Was Mahtani paid K120 bn?

The Minister of Finance Alexander Chikwanda must come out and explain reports the Bank of Zambia has paid Rajani Mahtani, owner of Finance Bank up to K120 billion as compensation for the seizure of his bank without litigation, Solwezi Member of Parliament Lucky Mulusa has demanded.

Following the publication of a press query by the Daily Nation sent to the Central Bank last month seeking to find out among other things, reports that Finance Bank was in breach of the Bank of Zambia Act in terms of shareholding as its owner Rajan Mahthan had maintained 56 per cent shares in the bank, Mulusa yesterday wondered why Chikwanda was quiet when the country’s banking and financial system was being destroyed.

Mulusa who stood on a point of order in Parliament yesterday said reports that the Bank of Zambia had K120 billion Mahtani without litigation as compensation for loss of business after the Central Bank had seized his bank in 2010 were serious enough for government to take immediate action on the matter.

Mulusa in his point of order said he did not see any reason why Chikwanda was keeping quiet while the country’s banking and financial system was being destroyed.

Mulusa also wanted government to explain the status of Access Bank following directives that all government and parastatal accounts should be withdrawn from the bank.

And the Bank of Zambia has refused to respond to the Daily Nation’s query claiming that the responses would be prejudicial because the questions raised were a subject of a court process.

The Daily Nation had sent a press query to the Central Bank governor Michael Gondwe which had carried eleven questions on the status of Finance Bank but in its response through cooperate affairs manager Kanguya Mayondi, the bank claimed it was unable to provide responses to the questions because of a judicial process.

“Kindly note that the Bank of Zambia is unable to provide any responses to the questions in your press query because there is a judicial process which is in progress regarding the subject and as such, it would be prejudicial at this time,” Mayondi said.

Soon after assuming power, President Michael Sata reversed the sale of Finance Bank to First Rand National Bank and handed back the bank to its shareholder, Rajan Mahtani.

The Bank of Zambia under former governor Caleb Fundanga seized Finance Bank from its shareholders in 2010 for violating the law through unsound practices including insider borrowing.

In the query, the Daily Nation wanted to find out the state of inside borrowing in Finance Bank and whether it was true that Clavada Mining, Finsbury Investment, Zambezi Portland Cement and Colosseum Limited had been used to borrow money from the bank.

The newspaper further wanted the Central Bank to confirm reports Mahtani had made monetary claims from the Patriotic Front government and the Bank of Zambia for loss of business and wrongful acquisition of his bank.

There are reports that Finance Bank and its shareholders had claimed monetary compensation from Bank of Zambia and that Mahtani had been paid up to K120 billion for loss of business without any form of litigation.

The Daily Nation also wanted to find out from the Central Bank the cost of seizure of Finance Bank and the subsequent sale to FirstRand National Bank (FNB) as well as the cost returning the bank to its shareholders.

The newspaper further queried the Bank of Zambia whether Finance Bank had made any claims from FNB as the previous buyers in the failed transaction.

The query also was trying to find out the state of Access Bank following the withdrawal of all government and parastatl accounts at Acces Bank.

The Daily Nation has information that the withdrawal of all government and parastatal accounts from Access Bank was influenced by an influential banker with political connections even when the bank had met all Bank of Zambia benchmarks and regulations.