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Firm blocks police probe

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By Rebecca Chimjeka

Transglobe, one of the firms that allegedly owe Export Development Fund (EDF) about K12.8 billion, has blocked the police from instituting criminal investigations against the company.

The development comes after in May this year, Director of Public Prosecutions (DPP) Steve Kayuni instructed the Malawi Police Service (MPS) to commence criminal proceedings against officers and companies that were allegedly involved in the plunder of money at EDF.

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In his letter to the Inspector General (IG) of Police, Kayuni further advised MPS to recover all assets that were realised from the alleged looting.

According to court documents that we have seen, Salim Tayub, Parvez Tayub, Rashid Tayub, Hamza Tayub and Nasser Satter of Transglobe applied for a judicial review against the probe before High Court judge Kenyatta Nyirenda at Lilongwe Registry.

However, the AG’s office— which is defending the case— wonders why the five sought the court’s intervention when their names apparently did not appear anywhere in the DPP’s letter to the IG.

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Hearing of the matter was expected on Thursday July 14 but was adjourned to Thursday July 21, 2022.

The claimants argue that the State’s decision to commence criminal investigations was not in good faith.

“It is the claimant’s case that the defendants maliciously and without merit selectively chose to prefer criminal charges against Transglobe and or the claimants when the evidence does not disclose any wrongdoing on their part,” reads part of a sworn affidavit in support of the application.

AG Chakaka Nyirenda said he would challenge the application.

“The companies are saying they should not be investigated on criminal charges, but we are also vigorously defending our position. The case has been adjourned to next week Thursday,” Nyirenda said.

In a sworn statement in support of the AG’s decision to challenge the application, Senior State Advocate Mtisunge Chiutula, among others, argues that the claimants obtained permission to apply for the judicial review without notice.

“The claimants wilfully or negligently made a false allegation that the defendants intend to arrest and prosecute them in respect of [the] funds when the truth of the matter is that the 1st defendant in his capacity as the Director of Public Prosecutions instructed the 2nd defendant [the IG] to commence criminal investigations against the parties mentioned in an audit report.

“It should be mentioned that the said letter between the defendants does not mention names of the above-listed claimants in anyway or whatsoever,” the sworn statement reads in part.

Meanwhile, Executive Director of the Centre for Social Accountability and Transparency, Willy Kambwandira, has urged the State to handle the EDF matter with passion.

“It is sad that despite all the stories that we have read about EDF, there is nothing to write home about as regards investigations and prosecutions of those involved in the alleged looting.

“We have not seen genuine action taken to reprimand officers and companies involved in the suspected looting at EDF.

We ask for speedy prosecution of officers and companies named in the fraudulent scheme, and we must recover what was fraudulently taken from Malawians,” Kambwandira said in an interview yesterday.

EDF, a development finance institution wholly-owned by the Reserve Bank of Malawi, reportedly gave a loan to Transglobe Produce Exports Limited, Alliance Capital Limited, Cotton Ginners Africa Limited and AHL Commodities Exchange.

An audit report that was conducted in 2021 by Fletcher and Evance indicated that Transglobe owed EDF $3 million, Alliance Capital Limited K6 billion plus interest while AHL Commodities Exchange had $800,000 to pay back.

The report indicated that acts of negligence and abuse of office by EDF management had resulted in the organisation losing about K12.8 billion through questionable business decisions between 2017 and 2019.

According to the report, the fund lost the money through its Commodity Market Making (CMM) initiative which EDF management had allegedly been administering without adhering to the laid-down procedures.

The fund introduced the initiative to assist local enterprises that had the potential to secure export supply contracts, but could not access loans from commercial banks and other lending institutions due to lack of collateral.

The report alleged that the conduct of EDF management in operating the CMM initiative without following processes and procedures and credit risk assessment, “clearly indicated acts of gross negligence and abuse of office.”

The audit further found that the fund paid over K7.4 billion in interest from 2016 to 2020 on the loans EDF borrowed from Trade and Investment Bank and Afleximbank.

“With most of its loan portfolio in a non-performing state, EDF may not collect the related interest charged to its clients,” it stated.

The special investigation also found that EDF’s Board of Directors had gaps in corporate governance, which resulted in the firm incurring a cumulative actual and potential loss of over K12.8 billion.

Among others, the auditors recommended to the board to consider taking disciplinary action for non-compliance with set procedures, gross negligence and abuse of office against officers responsible for CMM operations, risk mitigation and finance.

Few months earlier, the Public Accounts Committee of Parliament had questioned the legality of EDF after it had transpired that the firm had operated for over nine years without a licence.

 

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