Malawi Savings Bank (MSB) has dragged Airtel into the case where the Malawi Electoral Commission (MEC) sued the banker to claim back K39.5 million which was cashed fraudulently in May 2010.
MEC sued MSB for cashing out unverified cheques to two individuals who claimed to be the commission’s employees after allegedly verifying with then chief elections officer David Bandawe using an Airtel number.
However, Airtel, in its defence filed with the High Court (Commercial Division) by its legal counsel, Charles Kauka, contends that it did not have any contractual or legal relationship with MSB that would give rise to any liability cover for the defendant.
Kauka further denies any involvement of his client in the case, arguing it had “no duty of care to MSB to cover or protect the defendant”.
The cashed money was withdrawn from MEC’s ‘Presidential and Parliamentary Candidates Nomination Fees’ account, according to court documents.
MSB legal counsel, Charles Chayekha, of MC and Company, confirmed on Thursday having asked the court to consider the mobile phone service provider as a third party defendant “so that issues of liability, if any, can be determined together”.
Chayekha said his client relied on the confirmation of the instructions obtained by calling on Airtel’s network, hence the decision to drag it into the case.
He said before cashing the cheques out, MSB called a ‘Mr. David Bandawe’ on an Airtel line to verify if indeed the cheques were issued by the commission.
“The man—purporting to be a Mr. Bandawe—duly answered the call and authority was given that the cheques be honoured. However, it later turned out that it was not Mr. Bandawe who answered the call, but rather someone else,” he explained.
He said their impression is that “there is high possibility that the phone was hacked” and, therefore, the court should determine if Airtel could be a third party defendant in the matter.
Chayekha stated: “If found culpable, we want the mobile phone service provider to indemnify the bank.”
In its statement of claim, MEC says it had failed to get reimbursement in spite of several reminders to the defendant; and, that this is the major reason that pushed the commission to turn to the courts for intervention.
The commission—represented by Knight and Knight—says on May 7 2010, two cheques for K3 million and K36.5 million, with serial numbers 000073 and 000083 respectively, were cashed on its account number 150008081760001 without the bank seeking its approval.
The two individuals are said to have used MEC voter cards as identification, which, too, were not verified by the bank, according to the statement of claim.
“The defendant had no authority to pay the said cheque or to debit the plaintiff’s account and they are liable to repay the amounts of the said cheques to the plaintiff,” reads the statement in part.
MEC also argues that, at all material times, MSB knew or ought to have known or that the series of numbers in its cheque-book for the account ran from 000601 to 000700.
The electoral body is claiming K39.5 million cashed out without its authorisation through dubious cheques, and interest of the said amount at five percent above the base bank lending rate, collection costs of K5 925 000 and all expenses incurred in the action.
However, MSB contends, in its defence, that it subjected the cheques to all the necessary verification processes before cashing them out.
It says both cheques were presented to an MSB employee (Naomi Mkorongo) who telephoned and spoke to Bandawe, who verified and gave the defendant authority to honour them.
“On second instance, when the account was debited K36.5 million, ‘Bandawe’ called the defendant in the morning and spoke to Mrs. Naomi Mkorongo, advising her that he would be sending a Mr. Collins Kadammanja with a cheque for the stated amount and requested her to ensure that the cheque is honoured as the plaintiff was in urgent need of the money,” argues MSB in defence.
The bank says having subjected the cheques to usual scrutiny and having called the authorised signatory who confirmed the instructions, there was nothing that put or could put the defendant to any further inquiry.
On this premise, MSB argues it did everything within its capacity to protect the plaintiff’s money.
A teller at MSB’s Blantyre Branch and another at FDH Bank in Blantyre, speaking in confidence, stated that serial numbers do not form part of the verification process of the cheques.
Meanwhile, the court has set September 15 2015 as a date in which it will continue hearing the case.
Justice John Katsala is hearing the case, which was initially assigned to Justice Michael Mtambo.
Five people—businessperson Sudi Sulaimana and six accomplices—were arrested in December 2010 for allegedly forging documents, which they used to steal the K39.5 million from the MEC account.
They were charged with forgery, uttering false documents and obtaining money by false pretence, among others.
MEC alleged that the four forged signatures of signatures of EC officials, including MEC chairperson at the time, Justice Anastasia Msosa, and Bandawe to withdrawal the said amounts.
Their case has stalled in the courts and neither MEC nor their lawyers when contacted yesterday could indicate when the case would be heard.
In November 2012, senior resident magistrate Innocent Nebi flexed their bail conditions after the four complained that the initial strict conditions were affecting their livelihoods and freedom, particularly considering that the case was dragging.