Thursday 22 March 2018
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A penniless bank

enock Ndishishi Sackey ShanghalaSME Bank’s shady dealings exposed:
• BoN’s delayed reaction
• Namwater biggest loser
• The Jacob Zuma connection
• Ndishishi threatens lawsuit
• Gross conflict of interest
By Mathias Haufiku
It was former trade and industry minister Hage Geingob’s grand plan, the bank sent to rescue Namibia’s struggling small and medium industry.
But now Geingob’s dream to provide a platform that will assist small businesses has seemingly hit rock bottom due to alleged mismanagement, nepotism and fraudulent activities.
Upcoming businesses that often find it hard to get funding from commercial banks due to a lack of collateral, especially after the collapse the Credit Guarantee Scheme that disappeared without a trace, continue to suffer.
SME Bank failed to start off on the right note, from a technical agreement converted into shareholding without equity payment, to no shareholder certificates, vacant directorships and limited revenue flows. So dire was the situation that prominent
businessmen in the country were approached to bank their money with SME Bank.
Sources claim the bank was initially started as a Section 21 company before it was changed to a private limited company, technically making it legally defective at birth.
Although the public was made to believe that Namibia had a 65% stake in SME Bank with the remaining 35% owned by the Zimbabwean government, such structure cannot be deemed present in the absence of a shareholders agreement.
When the Bank of Namibia (BoN) announced this week that it will take over the operations of SME Bank, it came as a surprise to many, considering the fact that the media has long exposed the dubious activities taking place there but its management went to great lengths to douse the fire.
It now turns out that since assuming the hot seat at the bank in 2012, the bank’s leadership spent considerable energy taking care of themselves and making dubious investments close to N$200 million instead of taking care of SMEs.
“The bank even has a commercial arm, but this was never intended from the start.
This is why SMEs hardly benefitted from the bank. Those who benefitted extensively include the big guns such as politicians and some Zimbabweans in the health and pharmaceutical industry,” said a well-placed source, who preferred to speak under anonymity for fear of victimisation.
The Patriot understands that as a result of the mismanagement of the funds, there was a period in 2016 when the bank did not have any money to loan to potential applicants.
Venda society bank
Some of the money pumped into SME Bank was also invested outside the country. Those familiar with the transactions at the bank allege that over N$140 million was invested with the little-known Venda Building Society Bank in South Africa last year, the same bank that gained popularity when it extended a home loan to President Jacob Zuma.
This is despite the fact that one of the founding reasons of SME Bank was to keep money inside the country.
VBS made headline news last year when it came to light that it granted Zuma a loan, which enabled him to transfer R7 814 155 to the SA Reserve Bank (SARB) in terms of a Constitutional Court order handed down in March 2015.
The president was ordered to pay for non-security items at his private homestead at Nkandla.
This has raised further questions as to how Bank of Namibia failed to detect such a huge transfer.
“There were media reports in 2015 that SME Bank has no released audited reports three years after its inception as stipulated by the banking laws, why did BoN not ring the alarm bell that time already?” questioned a source in the banking industry.
Some of the institutions that banked with SME Bank include NamWater and Namcor.
NamWater is said to have banked over N$80 million with SME Bank. The Patriot understands that things started to unravel during the height of the water crisis last year.
Namcor is said to have pumped in over N$75 million from the fuel levy fund.
“NamWater approached SME Bank to have its money back to fund water projects and infrastructure but nothing was forthcoming. It seems NamWater did not even know that its money was invested outside,” said a source close to the matter.
The Mwangala deal
The board recently took a decision for the bank to acquire a major stake in an asset management company and/or form its own asset management company.
Despite the board taking a resolution failed to pass to operationalise this asset management company. The fact that a director failed to recuse himself during consultations on his salary and benefits seemingly raised no alarm bells. One of the bank’s non-executive directors, Phillip Mwangala was to spearhead the acquisition and/or formation of the asset management company and make sure that the acquisition and/or formation of the asset management company is compliant with the relevant laws and regulations.
Official documents seen by The Patriot indicates that Mwangala requested for a N$65 000 monthly pay, an ML63 AMG 4Matic Mercedes Benz to the value of N$550 000.
The vehicle’s motor plan would then be extended for an amount of N$23 050.
Mwangala’s appointment raised eyebrows back then, with many questioning why a director had to be appointed to carry out such an assignment.
Ndishishi in the mix
Having served as the permanent secretary in the Ministry of Trade and Industry during the establishing phase of SME Bank, Andrew Ndishishi is one of the figures that played a pivotal role when it came to operationalising the bank.
There are allegations that the SME Bank headquarters property is in the name Ndishishi’s late wife, Cecilia.
The next headache, sources said, seems to be how to get the property transferred to the state.
But when approached, Ndishishi vehemently denied that his late wife was in anyway connected to the building.
“I hope you have evidence of that [sic] allegations you are making because I intent [sic] to challenge that in the court of law because [it]is devoid of any truth,” he said yesterday.
Ndishishi, who currently serves as NIPAM’s acting executive director, said he is in possession of evidence that “government never bought a building but a company including assets which include the building”.
“There is prove [sic] in the company registry and Deeds Office that at no point did my wife get involved in that bank. Company registration is a public information, such information is with register company.
You are making serious allegations against someone who is not alive. Cecilia never owned a building nor had share in that company but more could come in the court,” he said. Regarding claims of insider trading, Ndishishi said: “Not as of but [I am] prepared to deal with the press platform[sic] but the court of law the issue is wrong investment not property owned by late Cecilia Ndishishi please go ahead with your article I have instructed my lawyer to monitor that publication and take appropriate action.
I believe you have your evidence just go ahead. It will be good from all of us that this communication is over until the court of law.”
Questioned about the matter, Attorney General Sakeus Shanghala said: “We are sorting out the shareholding as no share certificates have been issued.” He added: “Unfortunately at this stage I am not so sure what is there to fix but we will work with the interim board and the Bank of Namibia to restore normalcy to this important national bank!”
Shanghala said he is not aware of issues regarding the building’s ownership.
“No not at all. I haven’t heard of it. The AG Office is assisting GRN sort out shareholder issues that’s all,” he said. “GRN remains committed to the principle objectives which were the raison d’être for the creation of the SME Bank in the first place.
To this end, GRN will cooperate with the Bank of Namibia and ensure that this national institution is restored to its rightful role in financing Micro, Small Medium Enterprises (MSME’s). This objective is square and center to Article 95 of the Namibian Constitution which seeks to ensure that all of the efforts are aimed at ensuring economic growth, prosperity and a life of human dignity for all.”
DBN and SME Bank
Cabinet last year resolved that the Development Bank of Namibia (DBN) must completely disengage from financing small and medium-sized enterprises (SMEs) and concentrate on major infrastructural development projects and other big economic contributors.
The decision was taken to give both the SME Bank and the Development Bank of Namibia ample space to execute their mandates.
The Patriot understands that several DBN staff members jumped ship to SME Bank soon after the Cabinet resolution. Many were promised higher perks.
Inside information suggests that DBN’s SME portfolio was in the region of N$350 million. This money is yet to be transferred, and is likely to only move once SME Bank’s troubles are over.
It is not known how the SME Bank scandal will affect relations between Zimbabwe and Namibia, seeing that most of the top officials at the bank hail from Zimbabwe. Ali Aipinge was appointed on Thursday as acting Chairman of the board with Benestus Herunga acting as CEO.
One name that continues to keep tongues wagging is that of Enock Kamushinda.
Kamushinda is known as an influential businessman who is well-connected to decision makers in the country.
Who is Enock Kamushinda?
He is confirmed as a close friend to the Zimbabwean President Robert Mugabe and has in the past had banking interests in Zimbabwe and Malaysia.
His relationship with the Zimbabwean old President was confirmed by Mugabe himself in 2013 when Kamushinda donated a substantive amount of money for the construction of hostels near the Zimbabwe President’s Homestead in Zvimba area of Zimbabwe.
He has in the past been put under the radar by the Southern African anti-corruption watchdog for his business dealings in Zimbabwe. Although he has enjoyed close links to the Mugabes, in the past Kamushinda, who was schooled in India as a banker, spends most of his time between South Africa and Malaysia where he has some of his business interests, he entered the Namibian business sector when he spread his influence to Namibia through the troubled SME Bank.
He is also the former owner of the Metbank, which also has shares in the SME Bank and was one of the founders of the controversial business development corporation in Zimbabwe.
The controversial businessman is alleged to be close to the hardliners in Zimbabwe’s ruling Zanu-PF that financially back Mugabe’s hegemony.

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