In February 2022, the offices of the Attorney General and Director of Public Prosecutions (DPP) revealed they were pursuing legal action to force FDH Bank to pay back to the state K10.6 billion illegally deposited into the bank’s accounts from the Reserve Bank of Malawi (RBM) between 2019 and 2020. Two years later, the DPP's office is changing tune on the subject. MILIMO CHITSULO A cloud of uncertainty now hovers over the state’s decision to pursue legal action to force FDH Bank to pay back 10 billion kwacha which an audit report revealed was illegally paid into the accounts of the bank from the country’s central bank with the offices of Director of Public Prosecutions (DPP) and the Office of the Attorney General seemingly walking away from past public commitments on the matter. In February 2022, the Malawi Government, through former Director of Public Prosecution (DPP), Steve Kayuni, wrote FDH Bank, demanding the bank to refund K10.6 billion that the Reserve Bank (RBM) deposited into FDH Bank’s account between 2019 and 2020 or risk confiscation of the bank’s assets. PIJ understands that Kayuni’s successor as DPP, Masauko Chamkakala, reversed the decision to demand the K10.6 billion from FDH Bank with Chamkakala confirming the development in an interview, saying the state wants to first conduct a fresh investigation into the legality of the payment. Chamkakala further justified the move arguing that the previous decision to demand the money was made solely based on the Deloitte Audit report without a thorough investigation into the circumstances surrounding the transaction. "We provided the bank with an opportunity to respond, and they explained their side to us. The demand to repay the money was made based solely on the audit report without further investigation. What we are doing now is investigating the matter to ascertain the facts," said Chamkakala. The 2021 Deloitte Forensic Report on financial management at the Reserve Bank, revealed the 10 billion kwacha payment was made amid uncertainty over the future of the then Peter Mutharika administration, as the country waited for the results of the 2020 rerun Presidential elections. “In this case as well, the further costs of MWK 6.5 Billion to FDH were also not disclosed nor presented for ratification embedded in K6.5 billion, was K4.3 billion compensation paid to FDH Bank following earlier termination of FX swap arrangements on 26 June 2020 without a notable obligation for compensation,” reads part of the report. It added: “The timing of USD 350 Million and USD 100 Million Treasury Notes on 26 June 2020 and 30 June 2020 appear unjustifiable given that the Term Sheet for these transactions had been accepted by RBM in April 2020 as such RBM was aware of the need to undergo a restructuring as at that time.” But in the interview, Chamkakala said investigations into the matter already culminated in the recent criminal prosecution of former RBM officials and government officials but said any civil action on the matter against FDH was the responsibility of the Attorney General. The Attorney General, on the other hand, insisted the “claim still stands” in a separate interview, but said he had no information on developments in the matter. "I am not aware of that, but I will follow it up," Nyirenda told PIJ. The development is in sharp contrast to the tone set by the two offices when the matter emerged. In the demand letter addressed to the bank, dated 25 February 2022, the then DPP, Steven Kayuni, now serving as a Principal Secretary in the Ministry of Homeland Security, described the 10 billion kwacha payment as ‘proceeds of crime,’ ‘unjust enrichment,’ and ‘part of suspected money laundering’. "As a competent authority pursuant to the Financial Crimes Act, we intend to institute civil forfeiture proceedings against you for dealing with property connected to financial crime. Furthermore, based on our analysis and subsequent investigations, we strongly believe that the bank, its board members, and senior management personnel may become accountable for financial crimes in the near future," Kayuni wrote. A spokesperson for FDH declined to comment on the matter, referring PIJ back to the offices of the Attorney General and Director of Public Prosecution. READ MORE: FDH FINGERED IN A K10.4 BILLION MONEY LAUNDERING SCAM MALAWI CENTRAL BANK AUDIT EXPOSES FICTITIOUS TRANSACTIONS A MYSTERIOUS MAURITIUS FIRM IS PAID BILLIONS. NO TENDER. NO PPDA APPROVAL This article was produced by the Platform for Investigative Journalism (PIJ), a non-profit and public interest centre for investigative journalism. ABOUT THE AUTHOR:
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