ZIMBABWE Allied Banking Group (ZABG) group treasurer, Andy Hodges, has quit following the discovery of a questionable transaction that he tried to push t
hrough the bank for alleged personal gain, businessdigest can reveal.
Businessdigest can reveal that Hodges, who had been with ZABG since its formation three years ago, resigned on Monday, September 24, but officials at the bank say he is on leave. Banking regulations state that once a treasurer resigns from an institution he should immediately go on leave.
Hodges resigned after it was discovered that he was allegedly using the bank systems to make margins from foreign currency transactions between clients under the Reserve Bank of Zimbabwe (RBZ)’s twinning arrangement.
Hodges this week denied that he had been forced to resign. “Those allegations are not true. I just resigned,” Hodges said.
When presented with the allegations of the illegal deals, Hodges insisted: “I’m not at liberty to reveal reasons for my resignation. Just know that I resigned for personal reasons, nothing more.”
The twinning arrangement involves the partnering exporting and importing companies for easy foreign currency management and distribution. The twinning arrangement can be used when a company needs to buy raw materials, fuel and payment of debts.
All transactions under the twinning arrangement should be approved by the central bank and done at the official exchange rate.
Sources say on September 20 the treasury department got instructions from the Commercial Bank of Zimbabwe (CBZ) to transfer funds into an account belonging to a mining company which banks with ZABG.
The mining company had foreign currency but needed Zimbabwean dollars to meet its local obligations. Hodges is understood to have organised the twinning arrangement with an importing company that had local currency but needed foreign currency to purchase raw materials and agricultural equipment.
The total value of the transaction was $70 billion which was divided in two receipts of $66 billion and $4 billion.
Hodges had allegedly given the clients two different rates for the transaction. Internal investigations have since revealed that Hodges used a parallel market rate of US$1: $300 000.
CBZ had instructed that $66 billion be transferred into the mining company’s account but did not state where the remaining $4 billion was supposed to go.
A source said Hodges, who at that time was in Kariba for a presentation at a seminar, instructed that the remaining $4 billion be transferred into his personal investment vehicle called Sasfron Trust.
Hodges said he wanted to use funds to buy some shares under Sasfron Trust. Part of the amount was supposed to be paid out directly to Hodges himself while the remainder was to be used by ZABG stockbrokers to acquire shares under Sasfron Trust.
Problems arose when the transaction was taken to group chief executive, Steven Gwasira, for approval. Gwasira refused to approve the transaction after querying why Hodges should receive such large amounts. An internal investigation discovered that the $4 billion was part of Hodges’ mark-up from the deal.
Although ZABG was not prejudiced, Gwasira was concerned that Hodges, who ran a strategic division in the bank, was using his position to negotiate parallel deals that put the institution at risk.
He was also concerned that Hodges had used the bank’s systems to push through a personal deal.
Hodges came back from Kariba on September 22 and tendered his resignation on September 24.
* Meanwhile businessdigest can also reveal that Hodges is now the second major shareholder in ZABG after government. Hodges has been buying ZABG shares over the past six months.
Hodges now holds a 1,9% stake in ZABG while government controls 97%. Hodges bought the shares from depositors of collapsed banks, Trust and Royal, whose funds were converted into shares when the financial institutions were amalgamated into ZABG. Hodges controls the stake through a vehicle called Farai Trust.