Zimbabwe banking firm wins case against Malawi liquidation

Banking Group, AfrAsia Kingdom Zimbabwe Limited, formerly Kingdom Financial Holdings Limited, could claim the full value of its shares in the disposal of a stake in a Malawian financial institution after winning an appeal against an arbitrator.

The High Court in Blantyre set aside an arbitrator’s ruling against AfrAsia, citing bias by the arbitrator who had been improperly appointed.

Justice Chirwa ruled that the arbitrator’s ruling, which discounted the selling price for AfrAsia’s shares in a Malawi banking institution, had violated natural justice and was biased in favour of other shareholders, Thomson Frank Mpinganjira Trust and Old Mutual Life Assurance Company Malawi Limited.

The judge ordered the arbitrator to step aside and ruled that AfrAsia’s adversaries were free to approach the Supreme Court.

Both have indicated that they would be appealing against the ruling but AfrAsia said this week it was confident it would prevail.

Mpinganjira: Was partner
Mpinganjira: Was partner

At the centre of the protracted dispute is First Discount House Financial Holdings Limited in which AfrAsia had invested a significant amount of money but later ran into problems in 2011 when the Reserve Bank of Malawi directed it to relinquish its 38,15 percent shareholding, saying AfrAsia had become unfit to own shareholding in a banking institution.

The central bank’s decision was informed by a Zimbabwean dispute pitting AfrAsia’s founding shareholder, Nigel Chanakira, and then controlling shareholder, John Moxon.

AfrAsia’s partners in the business included the Thomson Frank Mpinganjira Trust, which controlled 37,85 percent shareholding and Old Mutual Life Assurance Company Malawi Limited, a 19 percent shareholder.

The Zimbabwean financial institution had offered to sell its stake for US$0.1381 per share, while its partners wanted to pay K6.27 per share for the stake. It had argued that the arbitrator had no jurisdiction to rule on the case, that even if he had the mandate, he had exceeded it, that he had misdirected himself by making a decision using evidence that the parties had not produced and that his ruling had been ambiguous.

This week, AfrAsia chief executive officer, Lynn Mukonoweshuro, said she was happy with the outcome.

“We used funds belonging to 14 000 shareholders to invest in Malawi and we are answerable to shareholders who put their faith in us,” she told The Financial Gazette.

“The money that comes out of here is the money that should come back,” Mukonoweshuro said, indicating that since they had injected greenbacks to prop up the Malawi bank, any sell would have to be in US dollars to enable the group to repatriate the funds back to Zimbabwe.

She said AfrAsia’s victory had come out of a combined effort by various government departments and the Reserve Bank of Zimbabwe.

“We felt how proud it is to be a Zimbabwean. We got 300 percent support from all arms of government who were handling this case, from the central bank that travelled with us to Malawi, to the Ministry of Foreign Affairs,” said Mukonoweshuro.

AfAsia had also questioned the evaluation of the share price by NICO Asset Managers which later placed the price of their shares in the Malawi bank at K8.70, instead of US$0.1381 per share.

AfrAsia then opted to sell the shares to a third party following the deadlock but the business partners argued that they had the right to first refusal.

AfrAsia’s legal advisor, Daniel Makono, said it was an invalid argument because Old Mutual (Malawi) and other partners had failed to raise the required funding, giving the Zimbabweans the latitude to scout for buyers with the right price as agreed in their shareholders’ agreement.

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