AfrAsia: Shareholders cry foul over huge financial payout to Chanakira
The Zimbabwe press has highlighted the dissatisfaction of certain shareholders of AfrAsia Bank Kingdom Limited over the huge financial package being paid to Nigel Chanakira, founder, Kingdom Limited, to part with his share in the merged entity. (Image: AfrAsia Bank)
Mauritius-based banking major AfrAsia Bank is facing obstacles in its African foray as its Zimbabwe branch is increasingly prone to controversies.
The Zimbabwe press has highlighted the dissatisfaction of certain shareholders of AfrAsia Bank Kingdom Limited, over the huge financial package being paid to Nigel Chanakira, founder, Kingdom Limited, to part with his share in the merged entity.
In order to acquire the 30% of shares held by Nigel Chanakira within the bank, an agreement giving him a package of $12.5 million has been accepted by the Afrasia Bank Kingdom Limited’s Board of directors.
With this package, Nigel Chanakira will get many benefits such as $2.5 million in cash. Also, the brand Kingdom Limited will be given back to him, with Afrasia Kingdom Zimbabwe Limited being renamed AfAsia Zimbabwe Holdings.
For some shareholders, it is not a good idea to offer such a large package to the founder as the financial situation of the bank is below par.
Mounting shareholder frustrated promoted an apology from Lynn Mukonoweshuro, CEO of AfrAsia Bank Kingdom Limited, and an e-mail from Zimbabwe has been sent to James Benoît, Chief Executive of AfrAsia Bank Mauritius, for additional help.
John Pilgrim, a shareholder, express his dissatisfaction to the local press by saying that despite insufficient capital in the company, the board has decided to further reduce the capital by $12.5 million.
He also stated that he does not trust the management team as the bank is under-performing, without any indication of
how things are going to change for the better.
The shareholders have also expressed dissent with the decision of the board of directors to increase the capital to $100 million, of which an initial sum of $20 million will be raised through the share issue.
In the second phase of the bank’s recapitalization, private placement will collect $80 million.
According to the minority shareholders, there is a lack of clarity behind the decisions of the board of directors as no circular has been produced. Amid a tense atmosphere, a special meeting of the board of directors had to be cancelled.
The Chief Executive, Lynn Mukonoweshuro, apologized to the minority shareholders for unsatisfactory bank services.
The two Chief Executives of AfrAsia Bank Mauritius, James Benoît and Kamben Padayachy, will be present at the general assembly of December 30, 2013 where the decision will be formalized to retain them as executive directors of the Zimbabwe branch.