The government sold Malawi Savings Bank (MSB) at K9.5bn ($21.1 million) to FDH Financial Holdings Limited whose chief executive officer is Thom Mpinganjira in controversial circumstances and more dirt is coming out that the deal was completed with concealment of K1.2billion loss and at least K3.5 billion loans from Mulli Brothers Group was understated.
Malawi government now holds only 25% shares in MSB while FDH Holdings has 75%.
The deal went ahead despite general resistance from the public and parliament’s rejection on the same.
But President Peter Mutharika adamantly said government sold the bank after listening to public debate and based on powers conferred on him by the Constitution.
Meanwhile, leaked documents show FDH bank was short-changed and is demanding from Malawi government about K1.2 billion loss which MSB presented as “other assets.”
FDH internal Audit Department uncovered the loss was not written off.
“The observations are correctly. The figure arose largely from foreign exchange revaluations of 2010 and 2011 and these figures were not correctly and timely recognised in the financial statement of the bank,” former MSB chief executive officer Ian Bonongwe is quoted in the forensic report as saying.
Mpinganjira’s FDH has since reported KPMG, who were external auditor for MSB, to the Institute of Chartered Accoutants (ICAM) for “ failing to recognise fictitious assets.”
Malawi government said it had written off the loans obtained at MSB, most of which were borrowed by private businesses and individuals who are financiers of the ruling Democratic Progressive Party (DPP).
Treasury asked the Reserve Bank of Malawi (RBM) to issue K6 billion promissory notes to take the toxic loans off the MSB books.
The MSB understated the Mulli Brothers outstanding loans with the institution by at least K3.5 billion.
At March 31, 2015 the Mulli loan balance shows that it was around K8.5billion.
But Bonongwe in a letter to Treasury dated April 15, 2015 indicated that Mulli owened K5 billion from the bank’s K6 billion toxic assets, concealing K3.5 billion
In the past five years the bank only made a loss of K1.9 billion in 2014.Follow and Subscribe Nyasa TV :