A company tasked with debt collection of K5 billion from Mulli Brothers Limited (MBL) is struggling to do so even after a court issued a warrant for sheriffs to impound property.
Communication from the debt collector indicates that MBL used a release agreement, signed in April 2018, to refuse to pay the debt for the defunct Malawi Savings Bank (MSB) even after earlier agreements made in and outside court between the MSB Debt Collection Company and Chief Secretary to Government.
The information also shows that Treasury could have not paid the K3 billion for damages which MBL incurred in 2011 on the basis of the MSB debt.
The company, which was set to collect close to K6 billion owed to MSB before the 80 percent government stake was sold to FDH Bank, has exhausted legal means to collect the debt.
Attempts to resolve the issues between Treasury, MBL and MSB Debt Collection Company with guidance from the Attorney General have also met a brick wall.
A letter dated June 6 2018, from Raymond and Hughes, the law firm contracted to act on behalf of the MSB Debt Collection Company, indicates that following a meeting which Chief Secretary to Government Lloyd Muhara chaired, MBL issued a K20 million cheque, which the debt collection company returned.
The CDH Investment Bank K20 million cheque number 001768 was issued in part settlement of the debt.
Reads a note from the MSB Debt Collection Company chairperson Chadwick Mphande: “Arrange for our lawyers to return this cheque as it does not conform to the agreement which we reached in Lilongwe during a meeting chaired by the Chief Secretary and attended by, among others, the Attorney General.”
But when MBL did not follow up with further payments, the law firm obtained a Sheriff warrant, dated April 24 2018, to execute the judgement debt.
A memo from the Deputy Sheriff of Malawi, dated June 20 2018, and copied to Raymond and Hughes,informed the Assistant Registrar of the High Court (Commercial Division), that he failed to execute the warrant because he was denied entry into MBL premises in Chigumula, Blantyre.
The Sheriff later heard from an MBL employee, a Mr Khupe, who made an undertaking that they would settle the judgement debt through Treasury ‘which he alleged, owes their company huge sums of money, exceeding the judgement debt therein’.
“He, actually, called a Mr Botolo of the Ministry of Finance who spoke to me and assured me that Treasury was already arranging a payment in this regard,” the report reads.
Minister of Finance, Economic Planning and Development Goodall Gondwe acknowledged that there was an agreement for MBL to pay in instalments but he was not aware how far the debt collection company had gone to collect the debt.
He also said he was aware that the debt collection company returned a K20 million cheque.
When informed that Mulli was refusing to pay because the government owes him money, Gondwe responded: “I wouldn’t want to comment about that. I was in Bali and when I came back I found these stories, but [Chadwick] Mphande would be best placed to know what is happening currently.”
But three follow up letters—dated July 12, August 20 and September 10—from Raymond and Hughes—to the Sheriff to proceed with execution of the warrant, have not been responded to.
“MSB Debt Collection Company wishes to advise that it has not received any payment from government nor is it aware of any arrangements by government to settle this debt on behalf of Mulli Brothers Ltd,” reads in part the first letter.
The July 12 2018 letter continues: “Consequently, MSB Debt Collection Company wishes to request you to proceed with execution, alternatively to obtain written confirmation that government is proceeding to settle the debt on behalf of Mulli Brothers Limited.”
In an interview, registrar of the High Court Agnes Patemba said the warrant was indeed not executed.
“The latest information we have is that we are waiting for Treasury to write a commitment letter that they are going to pay,” she said.
But the MSB Debt Collection Company chairperson, did not want to go into the nitty-gritty of the struggles to collect the debt from MBL.
Mphande said, in an interview on Wednesday: “There are discussions going on between the debt collection company and Mulli Brothers Limited. These discussions have been going on for a couple of months now, since March or April. That is as much as I can say.”
Government has been fighting to claim this debt since MSB sale in 2015.
Our sister newspaper, The Nation reported in May 2015 that Treasury repaid the loan as a condition for the sale of MSB to FDH Bank.
Treasury issued promissory notes valued at K6 billion bailing out individuals and companies which owed MSB, among them Mulli Brothers Ltd, with the belief that the billions would be claimed back through the debt collection company.
But three years after the company was set up and numerous court hurdles were dealt with, the debt is yet to be paid back.
The Nation reported in June last year that MSB Debt Collection Company was fighting complicated legal battles to get the debtors to repay the loans.
The High Court (Commercial Division) in Blantyre made an order on February 26 2018 compelling MBL to pay back the K5 billion debt, effecting a consent order based on a judgement of July 9 2015.
The February order just emphasised that MBL pays the K5 billion beginning with a K300 million instalment then subsequent instalments of K144 445 368.89.
Since the court orders came into effect, the same Treasury that MBL owes money, has paid the company K3 billion for damages incurred during the July 20 20111 demonstrations.
But after the settlement and K3 billion payment in April this year, MBL has since gone to court to claim damages for loss of business valued at K8 billion in the period before the payment was authorised.
Attorney General Charles Mhango said in The Nation story published on September 29 this year that he was not aware of an agreement between MBL and the debt collection company which could have compelled Treasury to hold on to the K3 billion.