Mr Wazara
Conrad Mwanawashe Business Reporter
Valley Technologies, the company owned by former Econet executive Zachary Wazara collapsed because of the businessman’s mismanagement and an elaborate incestuous inter-company structure, AfrAsia Bank Zimbabwe has said.The allegations are contained in a Defendant’s plea Case No HC3330/ 14 lodged by AfrAsia in the High Court, and its co-defendants.
AfrAsia, is cited in court papers as first defendant, and is being jointly sued with former AfrAsia chief executive Mr Nigel Chanakira’s Crustmoon Investments and Lalela Trading as second and third defendants, respectively.
Spiritage Telecoms, VNet, Mr Zachary Wazara, Spiritage Zimbabwe and Spiritage Business Solutions are the plaintiffs in a High Court application in which they are jointly claiming damages amounting to $78 541 707.
In their court application, the plaintiffs alleged that the financial institution, among other contentious issues, allegedly falsified records to the Reserve Bank of Zimbabwe to conceal non-performing loans. AfrAsia Bank Zimbabwe (formerly Kingdom Bank) is also accused of diverting $3,2 million of the $10 million facility from Afreximbank for Valley Technologies to Tetrad Investment Bank for the benefit of AfrAsia’s directors and management who then borrowed the same money through a round tripping arrangement.
Valley Technologies is a subsidiary of Spiritage Telecomms. But in the defendant’s plea, the financial institution denies any wrong doing. It argues that it cannot be held responsible factors that led to the demise of plaintiff’s business.
The financial institution said it had paid a total of $10 million to Valley Technologies and denies any committing any fraudulent offences.
“First Defendant (Afrasia) acted within its rights and lawfully in recovering amounts due to it by Valley Technologies; and the causes of the collapse and non-performance of loans to Valley Technologies were the actions and inactions of the 4th Plaintiff (Mr Wazara) mainly through mismanagement and an elaborate inter-company structure that for example resulted in $1 546 900 loaned to 5th Plaintiff (Spiritage Zimbabwe) by Valley Technologies being written off through what appeared to be incestuous charges,” AfrAsia said.
Afrasia said as bankers to Mr Wazara’s companies, it conformed to and performed all its fiduciary duties expected of a bank.
It denies Mr Wazara’s claim that it had an obligation to disburse working capital, but said it signed a capital raising mandate to source working capital for Valley Technologies. The bank said the successful implementation of the mandate was dependent upon several factors, which included the existence of willing supplies of funds, national and international economic conditions and the credit worthiness of Valley Technologies.
The businessman and his companies, alleged in the High Court application that AfrAsia, as Valley Technologies’ banker, was obliged to conform to and perform its duties and obligations in accordance with the usual banker/client relationship including the contractual obligations under the loan agreement.
Mr Wazara alleged that under the loan agreement, AfrAsia had a duty to provide working capital to Valley Technologies. He said Afrasia failed to secure or provide working capital to Valley Technologies and also failed to disburse the amounts secured for the benefit of Valley Technologies under the Afreximbank loan timeously.
The businessman also claimed that AfrAsia wrongfully and unlawfully converted to its own use amounts under the Afreximbank facility approved for disbursement to Valley Technologies.
AfrAsia is also accused of refusing to open security to other financial institutions willing to provide working capital finance to Valley Technologies and that it used its privileged position to reinstate a working capital mandate cancelled for non-performance.
But the bank said all amounts, which were due to Valley Technologies in terms of the credit agreements between the parties were disbursed once the applicable conditions were fulfilled.
“First Defendant (AfrAsia) released all funds which Valley Technologies were entitled to receive under the $10 million facility between the parties,” the bank said.
The bank denied that it took control of Valley Technologies and thereafter failed to run the company and that it wrongfully sold the company’s assets. Spiritage had also alleged that AfrAsia and its co-defendants sold its assets to a related party for $98 000 when they were valued above $12 million.
The bank said it went into a proposed settlement with Valley Technologies for the purposes of resuscitating the business, which was failing to service its loans as well as numerous other obligations including the payment of salaries and wages of its employees.
Mr Wazara claims that the failure of Valley Technologies was solely as a result of the negligent, reckless, unlawful and wrongful conduct of AfrAsia, Crustmoon Investments and Lalela Trading.
But the bank and its co-accused denied that the plaintiffs have suffered any damages arising of the bank’s conduct and challenged Mr Wazara and his businesses to prove their allegations.