‘Full recovery of Alliance Capital investments doubtful’

Investors seeking to recoup their billions from Alliance Capital Limited (ACL)—a firm undergoing insolvency—may not get all their anticipated returns as most of the firm’s assets cannot be easily sold without a substantial loss in value, Weekend Nation has learnt.

In an e-mailed response this week, Reserve Bank of Malawi spokesperson Ralph Tseka said: “Most of the assets available for liquidation are in form of receivables, which are illiquid in nature. The liquidator will, therefore, focus efforts on the recovery of these receivables.

“However, the liquidator has no control over how long this can take. Safety of creditor’s funds, therefore, mainly depends on the recovery process and findings from the forensic audit.”

The liquidator is the registrar of financial institutions, who is the RBM governor.

In November last year, the High Court of Malawi in Blantyre (Commercial Division) ordered that ACL be wound up and liquidated for its shortcomings to operate a well-managed financial institution in the country.

The company’s net capital as of April last year was at negative K393.39 million.

At stake is a whopping K24.7 billion investors’ money out of which K11 billion is owed to State agencies including K6.9 billion to the regulator’s own subsidiary Export Development Fund and K1.2 billion for Malawi Communications Regulatory Authority. Malawi Electoral Commission (MEC) is owed about K800 million.

Other State firms owed by ACL are Malawi Energy Regulatory Authority, Malawi Blood Transfusion Services, Malawi National Council of Sports and Agricultural Development and Marketing Corporation.

Tseka further explained that the forensic auditor to be appointed will be mandated to investigate the company’s transactions to determine if any financial crime or misconduct was committed in respect to the affairs of the company.

He said the findings from the forensic audit will then be shared with law enforcement agencies for their analysis and further action.

In a separate interview this week Attorney General (AG) Thabo Chakaka-Nyirenda confirmed that his office and other stakeholders are working on the issue of some directors of ACL who borrowed the depositors’ funds.

The AG, however, did not give further details on the scope and extent of their probe.

Earlier, Grant Thornton Consulting Limited was appointed to undertake the forensic audit but due to concerns regarding the independence of the auditing firm, the appointment was cancelled.

Last month, RBM invited fresh proposals for the provision of forensic audit services through open tender whose closing date was February 9 2023.

According to Tseka, creditors will be informed upon conclusion of the procurement processes.

Several companies, organisations and individuals who invested their money in ACL dragged the firm to court in a bid to recover their money.

One such body is MEC, which invested K690 million, which with interest is projected to have grown to K800 million. The money was nomination fees from candidates who contested in the 2019 Tripartite Elections.

In a telephone interview this week, MEC spokesperson Sangwani Mwafulirwa disclosed that the court recently ruled that ACL should pay MEC the full sum.

But ACL had asked the court to repay the money in K15 million instalments within a specific period.

ACL was incorporated as a private limited company on August 31 2004 as Alliance Investment Limited and changed its name to Alliance Capital Limited on September 30 2006