Supreme Court clears banks to loan Khato K105bn
National Bank of Malawi (NBM) plc and NBS Bank plc can now proceed to loan Khato Civils K105 billion for the Salima-Lilongwe Water Project following the lifting of an order stopping the process.
The Malawi Supreme Court of Appeal made the order yesterday, putting aside the injunction the High Court of Malawi Commercial Division earlier granted to Forum for National Development (FND) which demanded further details of the deal.
Both Attorney General (AG) Thabo Chakaka-Nyirenda and lawyer representing FND Edgar Kachere confirmed in separate interviews yesterday that following the development, the banks are now free to disburse the loans.
FND, led by its national coordinator Fryson Chodzi, obtained an injunction on May 4 2023, stopping the banks from issuing the loans to government on behalf of Khato Civils, arguing that the nation needed an explanation as to what had happened with a financier Khato Civils identified.
When the case came before Judge Ken Manda of the High Court Commercial Division in Blantyre on Wednesday for the parties to argue on sustenance, and on the other hand vacation of the injunction, FND sought an adjournment to allow it prepare. The court also dismissed an application of stay on the injunction filed by the AG.
The court had asked the AG to make a formal application of the stay to enable both parties be heard.
It was on this basis that the AG turned to the Supreme Court on grounds that the lower court dismissed his application for stay.
In an interview yesterday, Nyirenda said: “The lower court dismissed our application. We had no choice, but to turn to the Supreme Court to protect interests of government. We argued before the Supreme Court that the judge erred in law and in fact in holding that the presentation as to whether the matter before the court below was a commercial or not had been overtaken by events…”
He said the lower court erred by assuming jurisdiction over the matter when there was no commercial relationship between the parties and that the matter was not commercial in nature.
Nyirenda also said the judge also erred in law in improperly exercising his discretion to adjourn the matter.
But Kachere said the system stinks, arguing that the AG made an application for stay before the High Court judge who later ordered him to bring his application for stay of proceedings interpartes.
He said: “This meant all parties were to be heard on his application. At this stage, no order had been made. Surprisingly, on Sunday the AG made an application for stay before a judge of the Supreme Court.
“This is against the rules which require that the Supreme Court cannot entertain an application before it has been exhausted in the lower court. But surprisingly, it has granted the stay.”
Kachere said all FND is asking the Commercial Court is to decide whether Khato Civils’ failure to source own financing for the project does not mean that it had failed to perform the contract.
“And if Khato failed, wasn’t the government supposed to repudiate the contract and re-tender it so that other potential bidders could bid?” He queried.
In yesterday’s order by Justice of Appeal Dingiswayo Madise, the court ordered the AG to file a fresh application with notice within seven days and that FND must respond within 15 days.
Hearing of the summons, the judge ordered, would be done within 21 days from yesterday.
FND is on record as having argued that Khato Civils identified a financier, Quay Energy Corp, to the tune of K25 billion, but no explanation was given on what happened to the financier.
On the other hand, Khato Civils, through lawyer Chancy Gondwe, were arguing in the lower court that the Government of Malawi through the National Assembly passed the NBS Bank plc and National Bank of Malawi plc (Lake Malawi Water Supply Project) Loan Authorisation Bill, 2023.
They contend the Bill was passed into law on April 6 2023, effectively authorising the government to borrow from the two banks to finance the project.
