First Merchant Bank faces probe over Malawi cashgate

First Merchant Bank risk intense investigations on its operations over dubious bank transactions contributing to the Capital Hill Cash-gate scandal, Nyasa Times understands.

FMB will be taken to task for failing to comply with the money laundering law.

The bank failed to report to Financial Intelligence Unit (FIU) on transactions of over K1 billion connected to the scandal, which may have led to failure by authorities to notice and act on the transactions.

Minister of Justice and Constitutional Affairs Fahad Assani to journalists that there will be investigation to the commercial banks after allegations that businessperson Oswald Lutepo, who has been charged with money laundering, encashed a K1.2 billion cheque over the counter.

“This country has laws which stipulate what to do when it comes to money laundering. These laws stipulate that for everyone who has deposited cash of above K1 million, the Reserve Bank’s intelligence unit is supposed to know for further scrutiny.

“But these banks in question did not inform the RBM of these deposits and the subsequent immediate withdraws which was going against the laws. They looked the other way when huge sums of money were being drawn from their accounts without raising an alarm with the FIU.

“FIU would always come in when they have been advised of some suspicious transactions. This was not done and the banks should have an explanation to make,” said Assani.

FMB was also in the headlines related to cashgate when Malawi Police  confiscated US$ 184 000 (about K73.6 million) cash  at the bank which was being kept by Pika Manondo, the prime suspect in the shooting of Paul Mphwiyo, the Budget Director.

National Police Deputy Spokesperson, Kelvin Maigwa, said Manondo was keeping the money in a self-deposit box at the First Merchant Bank Lilongwe Branch.

FMB Managing Director, Dheeraj Dikshit: No comment

The FMB management could not comment on their bank’s conduct.

However, a Director and Legal Advisor for FMB, Mordecai Msiska has joined the legal team of former Justice Minister Ralph Kasambara who is facing attempted murder charges on Budget Director Paul Mphwiyo.

Meanwhile, former minister of Finance and Economic Planning Matthews Chikaonda who has proposed the setting up of a  cashgate commission of inquiry has claimed that the cashleak at Capital Hill started when government removed all bank accounts it held at National Bank of Malawi (NBM).

“That nonsense [cashgate] would not have been allowed in National Bank. I am calling for a commission of inquiry and National Bank will be there to testify,” said Chikaonda, who is the group chief executive officer of conglomerate Press Corporation Limited  and former governor of the Reserve Bank of Malawi .

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