Atlas Mara Banking group, established by former Barclays boss Bob Diamond, is facing a fresh legal challenge over the disputed purchase of Finance Bank Zambia (FBZ). Dr. Rajan Mahtani, founder of FBZ, is set to appeal against a recent ruling by the English High Court that favored Atlas Mara Limited (ATMA) in resisting a multi-million-dollar compensation suit brought by him and former shareholders of FBZ.
The English High Court judgment, which dismissed the compensation claim, may face scrutiny as Dr. Mahtani mobilizes a new legal team to appeal and/or seek a stay of execution on parts of the ruling. Additionally, Dr. Mahtani intends to explore other legal remedies to address what he alleges as Atlas Mara’s unjust enrichment to the tune of at least US$49.2 million, plus interest.
The contractual dispute stems from Atlas Mara’s acquisition of FBZ in 2015, during which negotiations took place in London, Dubai, and New York. Dr. Mahtani, who divested FBZ primarily for health reasons, entered into negotiations with Atlas Mara, believing the group would preserve the bank’s ethos and culture. However, discrepancies arose regarding earn-out clauses tied to the acquisition, with Atlas Mara disputing the likelihood of Dr. Mahtani raising the necessary funds.
The recent English High Court ruling found that Atlas Mara had no real expectation that Dr. Mahtani would be able to raise the requisite funds, contrary to assurances made during negotiations. This finding has prompted Dr. Mahtani to seek recourse for what he perceives as an unjust enrichment on the part of Atlas Mara, as well as compensation for losses incurred by FBZ shareholders.
Founded in 1987 by Dr. Mahtani, FBZ was Zambia’s first indigenous retail bank, boasting a network of 73 branches and over 1,000 employees. Despite its promising trajectory, FBZ’s shareholders now face the prospect of seeking legal redress for alleged breaches of the share sale and purchase agreement.