- Finance Bank Malawi is suing the Malawian government for over $575 million.
- Court hearings are scrutinizing how the compensation was calculated.
- The Reserve Bank of Malawi withdrew the bank’s licence in 2005 due to alleged financial irregularities.
- Finance Bank Malawi’s representatives argue the compensation should reflect lost <a href="https://usglobalxpress.com/pac-foundation-trains-36-young-entrepreneurs-in-business-finance-msme/” title=”PAC Foundation Trains 36 Young Entrepreneurs in Business Finance, – MSME”>business opportunities.
Malawi is facing the prospect of one of the largest compensation payouts in its history after Finance Bank Malawi, a lender backed by Zambian business magnate Rajan Mahtani, submitted a damages claim exceeding K1.02 trillion (about $575 million) over the central bank’s unlawful withdrawal of its banking licence more than two decades ago
The legal team representing the Malawian government began cross-examining key witnesses in a Blantyre court regarding the methodology used to calculate the financial demand, which is approximately 1 trillion Malawian kwacha
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The ongoing court proceedings follow a judgment that ended more than two decades of legal disputes regarding the initial closure of the financial business
The central bank of Malawi, known as the Reserve Bank of Malawi, originally pulled the operating permit of Finance Bank Malawi in 2005 over allegations of financial irregularities, causing total deposits at the institution to fall rapidly in a span of six months
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Liquidator of the bank, Sokwani Chilembo explained in court that setting the compensation value in United States dollars was necessary because the foreign investors who backed the financial firm had originally supplied their funds using international currencies
Government lawyers questioned why the compensation figure was set in United States dollars when the daily transactions of the commercial bank occurred in local kwacha
Nkhuzo Kuwani, a financial adviser for the Mahtani Group of Companies, an investment conglomerate owned by Rajan Mahtani, stated in that “there was a loss of opportunity,” and that “the bank was pricing that opportunity.”
Representatives for the central bank countered that the business retained physical assets while in liquidation that should reduce the total payout, but the bank’s team argued that an active lending firm would have created significantly higher value over time
The conflict dates back to 1995 when Finance Bank Malawi first opened its doors before being placed under central bank management and forced into liquidation in January 2006
Rajan Mahtani, who previously built Finance Bank Zambia before selling the institution to African financial group Atlas Mara for $210 million in 2015, remains a prominent investor across Southern Africa through his holding company Finsbury Investments
State legal representatives have indicated that they intend to challenge every part of the compensation calculation, which stands as one of the largest single monetary claims ever made against the state of Malawi