Lloyd Gumbo, Harare Bureau
BANKERS now face 10 years in jail if they cannot repay depositors and are found reckless or grossly negligent with depositors’ money or if they defraud depositors.
This follows the approval of the Banking Amendment Bill by Parliament meant to deter bank officials from being reckless with deposits. Both the National Assembly and the Senate passed the Banking Amendment Bill in December last year. The Bill now awaits President Robert Mugabe’ signature for it to come into force.
Reserve Bank of Zimbabwe Governor John Mangudya said yesterday that any bankers found on the wrong side of the law would now be prosecuted. He said in the past, some bankers abused depositors’ funds because there was no legal provision penalising them for such mischief.
But Section 20A (4) of the Banking Amendment Bill now states that: “Whenever after an investigation, it is established that a bank is unable to repay some or all of its depositors by reason of recklessness, gross negligence, fraud or other criminal conduct, then every director or other person who was knowingly a party to the carrying on of the business of that banking institution recklessly, with gross negligence or fraudulently or through other criminal conduct, by act or omission has caused the business of the bank to be managed in breach of the duties of the directors shall jointly and severally liable for any loss suffered by the depositors or the banking institution.”
Section 20A (5) adds that: “Without prejudice to any other criminal liability incurred, where following an investigation, it is established that the business of a banking institution was carried on recklessly, with gross negligence, fraudulently or in other illegal manner, every director of the banking institution or other person who was knowingly a party to the carrying on of the business in the manner aforesaid shall be guilty of an offence and liable to imprisonment for a minimum period of ten years.”
In a wide-ranging interview with our Harare Bureau, Mangudya said abusing depositors’ funds would be a thing of the past. “We are quite happy now that the Banking Amendment Bill passed through Parliament,” he said. “It is these amendments that are going to deal with all these delinquencies, whereby abusing people’s funds becomes a criminal offence.
“It talks about governance of banks and share holding and all those things. So, yes, the Bill is now there it was approved by Parliament. What is left now is for it to be implemented. We have dealt with it decisively to improve proper governance in banking. Therefore, abusing depositors’ funds will be a thing of the past. We now have teeth to deal with the matter.”
Mangudya said the amendments were expected to bring discipline within the banking sector, where bankers would no longer abuse depositors’ funds. As such, he said, they did not anticipate banks collapsing as mechanisms had been put in place to avoid abuse of the deposits.
Mangudya said once the banking sector complied with the provisions of the law, there would be no need for the Depositors Protection Corporation to compensate depositors, as no bank would collapse. He said the economy was on a rebound, with a lot of positives having been recorded in the past year.
Mangudya said there were things that needed to be addressed to make sure the economy continued on the upward spiral.
“As far as I am concerned, this year, as I have said so many times, should be a transformative year,” said Mangudya. “We want to transform this economy. When I say transformation, I mean we need economic transformation, social transformation and those two will help to increase the welfare of the people of Zimbabwe. We need to transform many things in Zimbabwe from the usage of foreign exchange because I do believe that a number of people in this economy and economic agents are using foreign currency not efficiently.
“We are happy that Government has now put the frameworks for indigenisation which we believe are clear to foreign investors. No one is being denied to invest in Zimbabwe and Government is not expropriating people’s assets. We are saying we need to comply with the rules of Zimbabwe and we want people to invest according to Zim-Asset, the 10-point plan and Rapid Results Framework.”
Mangudya said government was also on course to clear international debt as agreed in Lima, Peru in October last year.
He said there were also targets under the IMF Staff-Monitored Programme that Zimbabwe was expected to meet before clearing the debt.
Zimbabwe owes the IMF $110 million, the World Bank ($1,15 billion) and the AFDB ($601 million).