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NSSA loses US$9m in RMB

Webdev Author 30 Sep 2011

The disclosures were made in published financial statements by NSSA, the first time it has done so since its formation about two decades ago.
The publication of the social security’s financial            statements appear to be a deliberate attempt by the current board chaired by Innocent Chagonda to break from a past of secrecy and plunder that had characterised the running of the compulsory pension scheme for years.
RMB was placed under curatorship by the Reserve Bank of Zimbabwe (RBZ) on June 2, 2011 after an investigation exposed financial mismanagement and corporate                governance deficiencies that seriously undermined viability.
NSSA disclosed last week US$8,6 million had been invested in short-term instruments with RMB.
“NSSA had short-term investments in ReNaissance Merchant Bank secured by bank guarantees and bankers acceptances,” the authority said in a commentary accompanying financial results for the full year to December 2010.
“There were no balances as at 31 December 2010. However, as at 2 June 2011 when the bank was put under curatorship, there was an outstanding amount totaling US$8,6 million,” said NSSA.
The authority became the second high profile institution to publicly declare losing huge sums to RMB, after the Zimbabwe Stock Exchange listed hospitality group, the Rainbow Tourism Group said US$5 million, most of it       earmarked to fund an ongoing refurbishment programme, had been locked up in the bank. RTG had a relationship     with RMB through its disgraced chairperson, Patterson Timba, who stepped down after the RMB scandal was exposed.
More startling disclosures were likely to emerge after forensic investigators, BCA, completed an RBZ-sanctioned investigation into RMB, and its parent company, ReNaissance Financial Holdings Limited (RFHL).
NSSA’s revelations exposed how impropriety by a few bankers had far-reaching implications on the lives of already impoverished people like pensioners, who earn US$40 per month from the authority, and vulnerable groups indirectly benefiting from its schemes.
NSSA has the mandate to establish social security schemes for the provision of benefits to contributors on retirement or in cases of injury at work.
It has a strategy of growing its portfolios through investments on the stock and money markets, among others.
During the year to December 2010, collections from the two schemes climbed to US$181,4 million, from US$166,2 million the previous year.
Investment income charged to US$18 million, from US$8 million.
Over 1?900 pensioners are on the NSSA pension scheme.
Cash-rich NSSA, which closed the review period with US$133 million in cash and cash equivalent, from US$47 million in 2009, had been directed to bail out RMB by Finance Minister Tendai Biti.
The idea was later dropped after a public outcry, but its disclosure last week revealed how it had also been the victim of a firm it was being forced to bail out.
RFHL group chief executive officer, Timba, RMB    chairperson, Lovemore Moyo, executive director for       business development Dunmore Kundishora, head of treasury, Shepherd Shara, group company secretary, Lydia Timba and Robert Tindwa were booted out in the RBZ crackdown.
“The bank was technically insolvent with a negative capital of US$16,7 million as at April 30 2011, against a prescribed minimum capital requirement of US$10 million,” RBZ governor Gideon Gono said in June.
“Given the capital deficit, the bank requires US$32,6 million to comply with regulatory capital requirements. The capital position is projected to worsen to minus US$39,2 million, if contingent liabilities on account of RFHL amounting to US$22,5 million, are factored into the above position of minus US$16,7 million,” said Gono.