Malawi: High Court Orders Airtel Malawi and Standard Bank to Refund K24m Cashed By Fraudsters

The Commercial Division of the High Court of Malawi has found both Airtel Malawi and Standard Bank Limited liable in a case in which Billy Milindo was claiming a refund of K24 million, which was fraudulently cashed out by two fraudsters at two of Standard Bank Branches in Blantyre.

Milindo has an account domiciled at the Capital City Branch of the Standard Bank Limited.

The client sued both Airtel Malawi and the bank following a fraud that was systematically executed by employing three pronged fraud approach, which included swim swap, theft two cheque leaves from the claimants cheque book and finally forging of his signature.

Fraudsters reportedly employed the services of an employee of ISON, which had been contracted by Airtel Malawi to perform services for them.

The said employee facilitated the sim card swap in an arrangement where a mobile service user number is assigned to another.

In that way, any communication between the bank and the apparent bank account holder is done with the fraudsters.

In this case, the fraudsters were able to confirm the cheques that they had presented at the bank for enchantment and a total of K24million was cashed out through two forged cheques.

The fraudsters also managed to pull out two leaves from the claimant’s cheque book and proceeded to forge his signature.

It remains a speculation as to how these fraudsters were able to pull off the stealing of those two cheques.

However, in his ruling, Justice Ken Manda of the Commercial Division of the High Court said both Airtel Malawi and the bank are liable for the illegal transaction.

The case has generated questions among Malawians, with some asking: What does the law say on the issue of sim swap and encashment of forged cheques?

This is because mobile service providers are under duty as imposed by section 54 of the Communication Act, 2016, not to divulge their clients’ private and confidential information to third parties.

In this case, the court found that Airtel Malawi (as a principal) had breached this duty through their agent’s employee who had passed on the claimant’s personal details to the fraudsters.

For that, they were condemned to pay the exemplary damages amounting to K6m. In addition, they were liable to pay K12 million, which the fraudsters had cashed out, of course with interest.

Further, they were condemned to pay costs of the action.

Secondly, the law on the bankers liability as it pertains to forged cheques is very simple.

A banker is under obligation to take due care that forged cheques are not honoured. Even in case where the customer was negligent, a banker will still be held liable where a forged cheque was allowed to be cashed.

On the facts, Standard Bank was found to have allowed the fraudsters to cash those two forged cheques.

Funny enough, when the claimant sought a refund of the money, the bank refused to do so.

For this reason alone, the bank was ordered to pay the claimant K79 million as mobilisation and demobilisation costs that he incurred on the projects that he could not execute as he had no funds to proceed to do so.

What is strange here is that the lawyers for the bank did not challenge this point.

Additionally, the bank was ordered to pay back K12 million (with interest) to the claimant and was further condemned in costs of the action.