Malawi Government, through the central bank, paid K800 million (about $2.7 million) to Victoria Forex Bureau as compensation for loss of business over the last three years of forced closure, lawyer Kalekeni Kaphaleâ€™s court filings show.
The information about the K800 million out-of-court settlement is in an affidavit Kaphale filed in the commercial division of the High Court in Blantyre on October 18 2012 on behalf of CLC Forex Bureau to oppose the Reserve Bank of Malawiâ€™s move against striking his clientâ€™s lawsuit against the central bank to also compensate the company for loss of business damages estimated at K104.3 million (about $347 666).
Should the Victoria Forex Bureau payment be proved to be correct, it could open a can of worms, with 10 other bureausâ€”other than Victoria and CLCâ€”potentially picking a cue from the two and start demanding their own damages having gone through similar problems as the duo. This could put more burdens on the taxpayer if they succeed. The RBM, however, argues that CLC cannot seek litigation of a case that was already concluded through a court ruling.
But Kaphale said: â€œFurthermore, the fact that the defendant has in the past week paid Victoria Forex Bureau sums in excess of K800 million being damages for loss of profit due to the closure of the bureau and is not paying or refusing to pay CLC Forex Bureau, creaks a special circumstance in favour of entertaining the claim as both Victoria Forex Bureau and CLC Forex Bureau were parties to the judicial review case and since government has paid Victoria Forex Bureau, it cannot now raise the defence of res juricata only against CLC Forex Bureau.â€
According to court documents and correspondence we have seen on the matter, CLC Forex Bureauâ€™s demand for its own RBM compensation was rejected by Attorney General (AG) Ralph Kasambara despite suffering loss of profit under circumstances similar to Victoria Forex Bureauâ€™s.
â€œI am informed by my clientsâ€™ directors and I verily believe that in the last two weeks, government, through the very office of the [AG], has settled a claim for loss of business by Victoria Forex Bureau. This followed a letter dated June 5 2012 from the [RBM] to my office asking me to make an offer of damages for loss of business for both Victoria Forex Bureau and CLC Forex Bureau,â€ says Kaphale.
CLC Forex Bureau argues that the AGâ€™s decision is discriminatory and unconstitutional, according to the affidavit.
The firm states that it is wrong for government to settle a claim with one of two claimants and plead res judicata in relation to the other as RBM has argued in its own affidavit of October 2 2012 in support of its application to strike CLCâ€™s claim on grounds that it is an abuse of court process.
In legal parlance, res judicata generally means that once a court makes a final decision on a matter, that judgment is conclusive and the issue cannot be brought back a second time to a court of equal jurisdiction.
In this context, RBMâ€™s argumentâ€” based on its lawyer Samuel Malitoniâ€™s affidavitâ€”is that a party can litigate a civil lawsuit for money damages only once and since the courts already dealt with the matter in Judge Joseph Manyungwaâ€™s ruling against RBM delivered on March 2 2010, CLCâ€™s lawsuit may result in the issue being litigated again.
â€œSince the plaintiff [CLC] had already commenced judicial review proceedings against the defendant [RBM], they ought to have particularised their loss and applied for damages under those proceedings. The plaintiff, therefore, cannot commence fresh proceedings for aggravated damages and exemplary proceedings and loss of profits when the same could have been done under the judicial review proceedings,â€ said Malitoni.
But Kaphale explained in his affidavit that the matter of damages could not have been brought at the judicial review because, firstly, there was lack of knowledge of the claim for damages then and secondly, the question of res judicata does not arise during judicial review proceedings.
The court has set December 12 as the date for hearing the central bankâ€™s application.
In 2009, several other forex bureaus were closed by the Bingu wa Mutharika administration as part of reforms to tighten regulation of the currency market.
The closures sparked a high stakes legal battle that RBM lost in the Manyungwa judgment.
Victoria Forex Bureau is run by Zubair Osman whereas CLC Bureau Limited is owned by economist and academic Dr Charles Chanthunya.
The AG handled both claims on behalf of RBM as per a directive that Kasambaraâ€”who also doubles as Minister of Justice and Constitutional Affairsâ€”gave in a June 18 2012 letter to Governor Charles Chuka.
To the best of Weekend Nationâ€™s knowledge, government did not challenge the K800 million compensation payment, potentially the biggest by the Joyce Banda administration. RBM has, however, challenged CLC Forex Bureauâ€™s damage claims.
Correspondence we have seen and which is part of evidence submitted in court on the matter, shows that on May 15 2012, Kaphale wrote RBM demanding damages for his two clientsâ€”CLC Forex Bureau and Victoria Forex Bureau.
In response, RBM wrote back on June 5 2012, asking Kaphale to estimate the damage his clients suffered as a result of being prevented from plying their trade.
This was after AG Kasambara wrote RBM on June 18 2012, advising them that President Joyce Banda had ordered that the two bureaus be licensed again. In the same letter, Kasambara advised the central bank to refer all claims for damages from the two companies to his office.
Our investigations show that at some point between June and early October 2012, Victoria Forex Bureau was no longer being represented by Kaphale.
He apparently learned later that government paid off Victoria Forex Bureau, one of the two clients he was representing on the same case.
Kaphale on Wednesday declined to comment on the matter. Osman, promised to call back, but did not.
When we tried to call him later, his phone went unanswered. We sent him questions via SMS and we got no reply.
RBMâ€™s legal counsel Samuel Malitoni on Thursday declined to comment when asked to confirm payment to Victoria Forex Bureau.
Solicitor General Anthony Kamanga said in an interview on Friday: â€œIn these cases that were dealt with by the former Attorney General [Maxon Mbendera], we didnâ€™t have much leg to stand on and, therefore, we had to negotiate to minimise the cost on the taxpayer.â€
When asked why the K800 million payout was not contested, Kamanga said: â€œI donâ€™t have much knowledge on that, probably the AG should be able to help.â€
Asked why government did not challenge the K800 million claim to Victoria Forex Bureau, Kasambara said: â€œThat statement is a figment of imagination. Government has not paid that amount.
â€œWhat Mr. Kaphale has submitted to the court is what we call hearsay evidence. There is no evidence to prove that statement. That is an attempt by Kaphale to colour the case of his client. There is no payment voucher or cheque attached to support that statement.â€
Payments without fight
Since the Banda administration took over in April this year, government has paid a number of out-of-court claims.
One of them is the K20 million out-of-court settlement for false imprisonment by five people arrested alongside Kasambara on February 13 2012. These people were arrested for allegedly assaulting three men that Kasambara claimed attempted to kill him.
This five were represented by Ralph and Arnolds Associates, a legal firm in which Kasambara is a former partner.
Chilenje gets her cut
Another case involves former first deputy speaker Esther Chilenje who secured a K20 million payout from the National Assembly on July 17 2012 as compensation for suffering loss of motor vehicle use. This deal was also brokered by Ralph &Arnolds Associates.
Chilenje was entitled to buy the vehicleâ€”Toyota Prado registration number PAR 2â€”at the expiry of her term as deputy speaker, but failed due to complications following the vehicleâ€™s involvement in an accident just before she could finish her tenure. Parliament refused to give her a replacement, arguing that public service regulations did provide for such an arrangement.
In both casesâ€”one on Kasambaraâ€™s five accomplices and Chilenjeâ€™sâ€”government did not challenge the claims in court.