THE Parliamentary Public Accounts Committee has heard that the Development Bank of Zambia (DBZ) failed to fully recover a loan of K17 million from KIFCO Packaging of Kabwe in order to save the workers’ jobs.
Ministry of Finance Permanent Secretary Ronald Simwinga said this yesterday when he appeared before the PAC chaired by Luena Alliance for Democracy and Development (ADD) Member of Parliament (MP) Getrude Imenda.
Mr Simwinga said that DBZ could not apply punitive measures against KIFCO because the action could have resulted in loss of employment.
DBZ appeared before PAC to respond to audit queries raised in the 2013 Auditor General’s report that highlighted that KIFCO owed DBZ K17.4 million.
He said KIFCO was the single largest employer in Central Province and closing it down could have led to massive unemployment.
That, Mr Simwinga said, would have gone against the Bank’s and Government developmental objective of employment creation.
He said DBZ has since converted half of the loan into preferential equity share capital to ease the pressure on KIFCO and leaving the rest as an outstanding loan.
Mr Simwinga said since the loan became operational in the third quarter of last year, production at the company had improved and so had the company’s cash flow.
Other companies owing DBZ are Zambian Airways (18 million), a matter which was now in court and Mofu Industries owing US$ 110, 918.
Meanwhile, PAC took Mr Simwinga to task for maintaining George Chabwera on the DBZ board while he was serving as board director of a bureau de change contrary to the law.
Ms Imenda said serving as director on two boards in the financial sector was a crime and wondered why Mr Chabwera had not been removed when the Bank of Zambia observed the anomaly.
DBZ managing director Jacob Lushinga said the board had since completed its term while Mr Simwinga said it was unfortunate that the matter had taken long to be resolved but assured the committee that Mr Chabwera would not be allowed to continue in both positions.
United Party for National Development Mwembeshi MP Austin Milambo said DBZ should also recover the allowances Mr Chabwera got while serving on two boards.