FDH Bank has been embroiled in the K679 billion Reserve Bank of Malawi (RBM) scandal.
Questionable activities at RBM including money laundering involving top executives have been unraveled in an audit report which was produced by Deloitte.
According to reports, FDH Bank was the major beneficiary of suspicious transactions at RBM.
Auditors raised suspicions of a K4.3 billion transfer of funds from RBM to FDH Bank on the night before the results of the 2020 Fresh Presidential Elections were announced.
The transfer of funds was allegedly authorized by executives at the bank at the time including the then Governor Dalitso Kabambe.
Hours after the money was transferred, Lazarus Chakwera was announced as President of Malawi, replacing Peter Mutharika of the Democratic Progressive Party.
There is also a suspicious payment of K4.1 billion to the Pensions and Gratuity Account which was not approved by government and is also connected to FDH Bank.
RBM bosses also failed to disclose payments totaling K3.9 billion to the board for approval. These were paid to FDH Bank which is the local custodian bank for securities.
Another issue raised in the report is that Mulli Brothers and three other companies, which appear to be affiliated, were awarded contracts K5.4 billion totaling in 2019/20 season, Farm Input Subsidy Programme contracts of a total of K5.4 billion were awarded to Mulli Brothers and three other companies, all of which appear to be affiliated, according to the audit report
RBM serving managers and executives are also accused of receiving 27 billion in ex-gratia payments and in turn sharing K7 billion of the money with the DPP.
The audit report has since led to the arrests of Kabambe, former RBM Deputy Governor Henry Mathanga, retired Director Rodrick Wiyo and one of the current Managers at Reserve Bank Leya Ndonga.
The four have been charged with abuse of office as the state argues that between October 2019 and June 2020, they allegedly abused the office by paying a compensation of K4.3 billion to FDH Bank without prior approval.
Another case of abuse of office involves provision of credit to Mulli Brothers and other firms without prior approval of the board, which is also abuse of office.
They are also accused of neglect of official duty and money laundering with the state arguing that they acquired K8.3 billion while knowing that the said sum represented proceeds of abuse of public office.