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Government coy on toxic loans

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Williams Banda

Government is not coming out clear on how it will recover over K6 billion in toxic loans which various companies owed Malawi Savings Bank (MSB) at the time of its sale in 2016.

Spokesperson in the Ministry of Finance Williams Banda in an interview only said government will do all it can to recover the loans.

“The ministry will ensure that due processes are attained in the toxic assets,” he said.

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The Human Rights Defenders Coalition wrote a letter to the ministry in which it urged the government to move with speed in recovering the funds.

“As you are aware, government sold MSB Bank to FDH Bank. When the bank was being sold, some politically-connected individuals and companies owed the bank over K6 billion. It is alleged that the companies are owned by people aligned to the then ruling [Democratic Progressive Party] and that government did not recover the loans.

“We are therefore calling upon your honourable office to inform the nation on the status of these so-called toxic loans and what you intend to do about them,” reads the letter in part.

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At the time MSB was being sold, Mulli Brothers allegedly owed the bank K4.6 billion, Sterling Timbers K1.4 billion, Varibo Spirits K397 million while KJ Transways had allegedly borrowed K172 million from the bank.

Ganizani Transport allegedly owed the bank K97 million, Maranatha Institute of Education K83.9 million, Consolidated Building Contractors K71 million, CK Construction MK69.8 million while K Investment had allegedly borrowed K65.9 million.

Former president Peter Mutharika’s administration, which oversaw the sale of the bank, at the time set up a task force charged with the responsibility of recovering the funds.

Chairperson of the task force Chadwick Mphande said he met the Minister of Finance and the Secretary to Treasury to appraise them on the status of the loans.

Mphande, however, could not disclose what transpired during the meeting, saying the ministry was better placed to speak.

“I told them our position of the matter. Talk to them yourselves, otherwise I told them everything,” he said.

But Banda also could not comment on what transpired during the meeting only saying the assets will be recovered while Finance Minister Felix Mlusu did not pick his mobile phone on several attempts.

In 2016, the government sold MSB to FDH and Inde Bank to National Bank amid protests by stakeholders who said the move was a bad idea

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