Pakistani in K20bn ‘Bankgate’ arrested

Pakistani Abdul Rehman, who left the country in April amid allegations that he defrauded some local commercial banks of K20.9 billion through loans obtained in the name of a company he worked for, jetted bank into the country yesterday.

Head of Malawi Police Service Fiscal and Fraud Section, Isaac Norman, said in an interview yesterday police arrested Rehman on arrival at Chileka Airport in Blantyre.

Norman said his team was interrogating Rehman, but refused to disclose the charges against him, only saying they were “complex”.

Rehman was one of the directors at Cotton Ginners Africa Limited before he left Malawi for Pakistan with his family.

He arrived at Chileka aboard an Ethiopian Airlines flight at around 2pm, but it took close to two hours before authorities drove him out of the airport for interrogations at Fiscal and Fraud Section.

The businessperson was traced in Pakistan by some Malawians with an interest in the matter who reported him to authorities and negotiated his repatriation to Malawi, according to sources.

After Rehman’s departure, Cotton Ginners Africa Limited applied for bankruptcy at the High Court Commercial Division in Blantyre, but the affected commercial banks challenged the move.

Rehman reportedly obtained the loans using different properties of Cotton Ginners Africa Limited as securities.

He is believed to have remitted over $5 million (over K3.6 billion at the current exchange rate) in foreign accounts, according to an audit report by Audit Consult Advisory Services Limited dated July 23 2017, which is contained in court documents.

The major victim of the suspected fraud is Standard Bank Limited, which is owed K8 585 177 082, followed by Reserve Bank of Malawi’s Export Development Fund (K4 092 547 425), Ecobank Malawi Limited (K3 499 481 627), CDH Investment Bank (K4 476 302 691) and National Bank of Malawi (K250 000 000).

The amount at stake is K20 903 508 825, but it has also been established that the total liabilities for Cotton Ginners Africa Limited is K23 656 808 338, with the company’s total assets pegged at K10 011 666 092.

The company requires K13.2 billion to return to solvency, court documents we saw indicated.

Abdul Kader Patel, one of the directors at Cotton Ginners Africa Limited, filed the insolvency application, proposing cooperation of all the banks and appointment of an administrator to manage the company under supervision of the court.