Investrust Bank employees sue BOZ, others demanding redundancy packages
FORMER employees of Investrust Bank, in liquidation, has sued the Bank of Zambia, Investigating Bank (in liquidation) and Zambia Industrial Commercial Bank in the Lusaka High Court, for declaring them redundant without being paid their redundancy package.
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Langham Mwanza and 154 others are seeking an order that the failing by the Central Bank and their former employer to declare them redundant without following legal procedures is illegal.
They want an order that the defendants fully disclose the value of the consideration paid by ZICB under the purchase agreement considering that they are interested parties and the Investrust status as a public entity.
The employees want an order of declaration that the placing of Investrust Bank under compulsory liquidation, preceded by the purchase and assumption agreement with ZICB is unreasonable, unlawful and unjust.
Mwanza and his colleagues are seeking an injunction to prevent further actions by the defendants that may negatively affect their rights and interest.
On April 2, 2024, BoZ took possession of the Bank and declared it insolvent owing to the failure by stakeholders to meet its financial obligations.
A statement of affairs issued by the Bank had revealed that, the extent of insolvency was assessed to be K749.7 million, resulting in a capital deficiency of K853.7 million to satisfy the required minimum capital for a local bank.
Subsequently on July 17, 2024, the Bank of Zambia placed Investrust Bank under Liquidation and entered into a Purchase and Assumption (P&A) Transaction with a locally owned bank, Zambia Industrial Commercial Bank Limited (ZICB) in line with Section 73 of the Banking and Financial Services (Amendment) Act, 2020.
BoZ further stated that Calvin Habasonda Assistant Director Regulatory Policy, Licensing and Liquidations and Maibiba Mulala, Principal Examiner as joint liquidation managers of Investrust Bank.
In their statement of claim filed before the High Court, Mwanza and others said following their appointment, the liquidators on July 18, 2024 collectively authored termination letters and declared them redundant.
The employees stated that Habasonda and Mulala indicated that they would communicate regarding the redundancy packages among other issues.
Mwanza and his colleagues said as part of the redudancy process the liquidators ought to have informed them the hem of their dues which was not done.
“The failure has resulted in significant financial and emotional distress to the plaintiffs,”they said.
“The action of proceeding with the purchase agreememt prior to making a decision to liquidate Investrust Bank is akin to” assets stipping” and confining all creditors including the plaintiffs that are looking forward to recieve their terminal dues from the liquidation process as liquidators seemingly do not have any assets of value.”
The 155 employees said BOZ’s decision to procees the purchase agreement was done in bad faith as the same was done without consultation, notice, compesation for affected emplpyees.
They are further demanding an order that the
action by BoZ to transfer Investrust Bank’s most valuable assets to ZICB effectively imply a merger between the two Banks and as such the employee’s liabilities should have been taken into account by ZICB.
Mwanza and others are further seeking an order that the defendants compensate them for loses and damages suffered as a result of the redundancies set in motion by the compulsory liquidation including but not limited to unpaid salaries , benefits and redundancy packages in accordance with the law.
By Mwaka Ndawa
Kalemba August 12, 2024.
