Fees dispute stalls KBAL liquidation
Brian Benza | Friday September 9, 2016 14:57
Deloitte’s Max Marinelli resigned as the liquidator of KBAL in March this year after falling out with the creditors, but has now declined to hand over the case to the new liquidator, John Little, before he is paid.
On Wednesday, director of tax services at Deloitte, Terry Brick told BusinessWeek that the creditors have declined to pay Delloite for the services rendered since June last year when they were appointed the liquidators.
“They are querying the amount we have charged for the liquidation services. But, on our part we cannot hand over the process to the new liquidator until we are paid. The agreement was that they pay before we hand over. We will now wait for a meeting with the Master of the High Court who will adjudicate on the fees,” he said.
Terry however declined to disclose how much the creditors owe them although the bill was estimated to have stood at around P600,000 in March this year.
KBAL, which had no resident depositors based in Botswana, was last May placed under liquidation due to insolvency after an audit uncovered an $18.7 million (P200 million) mismatch between assets and liabilities.
Marinelli was then appointed liquidator the same month, but the liquidation process was derailed at a meeting held in November after creditors declined to give him autonomous authority to sell the assets of the defunct offshore bank.
KBAL depositors and debtors are predominantly in Zimbabwe where the bank originates. Creditors’ claims that have been accepted by Marinelli so far amount to $15.4 million while the liquidation account currently only holds $200,000.
Among some of KBAL assets to be liquidated include KBAL building in Kgale Mews, telecommunications equipment in Harare plus a $11 million loan book, whose recoverability is truncated by geographical challenges as well as Zimbabwe’s depressed economic landscape.
According to the balance sheet compiled by Marinelli in May 2015, KBAL had liabilities amounting to $19.1 million.
On the other side of the balance sheet, the bank owns assets worth a mere $2.4 million with the bulk of that money in the form of advances to customers amounting to $1.8 million.
On the best-case scenario, Marinelli however estimated that the recovery rate can rise to 27% as the recoverability of the advances to customers and assets held offshore cannot be fully ascertained at present.
Information at hand shows that KBAL’s liquidity and solvency matters largely stem from a shareholder dispute at its parent company in Harare, which resulted in the offshore bank losing $17 million in near-cash financial instruments invested in the holding company, Kingdom Bank Zimbabwe (KBZ).
KBAL, which was 100% owned by Zimbabwean businessman, Nigel Chanakira, was registered in Botswana in 2003 with KBZ, as its parent company and technical partner.
KBZ would later enter into a partnership with Mauritius-based Afrasia, but the business later ran into financial difficulties resulting in a separation between Chanakira and Afrasia. The $17 million investment made by KBAL in KBZ could not be retrieved due to liquidity constraints in Zimbabwe, resulting in the shareholders agreeing to swap assets.