THE National Social Security Authority (NSSA) is set to replace its members seconded to chair three of its subsidiaries’ boards with independent directors, as the companies concerned have recovered and are on a growth path, an executive has said.
REPORT BY NDAMU SANDU
The chairpersons seconded by NSSA have to step down by June 30 to pave way for new independent board chairpersons.
The move is in line with a board resolution stipulating that directors seconded by NSSA to chair boards have to step down. However, NSSA directors — who sit on the boards of subsidiaries, associates and those where the authority has some shareholding—will not be affected by the directive.
The affected directors are Innocent Chagonda (Afre) and Joseph Kanyekanye (Rainbow Tourism Group [RTG] and Capital Bank). Chagonda also chairs the NSSA board.
This means that other NSSA board members that are seconded to companies where the authority has shareholding — Rosa Dube (RTG), David Mutambara (CBZ Holdings) and Chris Hokonya (ZB Financial Holdings and Afre) —would remain on the boards.
James Matiza, NSSA general manager, told Standardbusiness that the initial reason for seconding the directors to the companies was that they were facing serious corporate governance and financial problems.
“We wanted to ensure that money channelled into those companies would not be abused. We put money in Capital Bank and wanted to make sure that the person appointed would go and manage that transaction. Capital Bank has stabilised and what is left is the capitalisation to meet the requirements. All other issues of former depositors have been resolved,” Matiza said.
NSSA moved into Capital Bank (formerly ReNaissance Merchant Bank) in February 2011 in a US$24 million deal after it agreed to rescue that bank that was under curatorship. RMB was put under curatorship in 2010 after a central bank investigation had unearthed serious irregularities where depositors’ funds were being siphoned by founding directors —Patterson Timba and Dunmore Kundishora.
Matiza said Afre was stable after it had been affected by the contagion effect from ReNaissance. Timba was executive chairman of Afre.
Matiza said the company was having problems to the extent that the Commissioner of Insurance instituted investigations and recommended that some directors and senior staff members should leave the organisation.
“Chagonda managed to implement the recommendations of the Commissioner of Insurance. Some board members left. From the report that is coming through, we feel that the institution is stable,” Matiza said.
In October last year, Afre shareholders booted out Timba, Norman Nyazema and Daud Dube from the board, in line with recommendations from the insurance regulator.
The shareholders also approved the recapitalisation exercise in which US$8,6 million was raised to shore up the group’s subsidiaries.
RTG, Matiza said, was on a growth path after shareholders found common ground to allow its recapitalisation that had been held back, to go ahead.
Problems at RTG arose in 2011 after the single largest individual shareholder, Nicholas van Hoogstraten’s nominees failed to garner enough support to sit on the board of the hospitality group.
The businessman then said he would not support the company.
While shareholders were fighting, the company was being hit by expensive finance charges on short-term loans.
Last year, the businessman had his nominees — Ian Haruperi, Shingirai Chibhanguza and Edgeton Tsanga — appointed on the board. Tsanga has since resigned from the board. A new chief executive officer, Tendai Madziwanyika, was appointed in November to steer the group to profitability.
“We gave them a US$10 million loan. They went for a rights issue and the company is responding well. There is stable management and money given by NSSA was applied for the right purpose. Therefore the time for the chairperson to step down is ripe,” Matiza said.