Trustco group chief executive Quinton van Rooyen says his group’s legal battles with the Bank of Namibia remain “far from over”, after a High Court judge on Friday refused to have a case about the central bank’s decision to suspend the operations of Trustco Bank dealt with as an urgent matter.
“This is just one interlocutory judgement in an interim matter in extensive ongoing legal proceedings,” Van Rooyen said in a media statement after judge Boas Usiku struck an urgent application filed by Trustco Bank and Trustco Group Holdings off the court roll in the Windhoek High Court.
Van Rooyen remarked: “While disappointed by the urgent dismissal, Trustco always follows the rule of law.”
He added: “Trustco will always comply with any lawful and reasonable instruction from any regulator or higher authority. We will always oppose tyranny and unjust instructions. That is the DNA of Trustco. The saga remains far from over.”
Trustco Bank and Trustco Group Holdings in August filed an urgent application against the Bank of Namibia, the bank’s governor, Johannes !Gawaxab, and other parties, after the central bank decided to suspend the operations of Trustco Bank with effect from 18 August.
Trustco Bank and Trustco Group Holdings asked the court to issue an interdict stopping the Bank of Namibia from implementing its decision to suspend the operations of Trustco Bank.
The Bank of Namibia is alleging, in another case pending in the High Court, that Trustco Bank is insolvent, with its liabilities exceeding its assets, and that it is also unable to pay its debts.
In an affidavit filed at the court, Van Rooyen has accused the central bank of “illegal and irrational conduct” and of trying to cause Trustco Bank and Trustco Group Holdings “as much harm and prejudice as possible” with its decision to suspend the bank’s operations.
Usiku said in his judgement on Friday he was not persuaded that the two applicants showed there were special circ*mstances warranting the hearing of their application for an interdict on an urgent basis.
They did not show they would not be able to get substantial redress at a hearing in due course, and the losses they said they would suffer as a result of the suspension of the bank’s business were not the kind that justified having their application placed at the top of the queue of cases waiting to be heard in the High Court, Usiku said.
He struck the application from the court roll, and ordered Trustco Group Holdings and Trustco Bank to pay the Bank of Namibia’s legal costs in the matter.
Usiku noted in his judgement that the Bank of Namibia informed Trustco Bank its suspension is temporary and subject to the bank rectifying within six months alleged instances of non-compliance with directives issued by the central bank.
The Bank of Namibia’s directives include requirements that Trustco Bank should provide restated financial statements to the central bank and that Trustco Group Holdings should make a capital injection of N$33 million in cash into Trustco Bank. The capital injection of N$33 million should have been made by the end of March this year, but did not take place as directed by the Bank of Namibia previously.
In his affidavit, Van Rooyen informed the court that Trustco Group Holdings and Trustco Bank in September last year filed an application in which they are asking the High Court to review and set aside the directive that the Bank of Namibia issued to Trustco Bank in July 2022.
In the meantime, the Bank of Namibia, in November last year filed an application in the High Court to have Trustco Bank wound up.
Both those applications are still be be heard in court and decided.
Van Rooyen alleged that with its decision to suspend Trustco Bank’s operations, the Bank of Namibia tried to bypass the court and elevated itself “to the status of a judge, jury and executioner” with regard to the fate of Trustco Bank.
Also in an affidavit filed at the court, Bank of Namibia deputy governor Leonie Dunn said the Bank of Namibia required Trustco Group Holdings to make a capital injection of N$100 million into Trustco Bank over a three-year period, to address the bank’s “precarious financial position and poor liquidity risk management”.
Trustco Group Holdings made a first payment of N$33,3 million, which was due at the end of March 2021, but this money was almost immediately channeled back to the Trustco group through management fees and the redemption of intra-group deposits, and this only created an illusion that Trustco Bank had been recapitalised in line with the Bank of Namibia’s directive, Dunn said.
She added that the second and third recapitalisation injections of N$33,3 million each were due to be made at the end of March last year and March this year, respectively, but Trustco Group Holdings has failed to comply with the central bank’s directives to provide those funds.
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