Attorney General Chikosa Silungwe says his office is reviewing a consent order between Democratic Progressive Party (DPP) administration and Mulli Brothers Limited (MBL) Holdings providing settlement of K5 billion debt over a 50-year period.
In an interview on Thursday, the government’s chief legal adviser said the court order that facilitated the arrangement, which he described as “ridiculous”, is currently under review.
Said Silungwe: “It’s an unreasonable agreement. It means that it will take Mulli Brothers 50 years to pay back the money. It is a ridiculous order.”
Ironically, the 2018 consent order between the Office of the President and Cabinet (OPC) and MBL Holdings Limited lawyers was signed at a time the MSB Debt Collection Company—formed to
recover toxic loans from some businesses and politically-connected individuals owed Malawi Savings Bank (MSB), a commercial bank then wholly-owned by Malawi Government and sold to FDH Financial Holdings Limited—struggled to make recoveries.
Former chief secretary to the government Lloyd Muhara and then secretary to the Treasury Cliff Chiunda signed on behalf of the Malawi Government while MBL Holdings Limited was represented by its lawyers.
Under the agreement, MBL Holdings was set to be paying a fixed K5 million per month for 50 years to settle the K5 billion owed to the public.
In a separate interview, MSB Debt Collection Company board chairperson Chadwick Mphande on Thursday confirmed the consent agreement, saying his company has also taken up the matter following the change of government.
He said: “We assigned our lawyer Mr. Alinane Kauka to take action when we realised Mulli would not pay back the money. We threatened to put his company into liquidation.
“Mr. Mulli then went and spoke with the then Chief Secretary [Muhara] and agreed that Mulli should pay the debt in instalments of K5 million until he finishes the whole amount. It meant Mulli would pay that debt over a period of 50 years.”
Mphande said his company has met Minister of Finance Felix Mlusu and the new team at Treasury on the matter.
He said: “We briefed the Minister of Finance [Mlusu] and showed him the agreement and that as a debt company we would not accept that. We were willing to recommend perhaps five-year period of repayment, but not longer than 10 years.”
Since its formation, the loan recovery company has struggled to recover what have come to be known as MSB “toxic assets”.
Muhara and Chiunda, who signed the agreement on behalf government, could not be reached for comment on Thursday.
MBL Holdings chairperson also not available for comment while private practice lawyer Tamando Chokotho, who has previously handled agreements for MBL Holdings, said he was not involved in the consent agreement in question.Leston Mulli was
Besides Mulli with K4.9 billion, other individuals and businesses that owe Malawians through unpaid MSB loans include Varibo Spirits at K397 million, KJ Transways at K172 million and Ganizani Transport with K97 million.
The bank was also failing to collect K83.9 million from Maranatha Institute of Education, K71 million from Consolidated Building Contractors, K69.8 million from CK Construction, K30.7 million from MGI Trading and K20.7 million from Angel Wings.