Home » Governance » U.S $600k Council Funds Locked Up in Afrasia

More than $600 000 belonging to Harare City Council that includes ratepayers’ money and deposits from the Melinda and Bill Gates Foundation to fund a range of urban development projects is reportedly locked up in AfrAsia Bank.

The Reserve Bank of Zimbabwe in February this year cancelled AfrAsia Bank Zimbabwe Limited (formerly Kingdom Bank)’s licence after it failed to meet minimum capital requirements, becoming the second bank to fold since the beginning of the year after Allied Bank.

Recent minutes of the council’s Finance and Development Committee show that the city’s acting finance director, Mr Tendai Kwenda, revealed that cancellation of the AfrAsia Banking licence by the Reserve Bank of Zimbabwe had a direct impact on council.

“He . . . aised that City of Harare accounts with the same bank (formerly Kingdom Bank) had been closed on August 28, 2014 due to chronic liquidity challenges facing the bank, except one account which had been resuscitated with the view to enable the processing of RTGS to the China Eximbank and Harare Municipal Medical Aid Society,” read the minutes.

“The committee discussed the matter, expressing serious concern that a substantial sum and that of a partner, had been locked up due to the closure of the bank. The committee also requested the acting finance director to report on action taken by council and the bank in question on the recovery of the funds,” read part of the minutes.

The committee noted that total deposits with AfrAsia Bank with respect to rates amounted to $184 202,23 as at February 12 this year and that the Melinda and Bill Gates Foundation had deposits in the bank amounting to $450 617.

The committee tasked Mr Kwenda to submit a report to the committee on action being taken to recover council’s funds that were locked up in the bank.

The city also has some funds locked up in MetBank. The bank has, however, requested for a scheme of arrangement rather than resorting to judicial management as it could no longer meet clients’ demand deposits and maturing investments.

The committee discussed the issue, expressing concern that it was not getting adequate information on the matter and queried the rationale of preference shares. It requested for a detailed report giving more information on what transpired.

Source : The Herald