Zambia should investigate rich and powerful individuals operating offshore accounts in tax havens

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Action Aid Zambia
Action Aid Zambia

ActionAid has urged the Zambian government to investigate high network-worth individuals, corporate bodies and public officers operating offshore accounts and investing in tax havens.

In a statement made available to the the ActionAid said that those engaged in illegal financial dealings should be criminalized and that Government should take action to increase transparency in the country’s tax system, starting with a public register of a beneficial ownership.

According to ActionAid, this policy would reveal the true owners of anonymous companies and trusts, shining a light on the tax and that government should close all the loopholes that allow for tax avoidance.

Below is the full statement

ACTIONAID URGES GOVERNMENT THROUGH THE FINANCIAL INTELLIGENCE CENTRE TO INVESTIGATE HIGH NETWORK-WORTH INDIVIDUALS AND CORPORATE BODIES OPERATING OFFSHORE ACCOUNTS AND INVESTING IN TAX HAVENS

The recent revelations in the Paradise papers about how rich and powerful individuals, politicians and Multinational Corporations (MNCs) use Tax Haven to shift profits from one jurisdiction to another, echoes our demands about the need to address Illicit Financial Flows (IFFs).

The Paradise Papers developed by an International Consortium of Investigate Journalists (ICIJ) shows how rich and power individuals and Corporates use tax haven which are jurisdictions that offer secrecy on financials of individuals and business entities and very low or zero taxes.

Although it is not legal to move profits to a tax haven however the challenge is that individuals and business entities hide profits in tax havens far away from the tax authorities in the countries where the profits are generated.

This then is the question of morality. Mostly, especially in developing countries like Zambia the appetite to attract foreign investment is big such that a lot of tax incentives are given to investors. As a result, due to tax incentives, investors may pay very low taxes or may not be paying tax for a period of time.

Some of the MNCs have registered subsidiaries in tax haven as such they trade with those companies. For instance, company A in a developing country might procure services or goods from company B which is a sister company incorporated in the tax haven. Company A will pay out a lot of money for the goods or services procured from company B. Often times the cost of the price of goods and services is beyond the market price. Such a transaction enables the same company operating as company A and B to move profits in a Tax Haven.

The Paradise Papers leak also includes references to Illovo Sugar operating in Zambia as Zambia Sugar.

This revelation vindicates us (ActionAid).

According to our study titled “Sweet Nothings” we established that in November 2007, Zambia Sugar borrowed US$70 million (ZK280.5 billion) from two commercial banks, using the money to expand its huge sugar estate in Zambia.

Given that loan repayments attracts Withholding Tax (WHT) on interests, to avoid paying WHT on interest payment, the loan was channeled through Illovo Sugar Ireland, with the banks actually lending the money to the Illovo Sugar Ireland, which then made an identical matching loan to its sister company, Zambia Sugar.

By channeling the loan through Illovo Sugar Ireland, WHT on interest payment is avoided because then the Zambia-Ireland Double Taxation Agreement (DTA) denies Zambia any right to tax interest payments, or most other international payments from Zambia to Ireland.

Routing the loan via Ireland thus cancels Zambian withholding tax on these payments.

Lastly, we urge government to investigate high network-worth individuals, corporate bodies and public officers operating offshore accounts and investing in tax havens. To this effect, those engaged in illegal financial dealings should be criminalized.

Government should take action to increase transparency in our tax system, starting with a public register of a beneficial ownership.

This policy would reveal the true owners of anonymous companies and trusts, shining a light on the tax. In addition, government should close all the loopholes that allow for tax avoidance.

This includes reviewing and renegotiating outdated Double Taxation Agreement’s (DTAs) to include good strong provisions such as higher caps on WHT taxes.

On the international stage, the Zambian government should push for an Intergovernmental tax body that will seek to fairly and transparently address tax grievances.

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71 COMMENTS

    • ActionAID should also help us understand how someone whoo didn’t have K20 000 nomination fees for a presidential election is now worth over K23 million when salaries of govt officials are in public domain

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    • Tax avoidance is legal but immoral. Thats why HH quickly resigned from that company.

      But the stealing of tax payers money by inflating prices of imported goods as Lungu and his PF are doing is illegal,criminal and immoral. That amounts to corruption. Lungu is corrupt and a thief.

      There is a difference between Lungu and HH. Lungu is one criminal with a track record of stealing a client’s money. While HH is a clean business man despite numerous false allegations against him.He has openly challenged any PF id1ot including Lungu to take him to court if they believe his wealth is illegal. But no one has dared him.

      All of you PF minions mouthing off about HH wealth should shut up and concentrate on how Lungu got $23million in just a year of being Zambian president.

      Can’t wait for…

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    • What is happening to Transfer Pricing Regulations?
      Banks are transferring billions through management fees, insurance companies are transferring billions through reinsurance premium to their holding companies, mines are transferring profits through shell overseas companies.
      What is wrong with Zambians?

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    • Why is the General (Miyanda) mute on Hh and the paradise papers? If it were Lungu involved, he would have produced lecture material by now!

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    • Nindalama za nyoko olo za grz? No one is stopping you from investing abroad. This is the jelousy that come’s when you are at the level’s of the Queen of England’s investments. Keep on hating while his money keeps on multiplying. On real issues you are silent Action Dead

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    • Just 2 months after Kambwili was fired, he complained that he was broke & he was being squeezed by PF Govt. The reason they’ve failed to finish HH is bcoz his wealth & business prowess is beyond zambian borders.

      Don’t be jealous of HH, you too can trade on London Stock Exchange & open accounts anywhere in the world.

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  1. ACTIONAID has a valid point. Although it’s worth trying; closing all loopholes as they put is a difficult and odious task because you are up and against very powerful and rich individuals and corporations. A single Government is not enough to regulate these greedy corporations. You will need the help of International Trade Agencies, Governments, International Lending Institutions, etc. You will probably have to impose sanctions on these corporations. Not easy. But the Zambian Government can do what they can to curtail tax evasion.

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    • Hello, if what is convincing you is that photo of white people, you must be dull, that photo is for protesting about glencore ku London,,, actionaid should start investigating money ‘ stollen’ during colonisation,, start with queen Elizabeth

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  2. There will be no sensible comments from Dundumwezi apart from calling our wonderful women from various instititutions calling for investigations in this scourge prostititutes.

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  3. “…Some of the MNCs have registered subsidiaries in tax haven as such they trade with those companies. For instance, company A in a developing country might procure services or goods from company B which is a sister company incorporated in the tax haven. Company A will pay out a lot of money for the goods or services procured from company B. Often times the cost of the price of goods and services is beyond the market price. Such a transaction enables the same company operating as company A and B to move profits in a Tax Haven…”

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  4. I like this, naturally of course…… ………. …….. kikikikikikikiki…..although it is no laughing matter, but I note that ActionAid does not agree with the bedtime story issued by under5.

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    • That’s Why PF are dull, if want a complete solution apply a complete approach,,,,fire trucks, ambulances, auditors report, queen Elizabeth herself, Glencoe,,,,,why HH ??,,, maybe just go and drink shake shake,,,

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  5. As for under5, he should be sued and disqualified retrospectively for gross under declaration of his assets in last year’s presidential nominations and maybe even earlier ones. Declaration of assets is made on oath and telling lies or giving false declarations under oath is a criminal offence under the laws of Zambia or anywhere else for that matter.
    When the presidential candidates in 2016 nominations declared their assets, one person who stood out as under-declaring was under5, the boy declared his house in Kabulonga, a few cars and a few hundred cows. No mention of the assets in Paradise, South Africa, etc. Not even his companies or shareholdings within Zambia itself. I pointed this out at the time and no one paid attention despite them knowing the worth of under5. ECZ, Police, DEC,…

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    • But Terrible ndiwe wa Boza…..eiiish man so what u are saying is the few things your under 5 declared would reach K 75 million as total assets declared for presidential elections? By the way why are u obsessed with under 5 and you show no interest in the Zambia Sugar issue…..which action aid has been raising for some time and humbly Dumbly has absolutely shown no interest in …

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  6. …….ECZ, Police, DEC, DPP, etc were all snoring and sleeping zzzzzzzzzzzzzzzzzz!
    Umulandu taubola, prosecute this boy for perjury. DPP where are you? It is very easy to trace the boy’s wealth. If not for legal purposes, an exposè of under5 would at least reveal the kind of man who questions human rights, democracy, morality etc in others but not in himself.

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    • Nobody will ever investigate the Paradise Boy Under5. He is bribing everyone and everywhere.

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  7. And Laura Miti, where are you? Let us see your high moral standing now.

    This is a classic case of the adage “if you live in a glass house, don’t throw stones at others” !!!!!

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  8. HH has done nothing illegal ,tax avoidance is entirely within proper laws .Taxpayers $$ wastage by Lungu’s govt is an unforgivable sin though.

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    • Shame on your blunt conscience. Zambia needs tax money for infrastructure development. Are you now aware how much the country has been borrowing lately? Are you not aware, the anger even by some of the world’s richest countries, against these tax havens and against the selfish rich who choose to hide their money there? On which roads does HH drive? Is it not on Zambian roads – the same roads he would rather they remain in a state of disrepair for lack of money to keep them well maintained?

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  9. we should call Steven Suckur to come and ask questions for us because he will not give any Zambian sensible answers, he is just too arrogant and full of himself.

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    • Because Stephen Sackur needs to question the Queen first why Duchy investments is mentioned in the parsdise papers ….. why the put her monies in a tax haven ???

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  10. Yes, let us do so starting with Fire Tender and Ambulance money. Chagwa’s overnight wealth should be included in these investigations. HH should not be spared. To date, he has not explained convincingly his role during the Privatization era. He needs to come clean on this one. Our investigations must leave no sacred cows! We must revisit the Chiluba era and investigate ALL who suddenly became wealthy from proceeds of crime! I will even suggest we set up a Directorate to deal with Economic Crimes!

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  11. We told you that HH was up to no good. Him and others in UPND and PF. Zambians supporting thieves is why the nation suffers.

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  12. “If you live in a grass house don’t store thrones”
    IF IT WAS ECL WHO WAS IMPLICATED IN THE PARADISE PAPERS, UPND COULD HAVE GONE TO TOWN INSULTING ALL OVER, RAISING ALL SORTS OF POINTS OF ORDERS IN PARLIAMENT INCLUDING WALKING OUT OF PARLIAMENT. WHAT A SHAME , HYPOCRISY FROM DUNDUMWEZI

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  13. Its true if in glass houses dont throw stones. CARGILL the partner of Zambians IDC have been named in the paradise papers. Did PF government do due diligence when the partnered with CARGILL and has CARGILL and IDC utilized the services of an off shore account both jointly or severally.
    What is the tax status if cargill since its registering in zambian in , coincidentally , 2006.
    Has HH still ha e accounts in the offshore account of the company in which he resigned in 2006
    Lets get answers before we have another treason case with a nolle

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    • Why starting with far away jurisdictions? Let us start within Zambia and ask post-2009 “new-rich” how did they managed to swim against economic crash tide?

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  14. Terrible your handlers have wound you up on this one and let you loose where is your partner njimbu are they preparing him to continue the onslaught. I enjoy reading your posts because you believe that they are for the interests of zambia but you are actully helping zambia down the path of sth africa and zimbabwe.
    Think of the real zambia, the poor pipo that are suffering, the lack of trust in pipo since pf have formed government.
    I am not politically aligned despite your unfounded assertions that i am a upnd supporter.

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  15. We have been saying Sammy together with his fugitive friend Shansonga must be properly interrogated, This is a good matter for money laundering investigations

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  16. Start with the $1.2 billion Ndola Lusaka dual carriageway contract,$42 million fire trucks and overpriced Ambulances.

    The $14 million which HH got for selling his Bermuda company did not come from Zambia and never even touched Zambia.The company was listed on AIM (sub-market of the London Stock Exchange) which allows smaller, less-viable companies to float shares with a more flexible regulatory system than is applicable to the main market.So any taxes owed should be paid to the UK government.

    Bravo to HH for keeping some assets/investments overseas unlike Fred Mmembe who allowed vultures to feast on his well local established business.

    Now people know that HH is a very wealthy man who even ECL can not much.The man has millions of dollars to look after his family and single…

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  17. What is Paradise paper? I see a lot of ignorance. Does any investment in Burmudar, entail tax evasion? Did HH’s investment commit any tax evasion to Zambia? Where can a Zambian invest or not? Where do most of investors in mines originate from? So let’s not be foolishly excited, let study the revelation first, very important. Off shore accounts has been there closer to independence time, Lungu, Inonge, GBM, Milupi, RB, Chikwanda etc all have off shore accounts therefore investigate there source of income. Action Aid, investigate the ever inflated tenders before you can go to that island Burmuda, that’s a complex of businesses mind you.

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  18. Kwena Action Aid bapuba!!! You leave people stealing locally day light, and start talking about people who invested abroad. Fire tender, ambulances, investigate them first. If you find the prices are correct then it means we have entrusted our money in wrong hand who don’t understand the value for money. Remove them.
    Am happy for HH. If a Zambian can be rich to that level thats fine with me and I will work hard to be closer.

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  19. These complex issues give credence to the narrative that we do not need these honorary degrees that our illiterate people such as Chishimba Kambwili and Godfrey Bwalya Mwamba are being given or are buying. We need people that are going to rise to the occasion and push Zambia forward. It is very disheartening to note that Zambia 50 year plus after independence our central Bank still uses old outdated laws to safeguard the country’s financial stability. Instead we hear that there are serious leaks of foreign exchange at Bank of Zambia. The majority of our so-called lawmakers are drowning in illiteracy and moral bankruptcy. These are compounding factors of third world societies. One would have thought that the PhDs flashed at Bank of Zambia would show some cause and rise to the occasion…

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  20. … One would have thought that the PhDs flashed at Bank of Zambia would show some cause and rise to the occasion. People are working for their bellies instead of putting systems in place to safeguard our wealth for the good of all its citizens.

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  21. @20 independent, so now you are confirming that under5 earned $14,000,000. Talk about thieves unguardely revealing their boss!
    So there you are agreeing with me Terrible that under5 did not declare his full worth during nomination in 2016. THAT IS lying on oath, perjury, a criminal offence.

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    • @Terrible, you PF guys more dull than a grade 5 pupil.Learn to read before you spew rubbish and lies from your mouths. Read the Paradise Papers
      “Hichilema became a director of a Bermuda company, AfNat Resources Ltd., in March 2006, and he resigned that August, according to Appleby’s records. AfNat Resources was incorporated in 2005 and explored for nickel and other metals in Zambia and other African countries. It was listed on London’s alternative investment market until 2010 when it was purchased by Canadian mining company Axmin for about $14 million.”
      Why did he have to declare it in 2016 when he sold the company in 2010?
      In 2011 and 2015 nobody complained but now with useless PF it becomes an issue.Just go back to primary school and repeat grades 5 to 7.

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    • All the presidential candidates did not give true declaration, including Lungu. So all must be investigated. Our polical system does not encourage clear declaration.

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  22. FOR EVERYONE’S INFO ABOUT OFFSHORE TAX HAVENS AND IN PARTICULAR LEGALLITY IN ZAMBIA.
    PLEASE TOMORROW GO TO YOUR BANK AND ASK TO TRANSFER FUNDS TO YOUR OFFSHORE ACCOUNT FROM YOUR USD ACCOUNT
    YOU WILL DISCOVER THAT ITS IS AN EVERYAY THING.
    CAUTION:
    Dont go with firetender full of USD and ask for transfer.
    It has got to be from your legally aquired income.
    And you do so monthly.

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  23. US Commerce Secretary Mr Ross was named in the same Paradise Papers. When questioned during a news conference he admitted that it was wrong for him to do so and not to declare his offshore investment. Never mind the legality of it all, but contrast that genuine response of an honest American with that of under5. Under5 even goes further to tell lies about how he would use tax havens to borrow cheap money for Zambia. But this has absolutely nothing to do with lending and financing! IT IS ABOUT THE MORALITY OF EVADING TAX! Poor under5, all this is sinking on the heads of Zambia. Kaya mu 2031 kabili 2021 and 2026 no chance for for under5 because the memories will still be fresh about his tribal appointment to succed Mazoka, he went to Chief Mukuni and rode an elephant to confirm that and…

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    • And if the US law was to apply to Zambia, CONVICTED EMBEZZLER never stood chance to be nominated. Mind you, Zulu and Co. will be serving life sentences for Racketeering.
      And you are talking about MORALITY?
      How do you justify, not just on legal ground but also on moral grounds, that PF is still allowing VARUN (Pepsi), which is registered in Mauritius (without any assets) to carry-on retaining VAT and EXCISE Duty until 2021?

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  24. …..he went to Chief Mukuni and rode an elephant to confirm that and refresh our bad memories of that succession!! Not even one other tribe was invited not even from western or northwestern regions!

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    • The main question is; when did Hh first invest in these offshore shell companies, and where did he get his seed capital and how much was it, was it at the time of privatization? Was the seed money part of the kick backs he received into these off shore accounts to avoid tracing of the same? Why has Hh not declared this money for tax purposes to lead by moral example?

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    • @ God shall not allow…
      It was not “shell” company. It had assets which justify selling price of 14 Million US$.
      Please read before commenting, or you do not understand meaning of “shell company”?
      If you want example, check how RB and Mutati facilitated “Arctic Pty. Ltd.” registered in Port Luis (Mauritius) without ANY TANGIBLE ASSETS in Mauritius to be majority shareholder in VARUN (Pepsi) to retain VAT and Excise Duty up to 2021?
      By the way, if you speak about morals, what about those 42 fire-tenders? No need to investigate in Mauritius. Evidence is HERE in Zambia.

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  25. How about Dora Siliya and her cohorts who have bought mansions in South Africa? How many ministers have accounts in foreign countries and are not paying tax? Chiluba and his ministers had millions of dollars in british banks and Zambia has lost all those public resources in these foreign banks. Has Lungu got an account in a foreign bank? Who knows? Rupiah Banda and his childrens are living on stolen money in south african banks, nobody is talking about that. Bring back our stolen money!!! NOW!!!!

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  26. @Terrible, you PF guys more dull than a grade 5 pupil.Learn to read before you spew rubbish and lies from your mouths. Read the Paradise Papers
    “Hichilema became a director of a Bermuda company, AfNat Resources Ltd., in March 2006, and he resigned that August, according to Appleby’s records. AfNat Resources was incorporated in 2005 and explored for nickel and other metals in Zambia and other African countries. It was listed on London’s alternative investment market until 2010 when it was purchased by Canadian mining company Axmin for about $14 million.”
    Why did he have to declare it in 2016 when he sold the company in 2010?
    In 2011 and 2015 nobody complained but now with useless PF it becomes an issue.Just go back to primary school and repeat grades 5 to 7.

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  27. How do you expect them to successfully investigate off-shore deals when they have lamentably failed to investigate the fabled sale of companies through the privatization program? When KK asked them at Kabwe to explain where the money realized from the sale of companies, they answered him with bullets at Kabwe. Some people ended up with shares in the same institutions they were entrusted to sell. In some cases about 90% of proceeds from those transactions went to their fees. I am heard that when somebody sold Luanshya Mine to Binani at US$25.0M he got $17.5M as his fees and that money was never received in Zambia. Lumwana Mine was sold to Barrick in the world’s largest transaction at the time and GRZ didn’t receive anything in taxes for assests domiciled within Zambia! Anyway, let them…

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  28. Who is going to issue an instruction to investigate who when birds of the same feathers flock together. I dare anyone to take the motion to parliament to vote on investigating people holding offshore accounts and those under declaring their net worth. I bet you both PF and UPND MPs will vote against the motion. That’s why HH can stand on the podium and say anything about this investment knowing fully well that no one will touch him.

    2021 vote for Chipimo.

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  29. Bravo ActionAid as you have now fully exposed HH!!!
    Where are Dundumwedzi cadres here such as “spaka like lilo,wanzelu,etc?
    ActionAid is a not PF wing but its an independent NGO.it has clearly stated here that what your “cuundu chaitwa” chairman HH does (tax dodging) is wrong because no country can develop when its people dodge paying of taxes!!THE PARADISE PAPER HAS FINALLY PUT A NAIL ON HH’S COFFIN!!!HH wont run away from his evil issue.he will sweat and it will cost him badly in 2021!!!PF’S FIRE TENDER SAGA IS EVEN NOW BURIED AND ALL POLITICAL GAINS HH COULD HAVE GOTTEN FROM PF’S MISTAKES ( FIRE ENGINES) ARE OVER NOW!!
    Dundumwezi cadres please note,the 3 things which have costed your Kainde the presidency since 2006 are; TRIBALISM,ARROGANCY,AND PRIVATIZATION!!!now add “TAX…

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  30. Continue…..
    The 3 things which have costed HH the presidency since 2006 are: TRIBALISM,ARROGANCY AND PRIVATIZATION.now add TAX DODGING to that list-HELL NO,HH WILL CRY AGAIN IN 2021!!

    NJIMBU BB 2017!!

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  31. Were HH to become president, how will he, with a clear conscience, urge the citizenry to honestly pay taxes? How hypocritical he will be, should he decide to do so! This is disgraceful. How can he convince us he is not selfish?

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  32. Ubututu muleke, where does Zambian money from the few tax payers go when the services do not even match or give anything deemed value for money? Action aid should also have words with the Chinese government for investing in Zambia instead of there own country? The notion of morality does not even cut it. Let Zambia become attractive to locals and they will not invest somewhere else. While at it, ask Kaizer Zulu to bring his brand back to zambia and find how he amassed his wealth within two days!!

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  33. he a crook
    childish
    arrogant
    tribal
    pompus
    egoistic

    he only goes to polls with 3 provinces where he gets 100% tribal votes

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  34. The paradise papers do not explain specifically how Zambia lost out as result of HH being mentioned. None of you PF cadres have explained how HH disadvantaged Zambia in terms of taxes. Since this story broke out ,I have read most of the comments looking for specific evidence of how Zambia has lost out . None has tried to explain,it is just an opportunity to have go at him since you cannot stomach the amount of trash Lungu has created.

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  35. So good to hear of a Zambian making his own money without thieving from state funds , well done HH ! Most of us are proud of all your hard work and your achievements and we are not jealously spending sleepless nights wishing we were as wealthy as you . Don’t listen to some of these lazy individuals with no brains ,motivation or work ethics who are sitting on their backsides and constantly criticizing you. You are a creative man and a good example to all aspiring investors . There are many ways to invest and grow your money, people !! You ask yourselves how the likes of Trump and others have generated so much wealth . No wonder we have so few genuine African wealthy individuals. Most are thieving politicians whose wealth is created withing a very short period of time and mostly whilst in…

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  36. where is Action Aid when we are crying for the theft of public money on fire tenders and ambulances etc? I agree with you #Enlightened;

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  37. I am so disappointed with a lot of bloggers here asking HH to declare where he got the money from. My question to you would be: ask all Indians and all foreigners including Moslem business owners where there money is from??? If you can answer that then we can talk. What is unacceptable and unforgivable and stupid is to steal one’s tax payer’s money. This is where HH and is money are exempted from the nonsense. He worked hard for his money.and invested wisely home and abroad, no big deal there. Never stole a penny from the government unlike your ECL with a questionable track record on fianances. Now he is rich because he is President while others are rich citizens due to hard work and education. Please people let us focus in big issues and not this. Steven Suckur is a scam bag FYI. He…

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