Malawi Law Society raises reg flags on proposed acquisition of a hotel by Public Service Pension Trust Fund

* Calls for an immediate suspension of this transaction pending a full and transparent review

* That includes urgent and independent investigation by the ACB, Minister of Finance and the Attorney General

By Duncan Mlanjira

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’, the Malawi Law Society (MLS) has called on relevant oversight authorities for an immediate suspension of proposed acquisition of a hotel by Public Service Pension Trust Fund — pending a full and transparent review.

In a press statement issued today, November 19 by MLS Honorary president, Davis Mthakati Njobvu and honorary secretary, Francis Ekari M’mame, the Law Society takes note of some alleged procedural irregularities, potential conflicts of interest, and concerns of a potentially inflated purchase price, emphasising that they “are too substantial to ignore”.

MLS takes cognizance that the Public Service Pension Trust Fund (the 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”.

The MLS indicates that it has anonymously received information regarding the proposed hotel acquisition, which information contains some “serious allegations that may point towards a departure from the fiduciary duties set above”.

These include:

(1) Allegations of Irregular Reversal of Decision: It is alleged that the Fund’s Board initially demonstrated due diligence by passing a resolution on January 17, 2024, resolving not to proceed with the purchase (then at MK47 billion) based on expert advice from one of the Fund Managers to the effect that the transaction was not viable.

“The allegation is that this decision was then overturned after the seller’s finance advisor contacted another of the Fund Managers. This second Fund Manager subsequently made presentations recommending the purchase.

“It is being alleged that the price involved has now been inflated, and is ranging from MK115 billion to MK145 billion.

(2) Allegations of Lack of Independent Due Diligence and Conflict of Interest: The information further alleges that critical safeguards were ignored, including an absence of independent due diligence by a hotel expert and no identified strategic partner.

“Most seriously, it is alleged that the entity which produced a second, favourable ‘Viability Business Analysis Report’ may have ownership links to the hotel itself, indicating a potential conflict of interest.

(3) Allegations of Pressuring a Newly Constituted Board: It is alleged that a new Board of Trustees, reconstituted in September 2025, has not been afforded sufficient time to appraise itself of the deal’s contentious history and is being unduly pressured to approve a transaction that a previous Board had rejected.

(4) Allegations of Suspicious Timing of Key Personnel Changes: The sequence of recent events has also been called into question. It is alleged that after the Fund’s Principal Officer was suspended on 27th October 2025 pending an investigation, a new Acting Principal Officer was appointed on 28th October 2025, and that a signed resolution authorizing the acquisition was produced shortly thereafter.

Based on the foregoing allegations, MLS thus takes note that “there are serious concerns that this transaction is being concluded under suspicious circumstances, which could pose a significant threat to the financial security of the Fund’s contributors”.

“The alleged procedural irregularities, potential conflicts of interest, and concerns of a potentially inflated purchase price are too substantial to ignore,” says the MLS, while calling for an immediate suspension of the transaction pending a full and transparent review.

The MLS further calls upon relevant oversight authorities, including the Anti-Corruption Bureau (ACB), Minister of Finance and the Attorney General, “to launch an urgent and independent investigation into the entire process surrounding this proposed acquisition”.

“The new Board of the Fund must be given the space and time to conduct a fresh, independent, and transparent assessment of this transaction, free from any external pressure,” says the MLS, with an emphasis that it “remains committed to its role of protecting the rule of law and public interest”.

“We will continue to monitor this situation closely and take all necessary steps within our mandate to ensure that the pensions of Malawian public servants are not sacrificed for a questionable and potentially detrimental investment.”

Reports of this proposed acquisition of the so far undisclosed hotel, surfaced on the public domain flagged by social media influencer, Onjezani Kenani, who indicated that some “politically connected individuals from both the past and current administrations are exerting undue pressure on the Public Service Pension Trust Fund to purchase a struggling hotel in Blantyre that is on the verge of repossession by a major local bank”.

“The proposed investment, valued at K47 billion, is widely regarded by asset managers as excessively risky, with an estimated payback period of 36 years — far beyond acceptable investment norms.”

Kenani also made it known that the Public Service Pension Trust Fund is building its own hotel along Masauko Chipembere Highway just after the Clock Tower in Blantyre where Mulika Club used to be — “yet some people are exerting unsustainable pressure on the fund’s management to buy another hotel a few yards away, for K47 billion”.

Kenani highlighted that the Public Service Pension Trust Fund (PSPTF) is a stand-alone contributory pension scheme for public servants, which was set up in accordance with the Pension Act (CAP 55:02) and is managed by an independent Board of Trustees.

“The Fund was established to provide retirement and pension benefits to public servants upon reaching the mandatory retirement age of 60. The Pensions Act mandates employers in the country to have a pension scheme for their employees.

“PSPTF started operating on 1st July, 2017 and was licensed on 10th July, 2018 by the Registrar of Financial Institutions — the Reserve Bank of Malawi (RBM).  The government deducts 5% from the civil servant’s salary, and it is supposed to contribute 10% of the civil servant’s salary.

“That is to say, if your salary is K100,000, the government will deduct K5,000 then contribute its own K10,000, so that in total it is supposed to remit K15,000 per month to PSPTF on your behalf.

“It turns out the government has been failing to remit the 10% since December 31, 2023. Only the 5% has been trickling in,” said Kenani just recently.