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Monday, October 11, 2021

Why the Appointment of Dr. Situmbeko Musokotwane as Finance Minister is Wrong

Columns Why the Appointment of Dr. Situmbeko Musokotwane as Finance Minister is Wrong


By Ngomola Cengelo Muyembe

I have an ask

In 2011, Five NGOs namely Lausanne/Zurich/Paris/Lusaka, SHERPA (France), the Center for Trade Policy and Development (Zambia), the Berne Declaration (Switzerland), l’Entraide Missionnaire (Canada) and Mining Watch (Canada) filed a complaint against Glencore International AG and First Quantum Minerals for violation of OECD guidelines.

They filed this complaint before the Swiss and Canadian National Contact Points (NCP)and won, but Situmbeko Musokotwane, who was the Finance Minister in Rupiah Banda’s government, refused to take the case to court or demand for penalties that could have resulted in billions.

The Organisation for Economic Co-operation and Development (OECD) which was founded in 1961 to help stimulate economic progress and world trade in countries that are committed to Democracy and Market economy, came up with some rules to stop criminals organisations like Glencore and FQM from stealing from the poor people.

One of the OECD rules that these criminals violated was on Transfer Pricing, where Mopani would dig our Copper and sell to Glencore, their own mother company and pay taxes over that declaration. E.G Copper prices would be $9000/ton on the international market, but Mopani would sell to Glencore at $1000, therefore paying ZRA tax on $1000/ton instead of $9000/ton.

It is this criminal behaviour that prompted the complaint by the Five NGOs. The financial and accounting manipulations performed by the two companies’ subsidiary, Mopani Copper Mines Plc (MCM), were designed specifically to evade taxation in Zambia and steal from its people. It was not up to Musokotwane and his cohort to forgive because that is the people’s money meant for schools and hopsitals.

This complaint was based on the results of a 2009 audit performed at the request of the Situmbeko Musokotwane’s very own Zambia Revenue Authority at the time, with support from Norwegian government, by international accountants one of which the current President Hichilema has some interest namely, Grant Thornton and other being Econ Pöyry.

Among the criminal acts exposed by Mr Hichilema’s company and partners revealed by the report, were the unexplained increase in operating costs in 2007 (+ $380 million), stunningly low reported volumes of extracted cobalt when compared to similar mining companies operating in the region, and manipulations of copper selling prices in favor of Glencore which constitute a violation of OECD’s “arm’s length” principle.

The result of those various processes was to lower by several hundreds of millions dollars MCM’s net income for the 2003-2008 period, hereby substantially lightening the company’s tax burden. This was broad daylight banditry! Yet Situmbeko Musokotwane thought otherwise.

In view of the above vast experience of Dr. Situmbeko Musokotwane and not forgetting his dubious sale of Zamtel and the relinquishing all of ZCCM-IH shares in a hugely profitable Lumwana Mine, why would Mr Hichilema hire him as our Finance Minister?

It is not about his age but his behaviour! Not only did he botch the opportunity to make an example out of Mopani, but he also painted a very bad picture on the Zambian authority to those people that would want to help us catch criminals that are stealing from the people.

Can he at least explain himself to the Zambia people so that we know he won’t do the same thing again?

48 COMMENTS

  1. The finance minister is answerable to the president , we thank God zambia has a savy well educated business man.

    There is no room for mistakes or ignorance this time round in the financial world for zambia…….

    It’s Zambia forward…….

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  2. Yaba, elyo bola yawama. It is indeed right for people to call Dr. Musokotwane to account for his failure to act. This is the Zambia we want in which leaders must be called to account for their deeds or omissions, past and present.

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  3. @Spaka he is answerable to the president who in turn is answarable to the people of Zambia who entrusted him with the mandate to rule. That said, I think it is fair to give the man a chance to perform before judging him. Otherwise we can only hope this wont be an unsuccessful take off.

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  4. I for one appreciate the interest shown by individuals regards the running of the countries affairs, it can only help those with responsivities to process carefully before making decisions going forward.

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  5. Musokotwane is also famous for building the famous road to nowhere. He spend government resources to build a tarred road to his village. If he is coming back with that attitude, he will now build a university in his village. He needs to be watched very closely. he comes back with a lot of buggage.

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  6. Take him to the laundry so that he’s as clean as you think he should be. All of us have skeletons in our cupboards. I laughed when s guy who has been collecting money before giving contracts to suppliers calling the PF a corrupt entity. Let him work and he may expose himself. Otherwise you’ll disqualify everyone.

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  7. #3  Nine Chale 
    August 29, 2021 At 3:47 pm

    “@Spaka he is answerable to the president who in turn is answarable to the people of Zambia who entrusted him with the mandate to rule…”

    HEHH will be answerable to the people of Zambia in 5 years , musokotwane is answerable to the president from day one…….

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  8. Well not only Zamtel but Finance Bank was also sold to FNB for a song under his watch only to be rescinded by Sata when he came into power. My take is that he lacks the character to withstand pressure of the appointing authority. At least thats what l saw when be served under RB.

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  9. Where was this writer when for 10yrs PF was decimating Zambia’s economy.Ngomola Muyembe you too have sins of omission.

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  10. Musokotwane is very much involved in corruption…ask him how he acquired massive pieces of land in chongwe Mikango Barracks…

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  11. The guy has simply appointed his business ally into the key position.
    If you’re here and still pretending you can’t make sense out of the current situation then am sorry to say your brain is in stupor.
    Auditing will be given to the presidents business friends and partners.
    Wake up!.

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  12. During his time the kwacha was very strong and there prudence management of resources.

    There came a venomous snake who brought a dinosaurs Alexander Chikwanda who brought hefty debts Zambia has witnessed.

    Give two years and you will see wonders!

    ZAMBIA FORWARD!

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  13. Some suspected thieves are allowed to do jobs and prove themselves. Other suspects especially if they are of PF breed are crucified, with no chance to repent! It pays to belong to the ruling party! Others are evening asking “where was the author when PF decimated the country?” Meaning what…? That UPND characters should also do the same?

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  14. This is the most interesting year and generation in politics the social media including all media is making things easier to know, Musokotwane cannot be trusted for the position of a finance minister looking at the baggage he is carrying on his shoulders, he is a dirty character musscareding as a good man equal to the job.
    Things could be that the head of state could have vested interest in whatever he does corruption could be the reason who knows, my only great disappointment is to see this guy again after all those stories of a despicable character that he is.
    Very soon we will learn that VJ is the minister without something

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  15. Iwe Gomola, or whatever you call yourself, a decision to prosecute a corporation is not made by a single government entity (In this case Finance ministry) but rather by a collection of aggrieved ministries ( Finance and legal affairs in this case), and the director of public prosecution. When you learnt about the information you are sharing now, what did you do about it then? Do you know if the DPP was involved in the decision not to prosecute Glencore? For you to pin the blame on an individual makes me believe that you may have a score to settle with Musokotwane. By the way, Musokotwane has a CV that can stretch from your house to Kinshasa, DR congo. Whats your CV?

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  16. Just the name “Glencore International AG” brings back to PF fans memories of privatization , the author should be aware, he is walking on a thin thread before he invokes that debate, and it appears that could be an indirect intent behind this article.
    Give HH, and Musokotwane at least 100 days, before you can start digging out this dirty. Do you think HH will tomorrow make up his mind and remove Musokotwane based on this article? HE.LL NOOOT !! This is all noise. period. TU PF just sit back and relax, and others a chance to do the job you could not do.

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  17. Fellow Zambians, looks like the pieces in the “ Brenthurst jigsaw puzzle” conspiracy theory are neatly falling into place. Major sponsor of the campaign, Brenthusrt Chairman Obasanjo’s interest in anything to with HH. Now this revelation! The Zimbabwean minister is saying we are dealing with sellouts. Are we really in charge of our destiny?

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  18. Yes I remember the cries of Zamtel workers between 2008 to 2011 which landed on deaf ears as RB, Musokotwane, Dora and the corrupt union stole from retrenched workers is broad day light. Musokotwane is as heartless as hh going by the article.

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  19. Well, well. Completely misplaced and full of half truths. Within the Nkana orebodies cobalt concentrations will vary greatly from zero to a few 0.xx %. So that particular comment is misplaced.

    The USD 228 million ZCCM-IH received from its wise investment in around 2004 in Lumwana Mine was well received. I think that was ZCCM-IH decision to invest in new company or bail out. We shall never know why ZCCM-IH opted to get the money. Could have been Bwezani’s campaign money. These are one of the failings of ZCCM-IH – political patronage!

    Lap green! Without Libya going into smoke surely there were significant improvement that were noticeable at ZAMTEL.

    I do not wish to go into detailed rebuttal of this article but find it very poorly balanced and lacks merit.

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  20. Musokotwane lacks the ability to resist pressure from the appointing authority. Yes men are the next hazard facing our nation. The so called boot leakers. Those with independent minds don’t seem to last. See what happened to Nevers Mumba. Then we were condemned with ni Ndalama za nyoko and a departure from cash budget, zero tolerance to corruption and renewed borrowing. We are still bound in debt. Every one of us owes about $800 including little babies.

  21. As commenter #15 aptly puts it “Ngobola what did you do about it then? You’re a fair weather critic speaking only when the battlefront is safe.

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  22. The question in the article is: Can our finance minister explain himself why he did not take punitive measures on an investor who intentionally abrogated the ZRA rules?
    Underpricing is the same as declaring less to escape full tax payments. Operational costs were also fictitious.

  23. If you beleive he is corrupt, individuals are free to report to ACC. I wonder why people have not reported especially when PF was in power

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  24. @SPAKA #7.
    If the finance minister was not happy with the president’s decision at that time, why did he not resign to exonerate himself?
    All public officers are accountable to the people, not to the president and you don’t wait for five years to be answerable. Leadership is people servanthood.

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  25. The biggest problem we have is that Zambia is short of honest men and women because even the educated have behaved like common criminals despite their rich CV. I wished Situmbeko well because I believe that people repent and reform otherwise his hands aren’t clean. He’s one of the reasons we kicked out RB

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  26. Musokotwane is world champion “crossing the floor”. A master DEFECTOR! I dislike any and every politician who changes his/her allegiance for next to no reason: GBM, CK, EN, SM and also Musokotwane. Not a good start!

  27. There was corrupting in RB govt .the issue was just exaggerated by M’membe because he hated RB and wanted sata and everybody worshipped Fred .during RB with musokotwane the economy was one of the best in Africa. We even had 6billion USD in reserves which data depleted. HH knows that during RB the economy was great ….good move HH

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  28. Let’s give Dr Musokotwane a chance to prove himself. My take is that with all defects allowed for, the fact still stands that the man is the right choice for the position of Zambia;s Finance Minister.

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  29. 1,2,3,4,5,6,7,8,9,10 years have passed and a dull PF cadre wants to accuse Dr Musokotwane for corruption.
    He thinks like his fellow dull and defeated Edgar Lungu who planned to arrest HH 30 years after the fact.
    For 7 good years ECL was just making empty threats against HH when speaking to his cadres.
    Get a life.

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  30. Glencore has become one of the most
    criticised companies in the world for tax
    avoidance, among other issues, and its
    Zambia operations are no exception.8 In
    2011, a report written by accountants Grant
    Thornton and consulting firm Econ Pöyry,
    which was commissioned by the Zambia
    Revenue Authority, was leaked in Zambia.
    The report, an audit of Mopani Copper Mines,
    contained a number of explosive findings,
    notably that Mopani’s operations included tax
    planning strategies “equal to moving taxable
    revenue out of the country”. It alleged that
    there had been an inexplicable increase in
    Mopani’s declared costs between 2006 and
    2008, and inconsistencies in the production
    volumes declared.

  31. In addition, the audit alleged that Glencore
    was engaging in transfer pricing activities and
    that its sales of copper to related parties
    were “not in accordance with the agreement
    disclosed” by not being at arm’s length.
    Rather, the audit suggested that Mopani
    sold copper at artificially low prices to
    Glencore in Switzerland under a deal struck
    with the firm’s UK subsidiary. The metal
    was then sold on, allowing Glencore to take
    advantage of Switzerland’s ultra-low tax
    regime. The audit concluded that “the Mopani
    cost structure cannot be trusted to represent
    the true nature of the costs of the Mopani
    mining operation”. In addition, the audit
    alleged that Mopani had “resisted the pilot
    audit at every stage”.9
    Glencore responded to the allegations
    in the…

  32. contains factual errors and inaccuracies. It
    is based on broad and flawed statistical
    analysis and assumptions.”10 Glencore also
    claimed that the auditors had failed to factor
    in rising fuel and labour costs over the period,
    and that all transactions were conducted at
    an arm’s-length basis and at internationally
    agreed prices. 11
    The leaked report caused a storm in
    Zambia, as well as considerable international
    attention. In 2011, five NGOs filed a
    complaint to the Organisation for Economic
    Cooperation and Development (OECD)
    against Mopani, claiming that Glencore’s
    activities were violating the OECD’s
    Guidelines for Multinational Enterprises.12
    Yet the OECD’s final ruling was inconclusive,
    simply concluding that the two sets of parties
    agreed to disagree.

  33. The matter was arbitrated by the OECD but wasn’t settled. The parties agreed to disagree.
    Nonetheless there’s no indicative evidence that the ministry of finance refused to take legal action against FQM.

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  34. Well, that was under the Rupiah Banda Administration. This is Bally Administration where no nonsense will be tolerated.

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  35. Mr Ngobola has presented a disjointed case.How come that was the only time Zambia had record forex reserves if we were truly being cheated on mineral royalties & taxes ?

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  36. #26  Mulongoti Machayi 
    August 29, 2021 At 7:32 pm

    “@SPAKA #7.
    If the finance minister was not happy with the president’s decision at that time, why did he not resign to exonerate himself?
    All public officers are accountable to the people, not to the president and you don’t wait for five years to be answerable. Leadership is people servanthood….”

    Was lungu answerable to the people in his first year despite everything going wrong ?

  37. @19, Bandawe-it’s like in the matrix and you get unplugged, then you see the real world. Good to see someone who sees the situation in real time. Were our youths duped??

  38. Is it not bizarre that the same people on LT who supported a corrupt clueless regime that had every economic indicator going wrong are the same people today condemning the new appointment of KM as finance minister ?????

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  39. How does the finance minister become culpable. The Attorney General is responsible for such matters, even the minister of justice comes close.

  40. AM WAITING TO SEE SHON TEMBO MATCHING WITH HIS NEW RUNNING MATE MR NSHILIMUBEMBA PROTESTING AGAINST THE AP9OINTMENT OF A DESERVING FINANCE MINISTER. THEY SHOULD BE FINANCED BY NAKACHINDA TO MAKE THEIR PROTEST FOOLISHLY SUCCESSFUL. AM NOT TEASING THEM AFTER ALL I KNOW THAT ”PA NSAKA TA PABULA CHIPUBA,”

  41. Very interesting comments. Perhaps the biggest factor against Musokotwane is the fact that he’s recycled. Surely there must be others who are younger with fresher minds. After all HH has been elected by youth.

  42. May l differ a bit with the author of this article in this regard were he labeled the appointment of the finance minister as wrong,not long ago alot of the so called PF click lined grouped and called HH a sorts of names, they even locked up for trumped cases and the rest is history.what am saying is ,in the new Dawn HH has put it plains that his team wants to serve the zambians not those in authority ! sometimes it’s wise to observe and comment later. This article is ill timed like the comments Raphael Nakachinda brought of incouraging parents to send their children without buying books, groceries e.t.c because HH promised free education.Lets wait and reserve our observations,time is coming to hit back. We might be a laughing stock if the opposite happens in reference to how ECL tumbled .

  43. Ma repeater ni so cabe. OK those who say Musokotwane is not suitable let him repeat the subject he failed mwina azakwela mweo. Muyembe wakamba tamvwa

  44. Well sometimes people go to that extent because of the top leader. But brothers and sisters with the standard HH has set for the way Zambia should be led. I don’t think Musokotwane will be able to carry out his personal interests over the interests of the nation. That is one, two, people change and if he has changed for the better Well and good but if not, the system will not allow him. Thirdly it’s too early to begin to judge people in this current Government based on their performance in the past. Let’s give them time and see what they are able to deliver.

  45. Musokotwane is a wrong man for the Job of Finance Minister of now the new UPND government ,you can not borrow from jane to pay paul you re not going anywhere

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