Excuses continue to dog efforts to recover K6.1 billion that government last year paid to its then wholly-owned Malawi Saving Bank (MSB) to rescue 13 individuals and private companies that defaulted on their loan payments.
In a bid to recover the money, Ministry of Finance, which held shares in the bank on behalf of government, announced the formation of a special purpose recovery vehicle (SPRV) to have the defaulters pay.
Now, chairperson of the board of the SPRV, Chadwick Mphande, says all the toxic loans are either tied to some court injunctions or proceedings.
Besides Mphande, other board members in the recovery outfit are lawyers, Modecai Msiska and Khuze Kapeta, chartered accountant Nkondola Uka and Chifundo Asedi.
In a telephone interview on Monday, Mphande told The Nation that they have not recovered a single tambala from the defaulters, saying the company was in the process of fighting for the lifting of the injunctions in court.
He said: “We are failing to move as fast as we could to recover the money because of the slow pace of the court system. Almost all the cases are tied to some court case and it is difficult to recover the money. We are trying to vacate the injunctions.”
It is almost a year since the company was established and in April this year, Mphande told The Nation that the company could not recover the toxic assets due to government bureaucracy.
MSB failed to recover K6.1 billion from 12 individuals and companies, at the time government was selling off its 80 percent stake, prompting government to bail out the individuals and companies to facilitate the smooth process of selling the bank.
Reacting to the situation, Consumers Association of Malawi (Cama) executive director John Kapito said the whole issue about MSB toxic loans is confusing as it creates the picture that there are some efforts delaying the recovery of the toxic loans.
He wondered why government rushed to pay off the loans on behalf of the individuals and companies if the matters were in court.
“Why [did] government pay the full amount when the figures were contested in court? This is not making sense. There are some efforts delaying the recovery of the loans.” Kapito said.
However, Kapito said if the matters are in court, the SPRV created to recover the loan can do nothing until the court processes are concluded.
“These people [the defaulters] have the right to defend themselves. The issues of MSB toxic loans are becoming a burden to taxpayers and those that are supposed to pay the money. A special court can be established to clear these cases,” he said.
Judiciary spokesperson Mlenga Mvula told The Nation the MSB toxic loans cases may be among the complex cases that need time for the judges to read and understand before pronouncing judgement that would result in a miscarriage of justice. Mvula said there are thousands of cases within the court and that the judicial system is doing the best to offload the cases in their order of cause numbers. We follow the cause numbers,” he said.
Major on the list of the toxic loans, which government took over, was the MBL Holdings Limited loan which stands at K4.9 billion. Other defaulters are Varibo Spirits owned by Duncan Kaonga at K397 million, KJ Transways owned by a Mr Mkumba who has a K172 million loan that has not been serviced, Ganizani Transport owned by Charles Fungula who owes the bank K97 million.
The bank was also failing to collect K83.9 million from Maranatha Institute of Education owned by Ernest Kaonga, K71 million from Consolidated Building Contractors owned by Peter Mhone, K69.8 million from CK Construction of Chester Makuwira, K65.9 million from a firm owned by Bintony Kutsaira, K30.7 million from MGI Trading of Macpharen Mpeta Phiri, K27 million of Injena Petroleum Limited, K20.7 million of Angel Wings owned by Angel Chaponda Nazombe and K12.7 million of Eranive Trading for Fanny Joshua.
In July last year, government sold off its 80 percent stake in MSB to FDH Financial Holdings Limited, owners of FDH Bank. MSB was sold because it was struggling to raise K23.7 billion to meet Reserve Bank of Malawi (RBM) Basel II capitalization requirement.