Police on Tuesday arrested former Secretary to the President and Cabinet Lloyd Muhara and business magnate Leston Mulli for their alleged involvement in a deal to settle a K5 billion loan over a 50-year period.

National Police deputy spokesperson Harry Namwaza confirmed the arrest of the two in an interview on Tuesday but asked for more time to get details on the charges.

The arrests come after Attorney General Thabo Chakaka Nyirenda in a letter dated May 11 2022 asked Director of Public Prosecutions Steve Kayuni and former Inspector General of Police George Kainja to take action against Muhara as well as former Secretary to the Treasury Cliff Chiunda for allegedly abusing their offices in the transaction involving Malawi Savings Bank (MBS), a commercial bank formerly wholly-owned Malawi Government.

In an interview on Tuesday, Nyirenda said they have found that the deal involved more money and that the figure has since gone up to K30 billion.

When contacted at Area 3 Police in Lilongwe before the two suspects were transferred to Lumbadzi Police Station where they spent the night, lawyer representing Muhara and Mulli, Chauncy Gondwe, declined to give more information, but confirmed that it was connected to the loan settlement deal.

He said: “Police are now transferring my clients to Lumbadzi and we expect that they will be taken to court [today] to be formally charged. I cannot cite the charges for now, but it is in relation with the loan settlement.”

When The Nation visited Area 3 Police on Tuesday afternoon, the suspects were seen in a jovial mood at the carpark interacting with sympathisers and some opposition Democratic Progressive Party (DPP) members, including Thyolo Central legislator Ben Phiri. They were later driven off in a Toyota Fortuner.

In the letter addressed to lawyers representing MSB Debt Collection Company and copied to Kainja, Kayuni and others, Nyirenda said Muhara and Chiunda illegally instructed a law firm to withdraw enforcement of bankruptcy proceedings it obtained against Mulli Brothers Limited (MBL) Holdings.

The communication further indicated that the decision was wrong as none of the two was MSB Debt Collection Company director, as such, could not validly enter into a settlement agreement on behalf of the company.

Reads the letter in part: “Both Honourable Justice Muhara and Mr. Cliff Chiunda committed a criminal offence of abuse of office contrary to Section 95 of the Penal Code or Section 25B of the Corrupt Practices Act when they executed the said settlement agreement.

“Mulli Brothers Limited, its directors or employees may also be liable for the offence of aiding and abetting abuse of office by a public officer.”

Nyirenda further requested the law firm to proceed with enforcement of the bankruptcy proceedings against MBL Holdings and to have the settlement agreement which he said was “illegally and unlawfully signed” set aside.

The Attorney General’s decision followed a move by his predecessor Chikosa Silungwe to review a consent order between the Malawi Government under the DPP administration and MBL Holdings that provided settlement for the K5 billion debt over a 50-year period.

Muhara and Chiunda signed on behalf of the Malawi Government while MBL Holdings was represented by its lawyers.

Under the agreement, MBL Holdings was set to be paying a fixed K5 million monthly for 50 years to settle the K5 billion owed to the public.

Ironically, the 2018 consent order between the Office of the President and Cabinet and MBL Holdings was signed at a time the MSB Debt Collection Company, formed to recover toxic loans that some businesses and politically-connected individuals owed MSB, a commercial bank then wholly-owned by Malawi Government and sold to FDH Financial Holdings Limited, struggled to make recoveries. n

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