The Reserve Bank of Malawi (RBM) has sued Mulli Brothers Limited, JF Investment Limited of Justin Fredson Likhunya and three other local companies for failure to repay about K3.2 billion in loans connected to subsidised fertiliser deals they signed with the government.
According to court document, the central bank lawyer Thabo Chakaka Nyirenda filed in the High Court Commercial Division on March 2 2021 the companies were accessing the loans as part of a trade finance agreement known as Dual Tranche Strategic Structured Commodity and Trade Finance Facility which they signed a couple of years ago.
The agreement was that Reserve Bank was sourcing forex and paying foreign-based fertiliser manufacturers on behalf of the local firms in the hope that they will refund later.
Mulli allegedly owes RBM around K1.5 billion and had paid back only K709.6 million by December 20 2020, JF Investment Limited of Likhunya is accused of dogging repayment of K152 million and Rock ba Rock allegedly owes the central bank over K1 billion.
Others are Blantyre-based Webb Commercials and FF trading which face K308.2 million and K233.2 million claims respectively.
Chakaka Nyirenda in the court summons state that Mulli and other four companies had breached terms of the contract by failing to make full payment of the loans.
RBM says it “suffers and continues to suffer loss, damage and expense” following the failure by the companies not to repay their loans after government had paid them for supplying fertiliser.
On FF Trading, RBM reveals: “In breach of the express and/or implied terms of the contract, the proceeds of sale of subsidised fertiliser which the defendant assigned to the claimant were never remitted to the claimant. However, on February 25 2020, the defendant paid the claimant the sum of K374 880 000.00, leaving a balance of K233 281 504.98.”
Leston Mulli, managing director of Mulli Brothers Limited, confirmed owing the central bank but said his firm was struggling to service the loan because government has suffocated it by stopping awarding it contracts of supplying fertiliser.
Mulli said the decision by Tonse Alliance government to struck off his company from the list of suppliers of Affordable Input programme had “serious consequences.”