Malawi Savings Bank sale ‘blocked by injunction’

High Court has granted a temporary restraining order stopping the controversial sale of Malawi Savings Bank (MSB).

Ministry of Finance, Economic Planning and Development, through the Public Private Partnership Commission (PPPC), is set to conclude sale of between 51 and 75 percent shareholding in the bank, following failure to recapitalise it and adhere to regulations requirements by Reserve Bank of Malawi (RBM).

PPPC announced the designation of FDH Financial Holdings Limited, the parent company of FDH Bank, as the preferred bidder to invest in MSB and is offering K4.9 billion to buy 75 percent stake.

But MSB employees rushed to court  to prevent the transaction being completed.

High court judge Healey Potani granted the injunction on Thursday in the commercial city of Malawi, Blantyre through lawyer Michael Goba Chipeta.

Chipeta confirmed to Nyasa Times that indeed he is handling the case under the cause number 39 of 2015.

The lawyer said MSB workers want the court to interpret if the sale of the bank is in line with Public finance management act and Public Partnership Act (PPA).

He said the members of staff are worried that should the sale of the bank be illegal it will affect the contracts of the workers.

Chipeta said Minister of Finance is the first respondent, Public Private Partnership is the second respondent while Malawi Savings Bank is the third respondent.

Critics have argued that  proposed K4.49 billion price offered as an “epic swindle” and PPPC chief executive officer, Jimmy Lipunga, said the value of MSB needs to be revised and that will negotiate with the preferred bidder.

A legal opinion by renowned lawyer, Kamudoni Nyasulu, sought by the Budget and Finance Committee of Parliament, argues that the divestiture of MSB without parliamentary approval cannot go beyond 49 percent.

Nyasulu, who is managing consultant at KamudoniNyasulu, Law Consultants, opined that as a statutory body, MSB was “commercialised” and is therefore a “company” as defined by Section 2 of the Companies Act and or “State-owned enterprise” as defined by Section 2 of the Public Private Partnership Act.

“MSB is, therefore, subject to Public Finance Management Act, Public Audit Act and Public Procurement Act, which are subject to parliamentary oversight. Public property shall be disposed of by an Act of Parliament,” he said.

“The Executive cannot make law, but changing MSB from a statutory body to a private company without government controlling share, the Executive will be making law. Divestiture of such a body without parliamentary approval cannot go beyond 49 percent share. How much space was given to the consultation on public interest in this divesture?” queried Nyasulu.

Nyasulu’s legal opinion said courts can declare invalid, not just laws, but also decisions of the Executive that are inconsistent with the Constitution or any law.