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FDH suspects fraud at MSB

FDH Holdings Limited, a majority shareholder in the formerly government-owned Malawi Savings Bank (MSB) says it suspects a possibility of mismanagement or fraud at the bank and plans a forensic audit on the financial mess at the bank.

This follows revelations that MSB in 2014 made an after-tax loss of K2.4 billion, contrary to earlier reports that it made a similar amount in profits.

FDH Chief Executive Officer Thomson Mpinganjira said yesterday the group will conduct a forensic audit on the bank to detect any possible mismanagement of funds.

“The audit will ensure that if any malpractices occurred they are brought to light. We will ensure that we protect the resources of this bank and vigorously pursue anyone found to have carried out any malpractices and criminal activities that were aimed at stripping the bank of its assets,” said Mpinganjira in a statement published in The Daily Times of yesterday.

He says the recorded loss implies increased cost for the bank to meet the Basel II recapitalisation capital shortfall.

FDH was anticipated to channel about K3.2 billion into the bank to meet the requirement, but according to Mpinganjira, the recorded loss implies that the actual shortfall as at December 31 2014 is now at K6.3 billion, double the original estimate.

Among others, staff costs in the year under review increased by 56 percent from 2.5 billion in 2013 to K3.9 billion. Other expenses also increased from K460 million in 2013 to K720 million in 2014.

According to the financial results, the bank’s assets base, however, grew by 19 percent from K40.2 billion in December 2013 to K47.9 billion in December 2014.

The bank’s customer portfolio also went up by 27 percent from K31.72 billion in the previous year to K40.38 billion by end of December, 2014.

According to MSB’s published financial results for the year ended December 31 2014, the bank recorded a consolidated loss of K2.4 billion against a K249 million profit for the year ended December 2013.

Mpinganjira said the results imply a possible fraud within the system.

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