Finance Bank owner Rajan Mahtani has allegedly claimed K 120,000,000 (K120 billion unrebased) from the Bank of Zambia (BoZ) without the knowledge of other shareholders, a highly placed source tells Zambia Reports.
According to a source within the Bank of Zambia, when one of the BoZ board members questioned the transaction, he was threatened with dismissal by President Michael Sata, whose last campaign was financially supported by Mr. Mahtani.
According to information, Mahtani has quietly claimed the money from the Zambian Government for the period of time the Zambian Government re-possessed Finance Bank for non-compliance under the Banking and Financial Services Act, with his personal shareholding exceeding more than 25% of the bank.
In 2011, the past government under President Rupiah Banda intervened against Mahtani’s Finance Bank following a forensic audit conducted by the firm Edward Nathan Sonnenberg, which found that Mahtani owned up to 56.5% of the bank through several different front shareholders such as Clarkwell Limited, Job Albert T Samuel, Estate of the late Pat Bwalya Puta and Patrick Chamunda. The other major shareholder in Finance Bank is allegedly Credit Suisse, however other sources indicate that the shares only act as collateral on a personal loan to Mahtani, rather than a strategic stake in the Bank. The violations of the Banking and Financial Service Act were detailed in a government gazette issued on Dec. 31, 2010 – a document which has not been revised by the government.
One of President Sata’s first acts in office was the immediate restoration of Mahtani’s ownership of Finance Bank, despite an acquisition transaction in process by the South African-owned First Rand, as well as the dropping of a forgery charge against him. Mahtani’s personal lawyer, John Sangwa, has also been appointed by Sata as state counsel.
Speaking on the condition of anonymity, the source at BoZ says that Mahtani has sought to keep this claim of K120 million discreet in order to avoid additional claims from any other Finance Bank shareholders who may stake a claim.
When BoZ board director Gilbert Temba queried the transaction, President Sata allegedly threatened to dismiss him from the board, the source said.
Mr. Temba, a well known Lusaka businessman, was blocked from making Mahtani’s compensation claim public by the Treasury Secretary Fredson Yamba, who also sits on the board.
Yamba, who is a brother-in-law to President Sata, called State House to report Mr. Temba’s plans, leading to the threats of dismissal, the source says.
Meanwhile the BOZ source says the board has also discovered that Mahtani through Finance Bank allegedly lent out US$ 7 million to the owners of the new Radisson Blu Hotel in Lusaka without collateral or clearance from the Bank’s credit committee, which is against the Bank of Zambia regulations.
“This is how Mahtani operates,” the source said. “He accrues huge debts to fuel his liquidity, and later turns his loan debts into shareholdings. That’s what he wants to do with Radisson Blu. Instead of the President advising Mathani to reign in illegal practices, instead he threatens to drop any board members who stand in the way. The first casualty is Mr. Temba,” the source said.