RBM was sleeping on the job
One institution which has become so opaque of late is the Reserve Bank of Malawi (RBM). RBM rarely responds to media inquiries on issues of national importance. The only time information from RBM is put in the public domain is when the entity itself has something to say. It is one-way traffic. Forget about the ATI tool, all Malawians, including the media, are expected to use to force public entities to divulge information they hold. ATI is still work in progress.
The central bank has particularly done all it can to dodge questions concerning the troubled investment and portfolio managers Alliance Capital Limited (ACL). This is a disservice to the nation. As a regulator of financial institutions, the importance of RBM in shaping the country’s economy cannot be overemphasized.
The $1000-question about RBM is what was the institution doing as a regulator of financial institutions when ACL was messing up with people’s money? Mind you some of this money is pension which some investors had worked for, for their entire working life. Now it is gone. At least they cannot access it when they most need it. This is very sad. You can have billions in a bank account or stashed somewhere, but if you can’t access it when you need it most, it has no value.
What has prompted this entry is the story Weekend Nation carried on October 22 2022 concerning K11 billion which public institutions are failing to redeem from ACL. In total ACL is failing to redeem over K24 billion in matured investments to over 233 clients. Hundreds of these have taken the legal route to get back their money. Many, if not all, have also lodged multiple complaints with the central bank.
Some ACL clients who are now struggling to get their money are not comfortable to have their names mentioned in the media. That is why in our story the thrust was on the money that the public entities which we listed are owed. This is because this is taxpayers’ money.
We received a lot of feedback to the story. One reader wondered if government institutions are mandated to invest money. And if so who is in charge of investments in these respective companies?
Of course, they are, with written permission from Treasury. The 12 government companies which invested their money with ACL committed no crime.
The story explained that as investment and portfolio managers ACL was supposed to put the billions it was getting from clients into interest-bearing assets. But instead “the company deviated from its principal role of arranger in private placements and acted as a principal lender in such transactions as if it were a lending institution. As a result, ACL was unable to honour requests where clients instructed it to redeem in part or in full matured investments.” This is from a court document.
Granted, there is the central bank which is helping ACL’s clients to recover their investments. One route the central bank has taken is to have ACL liquidated. Unfortunately the process is slow. The wheels of justice do grind but unfortunately they are too slow for anybody’s comfort. As I have said above some of these funds are pension funds which some individuals invested with ACL in the hope that it would generate profits. For some of them, this is money from their entire working life spanning many years. Some of these people are old and frail. They need this money today, and not tomorrow; some for medical bills and others for their upkeep. To be told the millions they invested with the company is not available is tantamount to telling them to go home and die.
My plea to RBM is that it should expedite this mater. This is mess which happened on its watch. Someone was sleeping on the job. The bank did not do what it was supposed to do. It should therefore accept liability and urgently do something to bail out the distressed ACL’s investors.
As for the K11 billion owed to public entities, the Public Accounts Committee of Parliament (PAC), as an oversight body, should be interested to ensure that this money is recovered sooner than later. PAC has powers to summon RBM officials to hear what plans they have to sort out this mess. Hold RBM to account.
