Dr. McDonald Mafuta Mwale
* Proceeding with the transaction would be inconsistent with sound pension fund management principles and expose members to undue financial risk
* From a prudential and regulatory perspective, the proposed transaction is likely to breach investment limits under the Financial Services (Investment Management of Life Insurers and Pension Funds) Directive, 2025
* And result in serious liquidity mismatch and heightened risk warn of regulatory breaches and systemic financial risk that could destabilize the pension sector
By Duncan Mlanjira
In his assessment to the proposed sale of Amaryllis Hotel to Public Service Pension Trust Fund at exorbitant K148 billion, the then Reserve Bank of Malawi (RBM) Governor Dr. McDonald Mafuta Mwale advised the Attorney General (AG), Frank Farouk Mbeta that “proceeding with the transaction would be inconsistent with sound pension fund management principles and expose members to undue financial risk”.
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The RBM Governor was responding to the AG who had asked for guidance on the matter following red-flags-raised-by-malawi-law-society-in-november-on-the-proposed-acquisition-of-amaryllis-hotel-by-public-service-pension-trust-fund/, which called on relevant oversight authorities — including the office of the AG — for an immediate suspension of the proposed acquisition, pending a full and transparent review.
In a press statement issued on November 19, 2025, the Malawi Law Society (MLS) took note of some alleged procedural irregularities, potential conflicts of interest, and concerns of a potentially inflated purchase price, emphasising that they were “too substantial to ignore”.
MLS took cognizance that the Public Service Pension Trust Fund was established to safeguard the retirement benefits of public service employees and “it is, therefore, incumbent upon its trustees and managers to act with the highest degree of prudence, diligence, and fidelity”.
After receiving the petition from the MLS, AG Farouk Mbeta proceeded to engage the RBM Governor Mafuta Mwale on December 11, 2025 seeking his guidance on the matter but before the RBM could respond, the AG replied to the MLS on December 28, 2025 on the same issue.
The AG indicated to the MLS that after investigating the allegations raised and to issue a Restriction Notice against proceeding with the sale until the probe is complete, his office determined that “there was no evidence that the Board passed a resolution on January 17, 2024 not to proceed with the purchase of the Hotel on a Fund Manager’s advice that the transaction was not viable”.
“On the contrary, the business assessments carried out by experts namely FDH Bank Plc, Continental Asset Management Limited and EMJ Advisory Public Accountants dated 30th June, 2023, May 2024 and November 2025, respectively, indicated that the business was viable.”
The RBM Governor Mafuta Mwale then provided his response to the AG on January 6, 2026, thus sharing his assessment that “from a prudential and regulatory perspective, the proposed transaction is likely to breach investment limits under the Financial Services (Investment Management of Life Insurers and Pension Funds) Directive, 2025 and result in serious liquidity mismatch and heightened risk”.
Mafuta Mwale enlightened the AG that the Public Service Pension Trust Fund (PSPFT) “is the third-largest pension fund in Malawi by assets and second-largest membership size — hence systematically important”.
“Therefore, any imprudent investment decision by the Board of Trustess could significantly risk members’ benefits and the stability of the pension sector — as well as undermine pension members’ confidence in the national pension scheme in Malawi.
“My recommendation is that the Board should reconsider its decision on this matter. Should the Board opt to proceed with the transaction, it should demonstrate to my office, with clear basis, the viability of the proposed investment and how members funds would be safeguarded,” wrote Mafuta Mwale, who has since been removed as RBM Governor and replaced with seasoned banker, George Patridge.
This was long after the AG had assured the MLS that everything was in order before the financial service regulator made its assessment based on the Law, of which the MLS based its petition as part of its statutory mandate under section 64(d) of the Legal Education and Legal Practitioners Act; ‘to protect matters of public interest touching, ancillary or incidental to law’.
Attorney General Frank Farouk Mbeta
On the allegations of conflict of interest, the AG responded to the MLS that “although Continental Asset Management Limited is a sister company to CDH Bank Limited, which has an interest as a lending institution to the Hotel, the former’s involvement in the business analysis and recommendations did not in any way pose any risk of conflict of interest”.
“Furthermore, the proposed sale is principally based on EMJ Investment Analysis Report of November, 2025,” said the AG, while also indicating that “although the new Board became operational in September 2025, there was no evidence that [it] was unduly or otherwise pressured to approve the transaction that a previous Boars had rejected”.
On the allegations of suspicious timing of key personnel changes, the AG reported that the Principal Officer, George Jim, was suspended on October 27, 2025 for misconduct and that on the other hand, acting Principal Officer was appointed on October 28, 2025.
The resolution authorising the acquisition of Amaryliss Hotel was made on October 25, 2025 “prior to the said suspension and appointment to the post of principal officer and that steps and correspondence leading to the Board resolution were made by the suspended officer”.
“Thus there is no evidence supporting any allegations of suspicious timing of the key personnel changes in relation to the Board resolution [on the proposed acquisition of Amaryliss Hotel].”
The AG emphasised that “in view of the magnitude of the transaction in this matter, and indeed out of abundance of caution, and, in order to ensure that members’ savings are protected with the prudent investment principles and regulatory requirements, the Board is advised to once again review the attendant risks and satisfy itself of the available mechanisms for the management/mitigation thereof.
“Once that is done, the Board is advised to proceed with and conclude the transaction in the best interests of the Fund and its members,” said the AG, while admitting that “this is a huge transaction that cannot go without significant operational and financial risks”.
He added that all the three business evaluation reports highlighted comprehensive analyses of various risks likely to be involved in the transaction and as regards the allegations of the inflated price in particular, the AG reported that it was found that price “derived from expert analysis of attendant market variables followed by negotiations on the price between the contracting parties”.
“In that regard, the transaction cannot be faulted on the risks involved,” said the AG, who extended the Government’s appreciation for MLS’ initiative in raising the allegations to his office to protect the interests of the contributors to the Fund, the public servants.
“I wish to assure you of Government’s commitment to ensure strict adherence to prudent principles and regulatory requirements by all players in the financial industry.”
The AG also consulted the Anti-Corruption Bureau (ACB) after the MLS petition and in its response dated December 18, 2025, acting Director General, Gabriel Chembezi informed the AG that investigations were initiated into allegations of corrupt practices sorrounding the sale of Amaryllis that was triggered by concerns raised by the MLS.
But the ACB indicated that it “did not find sufficient evidence to sustain charges or abuse of office by the public officers involved in the transaction” while indicating that issues of the sale that included operational risk, lack of involvement of Fund Managers and the exorbitant purchase price, among others, fell outside its mandate.
The ACB thus referred those red flags to the AG’s office while indicating that the graft busting body “may revive its investigation into the matter should new evidence emerge that indicates potential criminality”.
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