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Oliver Kazunga Senior Business Reporter
TETRAD Holdings’ board of directors are baying for judicial manager Winsley Militala’s head after he issued an “inaccurate” report that implicated top executives in the more than $25 million unsecured loans — blamed for causing the collapse of the bank.

The High Court placed the investment bank under provisional judicial management in January this year to safeguard the interests of depositors and creditors.

The court subsequently appointed Militala as the provisional judicial manager.

In a recent report availed to the court, Militala said the bad loans amounting to $25.1 million, which is 40 percent of its loan book, were a major contributor to the bank’s closure.

He said owing to undercapitalisation of the bank as evidenced by negative core capital of $38.2 million, the bank’s financial position was inadequate to cover the risk to which it was exposed.

“The bank failed to adequately protect its assets, earning capacity and its reputation as is evidenced by the high levels of non-performing loans. Best practice would have seen a strong internal control system and appropriate corporate behaviour forming the basis for effective, entrepreneurial and prudent management of the bank’s affairs,” read part of Militala’s report.

Yesterday the Tetrad Holdings board refuted claims made by Militala and dismissed the content, accuracy and conclusion of the report.

“We now have the gravest reservations regarding the qualifications of, the competence and partiality of, Winsley Militala in the discharge of his duties on behalf of the members and creditors of the bank.

“In the time available prior to the creditors meetings to be held on Wednesday April 22 and Friday 24th of April, the board of Tetrad Holdings and the previous management and directors aren’t able to address in detail what we perceive to be a large number of significant inaccuracies contained in this report,” said the board in a statement.

“In addition, many of you may have seen and been influenced by stories published in the press based on material contained in Militala’s report, which material we also believe to have been inaccurate and potentially misleading.”

The Reserve Bank of Zimbabwe has said it is revising principles of the Banking Act to make top executives and boards of directors criminally liable to bad lending.

The proposal comes against the backdrop of concerns that a lot of bank failures were due to bad corporate governance practices.

The board said Militala’s comments were defamatory as there was no substantive evidence for the alleged behaviour and conduct of the bank’s management and directors.

It said it was prudent to alert its members and creditors ahead of the meetings due this week in Bulawayo and Harare to the “apparent inconsistency in the conclusion of report” published by Militala.

The board said it would, together with creditors and members, challenge Militala at the forthcoming meetings as to the logic and intention of his recommendation.

“In making this statement, it’s the intent of the board of Tetrad to consider whether Militala’s appointment is in their interest. Militala’s primary obligation is to act in the best interests of members and creditors. To that end, he must engage with every part or institution, which could be able to protect those interests.

“In our opinion, Militala has failed completely in his attempt to discharge his obligation. For example, although prior to the first creditors meeting he had met with representatives of Horizon, he has failed to meet with them at any time since.”

Horizon Capital is a Russian investor that has shown keen interest in acquiring a controlling stake in Tetrad Bank.

The board said in the paragraph of his report immediately prior to his recommendation that the bank be provisionally liquidated he states, “At the time of concluding this report, (1) was yet to hold a meeting with Horizon. The advisors to the transaction had initially requested for a meeting and unfortunately failed to show up instead they sent a letter requesting numerous banking information, which is being attended to.”

Despite implicitly recognising the existence, the board said, Militala nonetheless considers it correct to recommend that the bank be placed under provisional liquidation on the specific grounds that “there are no re-capitalisation initiatives or other forms of intervention that were currently being considered save for the Horizon transaction. . .”

Tetrad Holdings further argues that Militala failed to disclose that he had cancelled or failed to attend three meetings arranged by Horizon.

“He has been invited to physically inspect the financial instruments in Horizon’s possession that would provide the necessary injection of capital to enable the bank to survive.

“He hasn’t done so and he has now indicated in writing that he is extremely reluctant to meet with any representative of Horizon. It would appear not for reasons associated with any discharge of his duties but for personal reasons related to his own comfort,” said the board.

It urged members and creditors to enquire at the creditors’ meetings for Militala to explain why he can possibly recommend that the bank be placed in liquidation, “an extremely expensive and damaging step to take”.