Chaponda sues FDH bank over breach of loan contract: Malawi court reinstates injunction

Blantyre-based businessman, Richard Chaponda has dragged to court FDH Bank for breaching loan contract and the High Court has since reinstated an injunction that was vacated last month restraining the commercial bank from confiscating and selling property used as surety in the loan deal amounting to K224.3 million.

Dika Hotel at Chilimba in Blantyre

Dika Hotel at Chilimba in Blantyre

On Thursday (12th March, 2015) Justice Rowland Mbvundula reinstated the injunction Justice Dunstan Mwaungulu had vacated on 10th February, 2015, allowing Chaponda to proceed with his case in which he is accusing the bank of breach loan contract and acting unprofessionally when trying to realize his property- a house, private secondary school and a Hotel.

FDH Bank wants to realize and sell Chaponda’s property for allegedly defaulting loan repayment, arguing the mortgagor has been failing to repay the K224.3 million loan facility approved in March 2012.

The bank changed the repayment period of approved loan from the agreed 120 months (10 years) to one year and some months after the mortgagor had refused to provide additional security.

Case File

According to documents filed at the court and correspondences between the two parties which Nyasa Times has obtained, Chaponda was persuaded to obtain a loan facility of K188 million from FDH Bank in January 2012 after the bank had offered to repay on his behalf another loan he had obtained from Standard Bank.

FDH Bank persuaded Chaponda to obtain the loan after seeing that the project, Dika hotel, which he was constructing was viable business and offered a ‘tempting’ repayment condition of 120 months (10 years from 2012-2022).

Chaponda only accessed 50 percent of the K188 million approved loan and the other 50 percent was withdrawn from his personal and business accounts held at FDH Bank Limbe branch by the bank as loan repayment.

In February, 2012 Chaponda applied for additional loan of K36, 280,000.00 which the bank approved on 9th March and was added to the earlier existing loan, increasing the facility to K224, 298, 288. 43.

And based on Mortgage arrangement, Chaponda was to repay the K224.3 million in 120 equal monthly installments amounting to K4, 712, 772. 63. The loan facility was to expire on 8th February, 2022.

However, Chaponda was denied to fully access the approved mortgage facility after he refused to provide his Rose Garden Private Schools, which the bank had identified, as additional security.

In one of the letters from the bank dated May 25th, 2012, signed by Head of Corporate Banking Chaponda was told could only access his mortgage facility of K224.3 million if he provided the private school as additional security, and was accused of not repaying the loan.

“You have an approved mortgage of K224.3 million which you have not fully drawn. One of the conditions for drawdown on this facility is that you provide additional security i.e. Rose Garden Schools. Please note that once you provide the security you will be allowed to draw from your account,” reads the letter in part.

In the letter, the bank argued that the loan repayments were not on schedule and that the loan has accrued K8, 706,742.34 in arrears as of May 2012.

But Chaponda dismissed the bank’s claims, arguing he has been repaying the loan, accusing the bank of being unprofessional in the manner it has been handling the loan issue.

Chaponda said was perplexed by the bank’s decision to change the loan repayment period from 10 years to one year and some months on accusations that he was defaulting repayments, adding the bank was wrong to demand repayment of K224.3 million when it actually refused him to ‘fully access’ the loan facility, especially the K36, 280,000.00 additional loan.

“If truth be told I have never refused nor defaulted repayment of the said loan as per bank statements from FDH Limbe branch and 5 cheques amounting to K10 million from International Commercial Bank in your custody,” argues Chaponda in one of the letters copied to Reserve Bank of Malawi, Anti-Corruption Bureau, Financial Intelligence Unit and Malawi police.

He argued that the bank’s behavior by advertising the sale of his property in newspapers affected his business, adding: “I made my position very clear in writing that I shall continue to repayment of the loan as per conditions agreed and upon surrender of my house property title deed currently illegally under your custody.”

Two weeks ago the bank officials stormed Chaponda’s Dika Hotel demanding employees to evacuate the premises as they wanted to evaluate the property to facilitate disposal. And the reinstated injunction means FDH Bank cannot proceed with its plans of realizing and evaluating Chaponda’s property before it is up for sale until the judicial review on the matter is concluded.

Follow and Subscribe Nyasa TV :

Please share this Article if you like Email This Post Email This Post

More From the World

Sort by:   newest | oldest | most voted
luviriboy
Guest

So this is how banks rob people of their properties? agree ten years and change to one year and anticipate failure then take it. I will not never come to you for a loan. But you persuaded him, was it a chess game?

No tribalist lomwe.
Guest
Having read the urguement, i have come up with this summary inshort: 1. There was an agreement on the loan.(original) agreed by both. 2. A second agreement was not well accepted by the bank.it needed an extra surity.( xool) a surity the borrower didnot agree. 3. The bank then changed the payment period to 10times less. 4.the borrower was not given money but the money was used by the bank to service another loan.(in this case the total sum given to the borrower was subtracted by the second loan with interest of ten years).JUDGMENT- first i ask myself if the… Read more »
10 pontplan@hotmail.co.uk
Guest

1. RBM CANNOT TOUCH MPINGANJIRA BECAUSE THEY ARE ALL THIEVES
2. FDH THROUGH DELOIT UNDER UKA PREPARES FAKE ACCOUNTS SHEET
3. MANY BANKS IN MALAWI LIKE FDH AND NBS HAVE CAUSED MISERABLE LIVES OF MWS.
4.GOVERNMENT ONLY NEEDS PEOPLE WHEN VOTING IS AROUND THE CORNER
5. MANY CEOs IN MALAWI ARE 100% THIEVES AND GO AND SEE THEIR HOUSES
6, TOOTHLESS ACB AND MUST IMMEDIATELY BE ABOLISHED
7. MANY FAKE HIGH COURT JUDGES ON PANNEL
8. PRESS CORPORATION OH! MBAVA ZA MTIMA BI!! KOMA KUKWERANA MU OFFICE
9 . TOBACCO INDUSTRY 100% CORRUPTION
10. WHEN IS GOD COMING TO FULLY PUNISH MALAWI NATION PLS PLS TATOPA

Kevin Gonondoli, Zambia
Guest
Kevin Gonondoli, Zambia

Manje ndani watukana bamusonda? Baoneka ngati bakwiya maningi.
Yayi bwana musonda ikani mutima wanu pasi, mayiro munakomenta funo pa zodiak za ba Pulesidenti wathu kulemba pakhoma la police seloka.
That was excellent komenti ka. Awo badana nanu bachita nanu sanje chabe.
story ya .yu bambo chaponda ndiyoipa maningi,. Innocent pipo are suffering in Nyasaland because of such crooked banks.

Pepa mu Nyasa muzanga chaponda, waberedwa maningi! Shame.

Ken Msonda, in my personal capacity.
Guest
Ken Msonda, in my personal capacity.
@#50 I don’t know why you are dragging me in Mr. Chaponda’s case against FDH. The has nothing t do with MTL Privatisation case. Is it a crime to befriend someone? Is it a crime in Malawi to be a politician? Is is a crime in Malawi to have a relative who is a successful businessman? I don’t know why some people hate me so much, ndinakulakwilani chani? I have known Mr. Chaponda and his family for the past 35 years. Tikaonana tisapasane moni? Please people grow. If I ever wronged you please find space in your heart of hearts… Read more »
DRAKE
Guest

Of late there has been Many adverts of Sale of Houses in the cities. This is not good for the development of a country and Malawians per se. More Malawians are entering the poverty circle than anticipated, properties owned by Malawians are being sold to foreigners who have the cash and leaving Malawians into a destitute state. The Government through Reserve Bank need to formulate good Mortagage loan policy and Business loans. Bank Charges and interests must be reviewed quickly otherwise poor Malawians are sponsoring Banks.

Matthews Mwale
Guest
Kikkkkiest! Kani ndalama Chaponda amangogawira anthu zija zina loan from FDH? I was wondering where this man gets his money to give to people. Much as FDH is wrong Chaponda is to blame too. Of late I have been seing chaponda in the company of a politician self proclaimed Christian and businessman ken msonda. I knew something fishy was coming up. FDH take cover simulimba. I see msonda feeding Chaponda how to fight back. This thin pp spokesperson is bad news kukonda mikanda too much. Remember the MTL sale he single handedly made late Bingu, Chikaonda, Press Corporation, Anadkat, FMB… Read more »
Kenneth Njolinjo Magombo
Guest
Kenneth Njolinjo Magombo

Malawi banks are involved i financial scam. Dont go to ask for a bank loan if you are not prepared to be swindled and eventualy loose you hard earned properties, only fools do that. Mr. Chaponda has a steady school business that could have easily funded his hotel business why go fo anothe loan with a cooked bank like FDH.

Munakawaputa ala a bank bambo Chaponda muthana nazo nokha.

MBC
Guest

I will reserve my comment for now . Am about to sell my assets to invest in the expansion of my business. Am seeking 2 houses for 80,000,000 kwacha, which will in return save me 3,600,000.00 interest every month. If I keep the houses and decide to borrow, rentals for the house will be amounting to 600,000.00 which 3,000,000.00 less than the interest being saved. In my simple analysis, in 10years, I would have saved over 150,000,000.00 interest which I can use to build my 2 houses if I wish to.

ginte
Guest

And what will be the cost of construction of those two houses in ten years time?

Cashgate1
Guest
Our govt ndilatulo, or those entrusted to review or enforce our policies akugona too much. lately ma bank akungolanda manyumba anthu, that’s not good for our economy. Banks lending rates are just too high for SME to operate and yet the very same banks are chocking these business. Govt needs to chip and provide an alternative. If it were in advanced economy a bail out is needed. People are loosing to much and you don’t expect our economy to grow in such cases. Mabank lekani kulanda anthu manyumba awo please. or else people should find means and stop borrowing from… Read more »
wpDiscuz

More From Nyasatimes