More than a hundred employees at the beleaguered SME Bank could be jobless if government does not recapitalize the bank with over N$400 million by 30 June 2017.
A senior official at SME Bank, who spoke under anonymity, voiced fears that the 120 workers at the bank could lose their jobs while clients could lose millions of dollars in investments could be lost if government does not come to the rescue of SME Bank soon.
A meeting was scheduled for last week between Trade minister Immanuel Ngatjizeko and Bank of Namibia to discuss the matter, however the meeting did not take place because the minister was not available. Chief amongst the concerns said the official, was “the finance minister’s indication that Treasury can only avail N$17 million to SME Bank.”
According to the source, an amount of N$50million is due to Social Security Commission on June 15, which is unlikely considering the bank’s teetering financial position. The source said under the current financial circumstances, SME Bank will not be able to sustain its operations past the set date.
Efforts to trace the SME Bank money invested in South Africa were intensified after the Namibian authorities approached the Financial Services Board(FSB) in South Africa on 27 March 2017 to help trace the money.
FSB Media and Stakeholder Relations Manager Nobuthula Mtungwa confirmed the request when approached by this newspaper.
FSB is an independent institution established by statute to oversee the South African Non-Banking Financial Services Industry in the public interest. Its mission and vision are to promote and maintain a sound financial investment in South Africa.
She said the request entailed “obtaining information relating to SME Bank’s investment from Mamepe Capital.” Regarding talks that FSB is taking Mamepe Capital to court over the matter, she said: “There is no court case between the FSB and Mamepe Capital. The FSB however can confirm that it has received a request from Namibian authorities regarding this issue. At this stage we are considering the request.” The investment made in South Africa is estimated at an amount of N$196 million. BoN launched the probe to determine the whereabouts of the funds. Court documents
however indicated that the axed top
executives at SME Bank are adamant that “once a client makes a fixed investment the recipient of the funds can take positions best suited for them to maximize on the returns of such an investment. In this case Mamepe is no exception.”
“Therefore there is no material difference as the third respondent[SME Bank] did place the investments on a fixed-term deposit, and Mamepe in return invested in consumable assets. This is normal practice. There is simply nothing wrong,” reads court documents filed by the executives.
A 2016 Deloitte and Touche report has revealed weaknesses around physical and logistical access control areas at the bank.
This ranges from biometric access for terminated employees not being revoked timely; management does not perform regular user access reviews and access request forms for users requesting access to the payment systems are not retained.
Deloitte recommended that general computer controls ad selected application controls should be improved. “We have noted a Management Agreement between SME Bank and Metropolitan Bank of Zimbabwe Limited, but according to management no management fees have been paid to date since inception. It is not clear whether such fees could be charged retrospectively in an event of dispute between the parties,” the report found. The report also warned that SME Bank could be exposed to “a risk of the termination of the sub-license agreement” because the core banking system license vests in World Eagle Investment(Private) limited, which is one of the three SME Bank shareholders.
In 2015 already, the bank warned that the ability of the Group to continue as a going concern is dependent on a number of factors. “The most significant of these is that the directors continue to secure funding for the ongoing operations of the Group and that the shareholders commit to continue injecting capital into the Group for so long as it takes for the group to become self-sustainable. We draw attention to the fact that as at 28 February 2015, the Group has a loss for the year of N$72 354 998 (2014: N$69 754 039) and accumulated losses of N$ 183 980 335 (2014: N$ 111 625 338) with a loss for the year of N$ 71 589 340 (2014: N$ 69 972 799); and the company has accumulated losses of N$ 183 880 675 (2014: N$ 112 291 335).”
The report further stated: “The shareholders have committed to financing the Group in the short term. However, in the long term the Group has a turnaround plan in place through which the Bank expects to incur losses at a reducing rate for the next 2 financial years, break even in the 2017/2018 financial year and be profitable thereafter.” Since the establishment of SME Bank, government has pumped about N$470 million into the bank since inception.
Trade minister Immanuel Ngatjizeko recently appealed to Chief Executive Officer (CEOs) of State Owned Enterprises not to de-invest their deposits from the beleaguered bank saying it will undermine the bank’s sustainability and existence, saying any: “Any decision to de-investing deposits from the SME will “nullify” the N$470million that Government has invested in the bank”.
Simataa cries foul
While seeking for interim relief in the High Court-which was eventually declined-Cabinet secretary and SME board chair George Simataa claimed the public would lose confidence in his work if no relief was granted. “In my own case I am the head of the Cabinet Secretariat, a very senior position,” he pleaded.
Simataa claimed the, together with the other applicants, he was removed from his position as SME board chair in the most depressing and public manner. “Their reputations as senior functionaries in the Republic of Namibia have been gravely damaged and continue suffering stigmatization on a daily basis,” Simataa said.