Govt tears into Finance Bank’s K1 trillion compensation bid

The Malawi Government has mounted an aggressive legal challenge against Finance Bank Malawi’s staggering K1 trillion compensation claim, questioning both the basis of the amount and the methodology used to calculate it in a case that could have significant implications for public finances.

During proceedings before High Court and Supreme Court Assistant Registrar Ibrahim Hussein in Blantyre on Monday, the State subjected the bank’s witnesses to nearly five hours of intense cross-examination, seeking to dismantle the foundation of the multibillion-kwacha claim.

Finance Bank, whose banking licence was revoked in 2005 before the Supreme Court ruled earlier this year that the decision was unlawful, is seeking US$150 million for alleged violation of its constitutional rights and a further US$134 million for loss of business—an amount now estimated at nearly K1 trillion.

Leading the State’s legal offensive, Attorney General Frank Mbeta, alongside Reserve Bank of Malawi (RBM) lawyers Zumbe Kumwenda, Senior Counsel James Masumbu, and Senior Counsel Patrice Nkhono, pressed Finance Bank’s witnesses to justify the enormous figure.

The bank called its liquidator, Sokwani Chilembo, and financial adviser Nkhuzo Kuwani of Zambia’s Mahtani Group of Companies.

One of the State’s key arguments centered on why the claim was calculated in United States dollars when Finance Bank conducted its business in Malawi, accepting deposits and issuing loans in Malawi kwacha.

“Were loans issued in US dollars? Were deposits received in US dollars?” Mbeta asked, challenging the rationale behind the foreign currency claim.

The Attorney General also urged the court to consider that the bank has remained in liquidation since 2006, yet was now seeking what he described as “almost a trillion kwacha” in compensation.

“The figure is huge,” Mbeta submitted.

Responding to the State’s challenge, Kuwani argued that the revoked licence denied the bank the opportunity to continue operating and generating profits.

“There was a loss of opportunity. We are pricing that opportunity,” he told the court.

However, Senior Counsel Patrice Nkhono questioned whether the bank could genuinely claim such losses when it still exists under liquidation and continues to hold assets whose value should be taken into account during compensation assessment.

Kuwani maintained that the current value of the bank’s assets was irrelevant because an operating bank would have created significantly greater value than one in liquidation.

During re-examination, Finance Bank lawyer Modecai Msisha, SC, asked Chilembo to explain why the claim was denominated in dollars.

Chilembo responded that the investors behind the bank were foreign nationals who had invested in foreign currency, making the use of the US dollar appropriate.

The compensation battle follows a landmark February 2026 Supreme Court judgment which ruled that the Reserve Bank of Malawi unlawfully revoked Finance Bank’s licence over allegations of financial malpractice, including claims that ghost accounts had been used to externalise foreign currency.

The decision brought to an end a legal dispute spanning more than two decades and opened the door for the bank to pursue damages for the closure of its business.

Court records show Finance Bank posted profits after tax of K70 million in 2001, K159 million in 2002, and K121 million in 2005.

In 2006, the bank’s then-chairperson Rajan Mahtani said deposits had fallen sharply from K2.13 billion to K381 million between June and December 2005, while total assets declined from K3.48 billion to K926 million.

The dispute began in 2005 when RBM sought legal action against Finance Bank. In 2014, the High Court awarded RBM K13 million and dismissed the bank’s counterclaim for loss of business.

Finance Bank first opened in 1995. After its licence was revoked in May 2005, it briefly resumed operations under RBM supervision before permanently closing in January 2006.

Ironically, in 2013, the central bank granted a licence to New Finance Bank (Malawi) Limited, with Rajan Mahtani remaining a principal shareholder—a move that at the time sparked debate over consistency in Malawi’s banking regulation.

The compensation assessment is continuing, with the Government determined to scrutinize every element of what could become one of the largest financial claims ever brought against the Malawian State.

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