bank’s depositors have in accounts at the bank, to which they have not had access since the bank was ordered to be wound up in July 2017. Depositors with amounts of more than N$25 000 in accounts at the bank would not benefit from the court order that Beukes, McLaren and Bruni applied for.

In an affidavit filed at the court last week, Bruni informed the court that the SME Bank has a total of 23 259 depositors, of whom 22 864 – 98,3% of the bank’s depositors – have amounts of less than N$25 000 in their accounts. Those depositors’ claims against the bank total N$16,8 million.

Bruni also recorded that 390 of the bank’s depositors have amounts of more than N$25 000 in their accounts, with their claims against the bank totalling N$1,037 billion.

He further stated that the accounts of five of the bank’s depositors are empty.

There are “more than sufficient funds” available to enable him and McLaren to pay depositors’ claims, but they could not do so without being authorised by the court, Bruni stated as well.

He also remarked: “The small depositors are suffering, and are continuing to suffer financial hardship due to the fact that their funds are being retained. This situation should be resolved as soon as possible.”

It is inescapable that the paying out of deposit claims below N$25 000 would simplify and speed up the winding up of the bank, because it gets the claims of 22 864 of the bank’s 23 259 depositors out of the way, Beukes says in an affidavit also filed at the court last week.

She further pointed out that McLaren and Bruni first applied for and were granted a court order allowing them to pay the claims of depositors with amounts of up to N$25 000 in accounts at the bank in February last year. However, the bank’s minority shareholders, the Metropolitan Bank of Zimbabwe and the Zimbabwean company World Eagle Investments, had that order rescinded in April last year.

The liquidators have appealed to the Supreme Court against the judgement in which the February 2018 order was rescinded, but their appeal will only be heard towards the end of 2020, Beukes said.

She also remarked that over the past two years, the two minority shareholders have through “a barrage of litigation and opposition levelled against the provisional liquidators and the master’s office” managed to postpone and delay the finalisation of the liquidation of the SME Bank.

In one of their latest moves, the two shareholders and Zimbabwean citizen Enock Kamushinda, who is a former board chairperson of the SME Bank and shareholder of World Eagle Investments, are asking the High Court to declare that the Bank of Namibia’s closure of the SME Bank in 2017 violated their constitutional rights and was invalid and void, Beukes pointed out in her affidavit.

In response to that application by Kamushinda and the minority shareholders, McLaren and Bruni are now asking the court to declare the Metropolitan Bank of Zimbabwe and World Eagle Investments liable for the debts of the SME Bank at the time it was ordered to be wound up in July 2017, and to order the two shareholders and Kamushinda to pay N$1,08 billion to the liquidators.

McLaren and Bruni further want the court to grant a judgement for the payment of N$121 million against the Metropolitan Bank of Zimbabwe, and for the payment of N$20 million against World Eagle Investments, based on an allegation that the two shareholders never paid in full for their stake in the SME Bank.

The Namibian government, through the Namibia Financing Trust, has 65% of the shareholding in the SME Bank.