Economic experts says Malawi govt should dismiss  FDH demands of K1.1bn refund on MSB deal – Report

Economic experts have urged Malawi government to dismiss FDH Holdings Limited demand of K1.1 billion to be paid back from the amount it paid for Malawi Savings Bank (MSB) shares on grounds that the company was overvalued.

Mpinganjira:Jealousy is still hunting many in Malawi

Mpinganjira: No comment

A local paper, Weekend Nation, reported that Treasury spokesperson Nations Msowoya confirmed that government has written FDH Holdings rejecting to take liability of their K1 133 950 000 claim.

But FDH Holdings Limited group chief executive officer Thom Mpinganjira refused to comment.

But the paper reported that Professor James Kamwachale Khomba of the Polytechnic —a constituent college of the University of Malawi- said government should not entertain FDH’s warranty and indemnity claim.

“MSB was sold on as is basis, so there is no need for FDH to claim any refund. The deal is closed; government should not tolerate such a claim now,” said Khomba as quoted by the paper.

Khomba, who is professor of finance and corporate strategy, pointed out that there is no economic condition to justify FDH claim.

The paper also quoted another economics lecturer at the Polytechnic, Abel Mwanyungwe, who said it was surprising that FDH is seeking a refund; a year after the controversial deal was sealed.

“Was the sale agreement not binding? Did it have clauses to be changed? Did it provide for re-valuation? And what economic conditions have changed now that were not factored in the initial valuation? quizzed Mwanyungwe.

He said FDH’s request for a refund raises questions because due diligence was carried out before the MSB was sold.

Mwanyungwe said for FDH to claim the bank was overvalued today, is surprising as even using any pricing model, the K5.4 billion that was quoted for MSB was an under-valuation and it was of no value to the shareholder.

In selling MSB, government had gone against recommendations of the Budget and Finance Committee of Parliament whose resolution, adopted during a session mid last year, was that government should recapitalize the bank to enable it meet regulatory requirements.

The paper reported the background to MSB sale, saying chief among reasons that forced government to sell the financial institution was its serious capital and liquidity shortfalls that could have seen the Reserve Bank of Malawi (RBM), as regulator of financial institutions, closing the bank.

Before MSB was sold, government in April last year issued K6 billion promissory notes to clear toxic assets off the bank’s books prop up its value to attract buyers.

Government then established a Special Purpose Vehicle to recover the debts, but there has been little movement in that regard, according to people tasked with the debt collection.

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11 thoughts on “Economic experts says Malawi govt should dismiss  FDH demands of K1.1bn refund on MSB deal – Report”

  1. Cash Gate says:

    Aboma angofuna kuti abepo apa, nkhaniyi ikapita ku khothi a boma akaluza then akapeleka ndalamazo.

  2. Dr Haswel P Bandawe says:

    Can we have more details from the Government and the FDH about the reasons for reported unraveling of the deal, please.

  3. kulyolyopera says:

    the truth is that the refund being claimed is going something it was already planned

  4. The Analyst says:

    O………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….O
    Ever been to the vendors’ market before?
    . . . you learn a lot frequenting such places.

    If you buy something from a vendor (knowing well that the item is undervalued); you still ask for a discount.
    . . . But if another customer comes along showing desperate interest and willingness to pay even more for the item, you quickly pay, take the product and go away; lest the vendor thinks otherwise.
    . . . If you had already paid and was just waiting for change, you even say “keep change” while leaving the place.

    The opposite is also true . . .
    . . . If you pay the right amount and a vendor is asking for more money; you begin looking for faults on the product. And when you find even the slightest fault, you begin to make noise.
    . . . And for fear that you may return the product, the vendor tells you, “Basi musandionjezerenso” and you walk away happily knowing well that siukanabwezanso iai.
    ……………………………………………………………………………….
    What Mpinganjira is doing is exactly what happens in the vendors’ market.
    . . . he konws that his argument is flawed and cant be given the K1.1bn.
    . . . he’s simply trying to find fault with the deal so as to deliberately drown all voice that says the bank was undervalued hence just given away to him.
    . . . He is willing to play the comedian just to hear Malawians say “Basi Bank yi sungani, simunagula dala nokha.”
    And if you look at the comments from the so called economic experts, Mpinganjira has achieved his goal.
    . . . coz just like a vendor in the market place, who doesnt want his goods returned, and says, “basi musandionjezereso ndalama”, the experts conveniently say “the bank was sold to Mpinganjira on ‘as is basis'”.
    ………………………………………………………………………………
    One thing is very clear from these cheap vendors-market gimmicks from Mpinganjira . . .
    . . . the MSB deal gives him no peace of mind. He is haunted!
    He knows well that he should not have bought the bank in the first place coz the reasons for selling it (protecting Mulli and friends in crime), were as deceptive as the manner in which it was sold to Mpinganjira (clandestine), let alone the price (give-away). Mbava zokhazokha!
    O……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………O

  5. Chakwanuleka says:

    It happened during the sale that while people were protesting DPP went behind the back to conclude the deal. It will happen again this time around that when everybody thinks the claim is irregular, DPP will go ahead with a refund.

  6. Kenkkk says:

    This is ulter nonsense from fdh and only a stupid corrupt govt can accept such a demand. Actually msb was undervalued by the govt to enable their fellow fdh cohorts to buy it.

    It is just like us going back to fdh demanding that they pay us more because msb was undervalued when this corrupt govt sold it to fdh.

    What is happening here is dpp wanting the cut of 1bn to go towards its 2019 campaign fundraising or more likely to thieving individuals at the top of dpp for self-enrichment as a reward for selling msb so cheaply to fdh. And together with fdh they have colluded to come up with this stupid idea of fdh demanding 1bn from govt for the alleged dubious overvaluation of msb at the time of sale.

    This dpp govt will never learn for the simple reason that it is stooped with corruption throughout its rank and file.

  7. Tione Phiri says:

    angobweza bank yathu. Iyaaaaaaa!

  8. Kanthu Ako! says:

    That is the problem with people that are used to stealing, they will try anything. in Chewa we have sayings about such people.

    “Amaba fuwa just feel good when the wife is distressed looking for another fuwa kuti a phike”

    Malawi is full of such people “Olodzedwa” if they do not steal something, sapezabwino.

  9. Gogodasi says:

    This is another form of cash-gate by the authorities as the guy is being used as a pond to get easy money from Capital Hill for political intentions. Reading between two lines this is typical political maneuvering. Amutuma kuti abe ndalama zathu zochitira fund D PHI PHI.

  10. kanchenga says:

    The bank is not actually asking for refund, but DPP was asking for its kick back the bank said we have no ready cash but if you can refund us 1.1 bln just after the passing of the budget on the basis that it was over valued that would be okay. These are birds of similar bicks, they know which tree to hole and how to hole it.

  11. The Patriot says:

    Mr Mpinganjira please dont sell your soul to money or Satan! The deal got through despite popular protests(at least on social media and parliament), toxic loans amounting 6 billion Kwachas have not been recovered and the MSB bank was sold for a song to you and your Mulhako associates.
    Now you want the tax payer to pay you a billion Kwacha for acquiring our bank at such a low cost? This is double jeopardy to the Malawian tax payer!!
    Being a devout christian Mr Mpinganjira remember these words”what shall profit a man to own the whole world and lose his soul?”

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