Malawi Savings Bank CEO says he received ‘political pressure’ to give loans

The Malawi Saving Bank (MSB) Chief Executive Officer Ian Bonongwe has made a scathing revelations which conclude that the wholly-owned state bank was being forced by the Democratic Progressive Party (DPP) administratiobn to release the loans now turned “toxic” to politically connected politicians.

Speaking during Times TV interview on Saturday June 20, 2015, Bonongwe admitted that he was being directed by the DPP regime which was led by late Bingu wa Mutharika to give loans to the politically connected businessmen in order to fund the importation of Farm Input Subsidy Program (FISP) which they had just been given by the government.

His comments lends credence to claims that business magnate Leston Mulli challenged President Peter Mutharika point blank during an audience at Kamuzu Palace that he cannot pay back billions he got from MSB because the money mostly went into late Bingu’s business stakes.

Sources revealed that the meeting took place in March as the President tried to understand the consequences of selling the bank.

“In fact Mulli wanted the President to know that most of the money he took from MSB was channelled to Bingu who also had stakes in most of Mulli’s businesses. He asked the President to help paying back the money, a thing that made Peter angry,” sources claimed.

Mutharika is said to have advised Ministry of Finance and Reserve Bank of Malawi officials on government adopting all the toxic loans of which K4 billion was for Mulli.

When pressed by Times TV host Brian Banda to comment on why Bonongwe being a professional man was giving such huge loans to politically connected people, the MSB boss said he had no option to scrutinize the applicants because “we call them directed loans where by the authorities could say give such, such the loan,.”.

Asked if he is ready to resign from his position as the bank’s CEO, Bonongwe said he cannot resign from his position while blaming government systems for the mess.

MSB has for many years been a government-wholly owned bank with many branches across the country and sometimes it has been offering services through post offices.

Government has put the bank up for sale with only one preferred bidder FDH Bank of Thomson Mpinganjira.

The move to sale the bank is said to recapitalise it to meet regulatory requirements in terms of capital in line with Basel II but critics have interpreted it as a bail-out package for politically linked businesses.

Under pressure from opposition, civil society and the media, President Mutharika ordered a suspension of the sale of MSB to allow more public debate on the issue.