Former Barclays Boss Bob Diamond Faces Lawsuit Over Zambian Bank Takeover
The High Court in London is hearing a case against Atlas Mara, the company founded by former Barclays boss Bob Diamond, over allegations that it attempted to diminish the value of Zambia’s Finance Bank ahead of a takeover. Dr. Rajan Mahtani, the founder of Finance Bank Zambia (FBZ), initiated the lawsuit, claiming that Atlas Mara breached the terms of the acquisition agreement, and is seeking damages of up to $100 million (£80 million).
Dr. Mahtani, who established FBZ in 1986, agreed to the takeover by Atlas Mara to secure the future of the bank as his daughters had no interest in running the firm. The bank, with 73 branches and over 1,100 employees, was considered one of the most successful in Zambia.
At the heart of the dispute is Atlas Mara’s alleged attempt to reduce the value of FBZ by identifying faults and regulatory issues. The court heard that Atlas Mara had initially offered approximately US$215.4 million for FBZ, with US$135.3 million and an “earn-out” of US$80 million.
During the trial, Dr. Mahtani denied withholding regulatory concerns from the Zambian national Bank (BoZ) before the sale’s completion date. The BoZ audit found that FBZ’s subsidiary, FBS, was under-capitalized by over 30 million Kwacha (around US$4.5 million in 2015), a finding Dr. Mahtani disputed as having no impact on the sale price.
Atlas Mara accused Dr. Mahtani of suppressing information about FBS’s under-capitalization, and internal emails were presented to the court, suggesting that Atlas Mara was not informed until May, months after the BoZ inspection.
Dr. Mahtani defended his actions, stating that Atlas Mara was conducting its due diligence and was aware of the regulatory issues. He claimed that Atlas Mara’s objections were an attempt to bring down the sale price by “finding fault in everything.”
This legal battle adds another chapter to Bob Diamond’s career, following his departure from Barclays in 2012 amid an interbank rate-fixing scandal. Atlas Mara, co-founded by Diamond, was set up to acquire banks in Africa.
The hearing is expected to conclude before Christmas.
Source: Nick Forbes
Central News UK