By Staff Reporter
A ROW has erupted between directors and shareholders of defunct Tetrad Investment Bank (TIB), which lost its licence eight years ago due to viability problems before restructuring its ownership through a debt-to-equity arrangement with depositors.
Reports say directors are profiteering out of the bank’s properties and other assets through rentals, while shareholders have gone eight years without a return on investment.
A number of other simmering issues are reportedly at stake and have now reached boiling point.
The revolt by shareholders was sparked by Bard Santner Investors (BSI)’s takeover of private clients’ portfolio from TFS Management Company, which is under liquidation, last month.
The new asset management took over Tetrad’s managed clients portfolio after reaching an agreement with the liquidator.
After BSI’s takeover was published by the media, TIB shareholders have purportedly flooded the new asset management firm seeking help on numerous problems thereby fuelling a shareholders revolt at TIB.
Against this backdrop, a host of minority shareholders are now increasingly growing impatient with the TIB board of directors running the bank’s affairs.
The bank has a property portfolio of about US$13 million from which it collects rentals and leverages its assets for other financial benefits.
Since October, 2018, a five-member board led by economist Appollinaire Ndorukwigira, who is the acting chairman, has been running the affairs of the bank.
The bank is now owned by its shareholders, not Tetrad Holdings as it used to be before the debt-to-equity scheme arrangement.
Information at hand reveals shareholders are worried and fretting that they have gone for too long without receiving a return on investment.
Besides lack of return on investment, the shareholders are complaining about lack of audited financial accounts.
Shareholders have not received audited financial accounts for the past three years, it is alleged.
The last financials received were qualified statements for 2018 which only came this year.
Shareholders are also disgruntled because the directors have made a series of empty promises on purported takeovers and capital injection which have not materialised, including the fake story of Russians coming a few years ago.
The other issue arising is that some of the shareholders are mainly old people and some of them have died without benefitting anything from their investments.
Shareholders say there is no sense of urgency on the part of management or directors who are fully aware of the demographics, particularly age, of the shareholders who need to the funds after reaching the twilight of their lives.
The management or directors have not communicated anything to agitated shareholders who have spoken out against the current untenable situation.
Jackie Levey, Sakuma Trading director, says her company which was engaged by TIB to mobilise deposits and investment funds has a property portfolio and loans worth US$5.3 million when the group, including the bank, was placed under judicial management.
“TIB directors are running scared now because for the first time they have got not just little old Jackie Levey and Sakuma trading gunning for them, but also influential shareholders. They are facing guys who have got more power and influence, and a stable asset management company will to help. The problem is that they are the only ones making money from the current situation; so they don’t want to lose it.
“That’s why they are being defensive. I stood up at the last AGM (Annual General Meeting) and I said on behalf of my clients ‘we don’t have faith in any of you; you are not trustworthy, you do not communicate’ and in the last three weeks they began sending messages because they are panicking. But it’s not the first time they have had real serious demands for accountability and return for investment, while shareholders oppose their actions.”
Another shareholder Divaris Dimitri said: “Before my mother (Kiki Divaris) died, she was opposed to the decision to bring in the new board. Ever since then there has been no communication from them. The story is that these guys have been running the bank with carte blanche, that is without accountability and communicating for some years. The promise of prospective buyers or investors has been going on for years, but there is no progress.”
Some shareholders chose to speak off the record.
“The bank’s shareholders are disgruntled and in a rebellious mood. The reasons are fairly straightforward. They have received no financial returns for the past eight years,” a well-informed source said.
“Communication blackout from management – shareholders have not received audited financial accounts for the past three years. The last they received were qualified financial statements for 2018, only in 2022.
“There is also an impression that management or its directors are benefitting given the fact that the bank has a diversified property portfolio from which it is receiving rent.
Instead of dealing with these issues raised by the shareholders, TIB directors have been dismissive of the minority equity stakeholders’ grievances.
They have been defensive and witch-hunting to intimidate shareholders, while targeting the financial advisory services firm, BSI, which has been approached for help.
In a letter to shareholders, dated 9 September 2022, acting TIB company secretary Judy Conway suggests the bank is more concerned about distancing itself from a transaction in which BSI took over Tetrad’s managed clients portfolio, not addressing the real issues.
The letter says the transaction created an impression that TIB is a subsidiary of Tetrad Holdings, which it no longer is although it was before, which is a peripheral matter.
“The article may have created the impression that Tetrad Investment Bank Limited is in some way associated with the transaction and that it is a subsidiary of Tetrad Holdings,” it reads.
“We wish to assure shareholders of Tetrad Bank Investment Limited that the bank has no association with the transaction described in the article, and that TIB is owned by its shareholders and is not a subsidiary of any company mentioned in the article.”
The article in question related to BSI’s takeover of TFS Management Company’s clients portfolio to unlock value for them.
Small shareholders are currently grouped and exercise proxy through Tetrad Creditors Group Trust (TCGT) represented by John Pybus, a banker.
TCGT has been complaining about shareholders’ approach to BSI for rescue instead of addressing their concerns.
“We wish to bring to your attention an approach being made to other shareholders in respect of their shareholding in Tetrad Investment Bank Limited (TIB),” it wrote to shareholders.
However, Bard Santner Markets Inc lawyers dismissed TIB’s accusations as baseless, saying the asset management firm has only engaged its own clients with vested interests in the bank as well as shareholders who have made enquiries or been referred to them by others.
Contacted for comment TIB director Harry Orphanides said there is now confusion over the situation.
“There seems to be a lot of confusion here and I’m due to meet with our attorneys to get the issue resolved. Bard has no authorisation to deal with the bank. Bard was dealing with the issues of TFS. Yes we do have a problem in that the shareholders were never informed that Bard was going to take over this portfolio and I have a problem with that.”
Asked why the board is not communicating with TIB shareholders, Orpahnides said:
“The bank deals with shareholders of Tetrad, its total separate entity they have got nothing to do with TFS, which was put under judicial management and is a separate company to the bank. The board represents Tetrad Investment Bank.”
Bard chief executive Senziwani Sikhosana spiritedly defended his clients who are also bank shareholders, and those who are not, saying they have done nothing wrong in engaging investors as they only want to get a return on their investments.
“Some of our clients are shareholders in Tetrad Investment Bank. Through them, other minority shareholders have reached out to us for help. As a result, we want to know how their investment portfolios are performing. That’s why we are here. That’s our job. When we act and ask questions on behalf of our clients, we expect answers whether the company is listed or unlisted; not stonewalling, intimidation or scare tactics.
“Our clients expect nothing less than that and so do our regulators. There is no passive investment in our world. We simply want our clients and other shareholders to get a return on their investments,” he said.