Collect outstanding debts from Mulli and others owing Malawi Savings Bank – Parliament

The Budget and Finance Committee of Parliament wants Capital Hill to ensure that non-performing loans are collected first before authorities sell 49 percent, not 75 percent, of the State-owned Malawi Savings Bank (MSB).

In an eight-page report dated March 23 2015  the parliamentary committee chaired by Ron Chiphiko wants government to help MSB board and management to ensure that Mulli Brothers Limited (MBL) pays back its long outstanding debt to the bank estimated at K4.6 billion which, however, is being contested in court.

“If there are outstanding payments to MBL, government should implement its undertaking to pay Mulli Brothers through MSB as enshrined in the ‘Assignment of Proceeds’ arrangement between MBL Holdings and MSB,” it says.

The report noted that MSB management and Mulli Brothers signed an assignment of proceeds whereby all money owned by government to Mulli Brothers was supposed to be channelled through MSB and government issued a Letter of Undertaking to this effect.

“ Contrary to this arrangement, government continued to bypass MSB and paid Mulli Brothers directly.”

The committee also called upon government to pay MSB all outstanding debts by some public institutions, including Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM), Agricultural Development and Marketing Corporation (Admarc), Malawi Defence Force (MDF), Malawi Rural Finance Company, Public Universities Student Scheme, Malawi Rural Development Fund (Mardef) and Farm Input Loan Programme (Filp).

The committee also proposes that government should only shed 49 percent of the shares and not 75 percent as proposed, adding wants an independent body to be appointed to evaluate the bank.

Parliament notes that PPP Commission has “a bad reputation” when it comes to selling of government assets.

“Stemming from the then Privatisation Commission, the entity has not made sure that public assets fall in the right hands. Most of the privatised entities have shed jobs, made no tangible investments and have not operated in the interest of Malawians,” the report reads.

“It is the wish of the committee to see that the issue of MSB is handled in the best interests of Malawians and not just to serve personal interests of some quarters within our society. The committee trusts that the shareholder [government] will find the concerns and recommendations valuable as the bank remains the asset of Malawians and whatever decision to be made should benefit the public.”

FDH Financial Holdings Limited emerged the sole bidder of MSB and offered K4.5 billion for what Minister of Finance, Economic Planning and Development  Goodall Gondwe said represented 75 percent of the bank’s shares and that government would negotiate a better price.

Nyasa Times reported on Saturday that MSB employees obtained a court order stopping the Public Private Partnership Commission (PPPC), Minister of Finance and other stakeholders from disposing of government shares in MSB.

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