SME Bank thievery, cover-up

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NUMEROUS transfers of money through which close to N$350 million was allegedly stolen from the Small and Medium Enterprises Bank were subsequently covered up through the creation of fake documents to make the transactions appear like investments made in South Africa, according to affidavits filed at the Windhoek High Court.

The methods used by a group of alleged fraudsters and thieves who occupied positions in the bank – including top-level posts – are revealed in a 185-page affidavit by the SME Bank’s legal adviser, Tania Pearson, that forms part of documents in the latest case that the bank’s provisional liquidators have lodged in the High Court.

The bank’s provisional liquidators, Ian McLaren and David Bruni, on Monday took the first step towards suing five Zimbabweans alleged to have been involved in stealing money from the SME Bank, by getting the go-ahead from the High Court to attach assets that the five have in Namibia to confirm the court’s jurisdiction over them while they are not present in the country.

McLaren charges in an affidavit that Zimbabwean businessman Enock Kamushinda, the former chief executive officer of the SME Bank, Tawanda Mumvuma, the bank’s former finance manager, Joseph Banda, and a group of Zimbabweans employed in the bank’s finance department, perpetrated the theft that led to the bank’s financial collapse and closure in July 2017.

Kamushinda was the deputy chairperson of the SME Bank’s board of directors, and has stakes in the bank’s two minority shareholders, the Metropolitan Bank of Zimbabwe and the Zimbabwean company World Eagle Investments.

In her affidavit, Pearson provides details on the methods through which the SME Bank was defrauded and the fraudsters tried to cover their tracks, until the Bank of Namibia took over the management of the bank, in which Namibia’s government is the majority shareholder with a stake of 65%, at the start of March 2017.

Pearson joins the liquidators in charging that Kamushinda, who played a key role in having the SME Bank set up with funding provided by the Namibian government, also was a central figure in a fraudulent scheme in which large amounts of money were siphoned out of the SME Bank. Mumvuma worked with Kamushinda in carrying out that scheme, while Banda was pivotal in channelling supposed investments, which were in fact money being stolen, out of the country, and later covering up the thievery through the creation of fraudulent payment instructions, the liquidators and Pearson are charging.

Other persons who played key roles in the theft include Chiedza Goromonzi, a Zimbabwean citizen who was an administrative assistant in the bank’s finance department, and Simbarashe Magombedze, who was the bank’s assistant finance manager, and helped Goromonzi to create backdated payment instructions and investment placement instructions in an attempt to cover up the theft of money from the bank, Pearson states in her affidavit.

The method used to steal the money from the bank was that false recipient names and reasons for payments were reflected in the bank’s internal records, to create an impression that transfers of funds were in respect of the bank’s genuine business, Pearson says. In reality, though, the bank account numbers to which funds were transferred belonged to entirely different entities, she says.

Pearson also says that “virtually all payment instructions involving the misappropriation of the SME Bank’s monies” emanated directly from the bank’s finance department or the CEO’s office.

The first fraudulent payment discovered so far was done in December 2013, when N$546 000 was paid to a company with the name Moody Blue Trade & Invest 14 in South Africa, supposedly for computer software. A total amount of N$21,4 million was paid to Moody Blue from then up to July 2016 – but Moody Blue was not a supplier of computer products to the bank.

It has emerged that money paid to Moody Blue was then paid to a company in the Democratic Republic of the Congo, Hyper-Psaro, on behalf of another DRC company, MCK Mining Katanga, which was not a client of the SME Bank, Pearson says.

A total amount of N$79,8 million was also transferred to a South African close corporation, Asset Movement and Financial Services (AMFS), and of that amount, at least N$64 million was paid out in hard cash to a Johannesburg resident, George Markides, who has confirmed to a commission of inquiry in South Africa that he made at least ten deliveries of cash to Kamushinda in a hotel in Johannesburg, McLaren says in a separate affidavit also filed at the court.

AMFS also transferred a total amount of N$2,8 million to a company of Kamushinda, Crown Finance Corporation, in Namibia, while a total amount of N$2,3 million was also transferred by AMFS to an account of another company of Kamushinda, Heritage Investments, Pearson says.

A service agreement between AMFS and Crown Finance Corporation for the transfer and transport of money provides evidence of the close involvement of Mumvuma in Kamushinda’s dealings. Mumvuma – then the CEO of the SME Bank – signed the agreement on behalf of Kamushinda’s company in July 2016.

That agreement “is nothing but a cover-up for money laundering,” Pearson says.

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