AG  Mbeta rips into Finance Bank’s K1.1trillion damages claim over “compromised” calculations

A staggering K1.1 trillion damages claim brought by the defunct Finance Bank of Malawi (FBM) came under intense scrutiny in Blantyre today, as Attorney General Frank Mbeta subjected the bank’s key financial witness to a gruelling cross-examination before High Court and Supreme Court Assistant Registrar Ibrahim Hussein.

The high-stakes assessment centres on FBM’s colossal compensation claim following the Reserve Bank of Malawi’s (RBM) controversial decision to strip the bank of its licence back in 2005 — a claim that, if upheld, could see the state on the hook for one of the largest damages payouts in the country’s history.

During Wednesday’s morning session, Mbeta turned his fire on Nkhuzo Kuwani, a financial adviser for Zambia’s Mahtani Group of Companies, who was responsible for crunching the numbers behind FBM’s multi-billion-kwacha claim.

“Compromised” calculations under the microscope

The Attorney General wasted no time zeroing in on a glaring inconsistency, demanding to know why Kuwani’s calculations stretched back to include the period between 1 January and 17 May 2005 — weeks before the RBM formally pulled the bank’s licence.

Kuwani claimed the inclusion stemmed from alleged illegal interference by the central bank during that window — but was left red-faced when he could not produce a shred of supporting evidence to back up the claim.

Things went from bad to worse for the witness when he admitted his assumption rested on the belief that a court-awarded damages ruling automatically implied interference had occurred.

Seizing on the admission, Mbeta bluntly told the court that basing financial calculations on assumptions rather than evidence risked compromising their accuracy entirely.

Row over $30million “opportunity cost” claim

The Attorney General also took aim at a separate element of the claim, arguing that the court had strictly awarded damages for loss of business and lost profits — not the eye-watering $30 million in so-called opportunity-cost losses that Kuwani had folded into his calculations.

Pushed on the point, Kuwani insisted the bank could have been sitting on idle cash that, had it been lent out instead, would have generated additional revenue for FBM.

The court has since adjourned for the afternoon session, with Kuwani expected to face re-examination as the marathon legal battle over the mammoth compensation claim continues.