Mulli sues over Reserve Bank of Malawi audit
Demands K2.1 billion from consulting firm, Deloitte & Touche
By Deogratias Mmana:
Mulli Brothers Limited (MBL) has demanded K2.1 billion from consulting firm Deloitte & Touche Services Limited for defamation in a forensic audit report for the Reserve Bank of Malawi.
In May this year, a report was released of an audit that took place at the Central Bank covering the period between January 1, 2019 and June 30, 2020.
The report details how Reserve Bank of Malawi officials allegedly bent own rules to facilitate payments, including some which auditors, Deloitte & Touche, deemed fabricated.
In the report, Mulli Brothers Limited (MBL) was among those named to have benefitted from the financial improprieties at the Central Bank.
Among others, the report claimed MBL was overpaid through the Fertiliser Inputs Subsidy Programme (Fisp).
In their summons, MBL through its lawyers, Ritz Attorney at Law, queries Deloitte for stating that the firm and Jean Mathanga, wife to former RBM deputy governor, were benefitting from hefty loans from the Central Bank for their businesses.
According to the court document, in the audit report, Deloitte & Touche said it was investigating an “allegation that RBM was financing dubious payments for DPP business owners that are being used as conduits for siphoning money from government.”
Reads the court document:
“The Defendant proceeded to state that: ‘…The Mulli Brothers and Jean Mathanga (the wife to RBM Executive Director) were benefiting from hefty loans from RBM for their businesses. The Mulli’s and Mathanga’s were paid money four times for the Farm Input Subsidy Program (FISP) and payments were made before the contracts were awarded to other suppliers…”
Deloitee & Touche Services Limited is being represented by Messrs Sacranie, Gow & Company, according to a notice of appointment of legal practitioners from Sacranie, Gow & Company dated September 2, 2021.
In its amended summons filed on August 30, 2021 at the High Court, MBL has therefore demanded a total of K2.1 billion in Civil Case Number 328 of 2021.
Reads the summons: “The claimant seeks from the court an order and/or a declaration that the Forensic Audit Report by the Defendant in as far as it relates to allegations concerning the claimant breached International Standards of Auditing and is not credible.”
MBL has demanded K100 million for damages for false reporting and/or false representation and malicious falsehood.
It has also demanded another K100 million for general and aggravated damages for what it calls negligence, negligent misstatements, representations and misfeasance.
The company has further asked for another K100 million for damages for professional negligence and also K200 million for defamation libel due to loss of business reputation and standing.
In addition, the company has demanded another K100 million for malice and/or bad faith and another K1.5 billion for loss of business and business value occasioned by the report.
The court has asked Deloitte & Touche to pay the costs or challenge the summons within 28 days.
“We command you within 28 days after the service of this summons on you, inclusive of the day of service, you must either satisfy the claim or file with this court a defence and list of documents.
“If you do not intend to contest the proceedings, you must within 14 days after service of this summons on you inclusive of the day of service return the accompanying response stating therein that you do not intend to contest the proceedings but desire a stay of enforcement of judgment, if any,” reads the summons dated September 2, 2021.
The summons says if Deloitte & Touche fails to pay or file a defence or return the response within the stated time, the court may proceed to give judgment against it.
There was no immediate comment from Deloitte.
One of Ritz lawyers, John Kalampa, said the matter has just commenced and Deloitte & Touche is still within time to file its defence.
“Our client’s issue of claim is that it observed several irregularities and falsities in the Forensic Audit Report that have impacted on its business and goodwill, among others.
“Our client’s assertion is that no interviews were at any point conducted and is of the strong view that the report falls below applicable standards. Our client is of further view that there was lack of appreciation of salient issues on how Letters of Credit under the facility worked,” he said.
Following the RBM report, former RBM deputy governor Henry Mathanga, director of financial markets operations Roderick Wiyo and senior finance and market operations dealer Leah Donga were arrested.