k250m payout sparks row

Government has paid K250 million (US$609 756) to one Elliot Amini of Lilongwe as compensation for a building that authorities had condemned as illegal but whose construction the claimant says was duly approved.

Ismael Wadi, lawyer for Amini, popularly known as Mr. Kampala—while validating payment to his client—refused to corroborate the figure, citing ethical considerations.

But officials from the Ministry of Lands and Lilongwe City Assembly (LCA) confirmed the amount. They also argued that the payout was unnecessary.

On the other hand, the compensation has also irked the liquidator of Finance Bank Malawi Limited Pempho Likongwe.

Likongwe told Nation on Sunday in an e-mail interview that the money has gone to the wrong party because the building is part of the assets of the bank currently in voluntary liquidation. He explained that Finance Bank bought the structure from Amini when the financial institution was a going concern.

The liquidator has also said he would sue the Attorney General on behalf of Finance Bank for what he considers to be illegal transfer of ownership of the building back to Amini.

Amini filed the lawsuit over the building—located a stone’s throw away from Lilongwe Bridge and close to the Escom sub-station in Old Town—in May 2012.

He was paid the compensation in November 2012, eight years after he was stopped from proceeding with construction of the building in 2004, according to sources at the Ministry of Lands.

The out-of-court payout has shocked some in the Ministry of Lands and LCA for two reasons: they say the transfer of the property’s ownership back to Amini from Finance Bank is unusual and, second, they believed government should not compensate—certainly not without a legal fight—a developer they say ignored their directive against construction.

Director of planning at the city council Hilary Kamera said in an interview on Tuesday that the building was unauthorised.

He said the structure was recommended for demolition when the council’s Town and Country Planning Committee—comprising independent and ex-officio members who are mostly government officials—revoked the decision to award the plot to Kampala in 2001.

“The area was not reserved for building in the original plan of the city. There was a line which is supposed to act as a boundary. Any building that is outside that line is illegal.

“The building in question was very close to the river. We do not know what happened for the developer to continue building the structure,” said Kamera.

He said it was surprising that it was Amini who demanded and received compensation from government when records indicate that the building belonged to Finance Bank.

But Wadi argues that the structure was fraudulently sold to the bank without the knowledge of Amini.

“The transfer of his land to Finance Bank was without his authority or knowledge, irregular and fraudulent and the aforesaid issues were brought to the attention of the liquidator of Finance Bank and the irregular transfer was rectified following a discussion and an amicable settlement of the matter between Kampala and the liquidator,” he said.

But Likongwe contradicted Wadi, saying the building is still owned by Finance Bank and expressed surprise that someone was compensated for the structure.

Likongwe said Amini sold the building to Finance Bank in 2004, explaining that all formalities were followed; including the transfer of lease which he said was duly executed by all parties. Finance Bank paid Amini K13 million for the building, he said.

“The transfer of lease was registered in January 2005 and Finance Bank Malawi Ltd became the legal owner of the building. Later, Mr Amini commenced an action in court claiming that he did not sign the Transfer of Lease. As liquidator, I defended the court action because I have evidence that Mr Amini signed the Transfer of Lease and he received money from Finance Bank. Mr Amini has not proceeded with the court action, and there is no court order.

“The next thing, I discovered that the Land Registrar in January 2013 cancelled Finance Bank’s name in the Land Registry and put Mr Amini’s name. I have questioned the Land Registrar’s action but I have not got a response. I have since given notice of intention to sue the Attorney General [Land Registrar] so that Finance Bank Malawi Ltd is restored as the owner of the building,” said Likongwe.

On the legality of Amini’s construction, Wadi said his client was lawfully given permission by the city to erect a two-storey building.

He said the directive to stop development was political, arbitrary and unprocedural.

But a source at the Ministry of Lands said they did not grant authorisation to Amini to start the development and were surprised that the developer went ahead to construct the building on the land without the ministry’s permission.

He said it was surprising that government has compensated the developer after it has all along refused to pay on the grounds that he defied authority.

“The building has no certification from government because government has been refusing to grant any as the building was unauthorised. The issue has been around for over 10 years. So many lawyers have handled it, but government has always put its foot down refusing to compensate. But this time, the order to pay came from above,” said the source.

Another source in the Ministry of Justice said for years government has been refusing to pay Amini until early this year when instructions were issued to pay him.

“There is a letter from the Ministry of Lands instructing the Ministry of Finance to pay Amini. The letter was copied to the Ministry of Justice. Government paid Amini in two tranches; the first was K100 million and then later K150 million,” he said.

Minister of Lands Henry Phoya said there was no way his ministry would have issued instructions to Treasury to pay Amini as issues of compensation are handled by the Ministry of Justice.

But our source at the Ministry of Justice said the ministry only acts as lawyers for a client—in this case, the Ministry of Lands.

Ministry of Finance spokesperson Nations Msowoya said he did not have information on the matter.

Uncontested compensations have dogged the Joyce Banda administration for some time now.

For example, by March 2013, government had not only depleted the K1.1 billion 2012/13 budget for compensations, it had also overspent by K500 million to record total payouts of K1.6 billion in compensations by February end, according to information Weekend Nation obtained from the Ministry of Finance in March.