Chakwera says DPP continues with ‘cashgate shenanigans’: Queries K6m bailout to ‘crooks’ on Malawi Savings Bank ‘loans-gate’

Leader of Opposition Lazarus Chakwera, who is also president of Malawi Congress Party (MCP) Dr Lazarus Chakwera, has asked government to explain the intention of selling state-owned Malawi Savings Banks (MSB) without following proper and set down procedures.

Chakwera was responding to the National Address which Malawi President Peter Mutharika delivered in Parliament on Tuesday May 5.

Shielding crooks

He queried the government for the K6 billion promissory notes to clear MSB toxic assets and “bail out crooks” who took loans from the state-owned bank and “do not want to pay back what they owe MSB.”

Chakwera said MCP has “strong reservations” about government intentions to sale MSB dubiously.

“Even this House expressed these reservations. All we are hearing is that MSB has toxic assets in form of bad debts but what we are not being told is who is responsible for these bad debts. Why are those who have not paid back what they borrowed from MSB not being asked to pay back what they owe MSB? Why is government paying back on their behalf? Are we saying it is ok to borrow and not pay back? Is this the culture we want to promote in this country?

“Fortunately for us the current Minister of Industry and Trade (Joseph Mwanamvekha) was the CEO of MSB at a time when most of these loans that have become toxic assets were granted. He should be asked to shed some light on this matter,” said Chakwera.

The opposition chief said government should not rush to bail out MSB before adequate answers are given as to who has caused the mess in the bank and what action has been taken for those responsible.

“For us as MCP, we are convinced that the case of MSB is just not about recapitalizing the bank, it is about protecting individuals who have connections to the ruling party (DPP) so that they can get scot free from the wanton plunder of MSB resources.

“And perhaps the same party sanctioned this because we wonder why should the whole nation bail out one or few individuals. If what we are hearing is true that government has taken tax payers money amounting to MK6 billion to clear MSB’s toxic assets caused by crooks who do not wish this country well, if indeed this is true, then this government is truly unaccountable to its citizens and continues to practice cash gate shenanigans,” said Chakwera.

Accountability

He said MSB being 100% owned by government is a public entity and therefore the citizens of this country; the tax payers and therefore owners of the bank deserve to know what is going on in MSB.

“We have read in the papers that after government has bailed out MSB, it will work out an arrangement with those that owe MSB huge sums of money of how their loans will be repaid. This is unacceptable. We are not children and we are not strangers in this country. This is tantamount to debt forgiveness to individuals with capacity to repay loans,” said Chakwera.

MCP president said if government is serious about the arrangement, the public should know who are the “notorious defaulters” and the strategies for recovery of the loans must be known now and not later.

He said: “We cannot continue to allow few misguided, greedy, corrupt and selfish people to hold the country at ransom at the expense of the hard working and honest Malawians.”

Government is seeking financial strategic partners to finance MSB which is struggling to meet Basel II requirement and the bank needs a financial injection of K23 billion.

The Public Private Partnership Commission (PPPC) recently unveiled FDH Financial Holdings Limited, owners of FDH Bank, as the only bidder to become the strategic partner after offering K4.9 billion for the 75 percent of the bank’s shares.

The government’s divestiture agency has since suspended the process following a court injunction.

Government asked the Reserve Bank of Malawi (RBM) to issue K6 billion promissory notes to take the toxic loans off the MSB books. The government has committed the money to repay loans that 13 private sector players took from the MSB and failed to repay.

The individuals are mostly known supporters and financiers of the ruling Democratic Progressive Party (DPP) who include to Mulli Brothers Limited (MBL)—whose managing director, Leston Mulli, is a known a close ally of former president the late Bingu wa Mutharika, the elder brother to the current leader, Peter Mutharika. Roughly 83 percent (K4.9 billion) has gone to clear Mulli loans.

Mardef abuses

Chakwera also raised concerns over financial abuses at Malawi Rural Development Fund (Mardef).

He wondered why government has remained mum on “gross mismanagement of resources “soon-to-be -established government finance company, Malawi Enterprises Development Fund Limited (Medf), formally at MARDEF.

“Why should a few greedy individuals monopolize and vandalize resources meant for the poor. Where is the accountability of this government? The minister of finance must give a full report to this house on these happenings at MARDEF,” he said.

Members of Parliament will continue debating to the State of the Nation of address.

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