Melt butter in a large frypan over medium heat. Add onion and saute until lightly browned. Stir in tomatoes, water, capsicum, mushrooms, parsley, paprika, salt, pepper, rice and olives. Arrange chicken in frypan, cover and bring to a boil.
Reduce heat to medium low and simmer for 1 hour. Note: If chicken is cooked through but rice is unfinished, remove chicken and let rice finish cooking; to serve, slice chicken and lay on top of cooked rice.