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The Bank of Zambia (BoZ) has defended its decision to place Investrust Bank Plc under compulsory liquidation, stating that it acted lawfully and in the best interest of the country’s financial system and depositors.
This is in response to a lawsuit filed in the Lusaka High Court by Langham Joseph Mwanza and 154 former employees of Investrust Bank, who are seeking compensation after the liquidation.
The plaintiffs alleged that the liquidation was reckless, unlawful and unjust, claiming they suffered financial losses as a result.
The former employees argued that the transfer of Investrust Bank’s key assets to the Zambia Industrial Commercial Bank (ZICB) amounted to a merger and that their rights and liabilities were ignored in the process.
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They also accused BoZ of failing to follow proper redundancy procedures as required under the Employment Act and are seeking an injunction to prevent further actions they believe could harm their interests.
BoZ, however, dismissed the claims as baseless and misleading.
It stated that it acted within the law when it took control of Investrust Bank, emphasizing that the bank was insolvent, and liquidation was the only viable option to prevent a collapse that would have had severe consequences for depositors and the wider financial system.
In its submission, BoZ cited Section 64 of the Banking and Financial Services Act, which mandated the central bank to intervene in cases of insolvency.
BoZ maintained that its actions were aimed at protecting depositors and maintaining financial stability, rejecting any suggestion that it acted in bad faith.
The central bank also clarified that extensive efforts were made to secure equity partners to save Investrust Bank, but none of the proposals were viable.
It stressed that the liquidation was not influenced by the transfer of assets to ZICB, which it described as a separate matter.
Addressing the redundancy claims, BoZ noted that the decision to terminate employees was made by court-appointed liquidators, not the central bank.
It assured that compensation for affected employees was ongoing and was being handled according to legal procedures.
BoZ concluded by stating that all legal requirements had been met, and the liquidation process was inevitable due to the bank’s insolvency.
It rejected any claims that the process was unlawful or unjust.
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