By Michael Chishala
I have heard some very impressive speeches by our new President Mr Hakainde Hichilema on many different topics. This is a rare time I feel very proud as a Zambian that we kicked out the corrupt PF Kakistocracy with a very large boot! The President has strongly stressed that rule of law shall be followed strictly and it shall in fact be strengthened.
The sad story of Zamtel and Konkola Copper Mines (KCM), originally owned by LAP GreenN and Vedanta respectively, is a classic case in how to chase away investors whilst gaining notoriety abroad as a nation of men and not laws. What has been most disappointing is not only that these two companies were grabbed from their rightful owners through a highly questionable, if not corrupt procedure, but that too many Zambians were clapping their hands whilst this was happening!
I find it most ironic that on one hand we supported this lawlessness, but on the other criticised the former PF government for breaking the law in other areas such as caderism, corruption, theft, arbitrary arrests, abuse of state resources or misusing the Police to settle political scores. We justified the seizures of Zamtel and KCM by saying that foreign “infestors” are just rich greedy capitalists who pollute with impunity, hide profits through transfer pricing and do not follow labour laws. But as the old adage goes, two wrongs do not make a right.
The fact that Vedanta as owners of KCM does wrong or unethical things, or breaks the law is not a justifiable reason to equally break the law when dealing with them. That’s vigilante justice, the same as beating up a thief and killing him before he can be arrested, charged and locked up.
The sham KCM liquidation process overseen by Mr Milingo Lungu was a total disgrace. Us Zambians supporting it was even more disgraceful. Today we are up in arms at the slightest sign of the new UPND government bending or breaking the law (eg appointing Ministers to non-existent Ministries), but we were fine with the criminality of chasing away Vedanta and seizing their asset that they paid for and developed, regardless of the arguments about what the true value of KCM was at the time it was bought.
If KCM is polluting the environment, why don’t they get fined by the government through the Zambia Environmental Management Authority (ZEMA)? If they are hiding profits through transfer pricing, why doesn’t the Zambia Revenue Authority (ZRA) punish them? If ZRA lacks capacity to detect sophisticated transfer pricing, why doesn’t ZRA either get some experts from abroad seconded to teach them how, or send their people abroad to take a course in nullifying transfer pricing mechanisms?
If KCM has failed to pay suppliers on time and messed up the Copperbelt economy, why on earth aren’t all those suppliers owed millions of Dollars not taking them to court and using bailiffs to grab KCM assets? It is an open secret that the KCM board has always had government representatives from the day Vedanta bought the mine. So does this mean they have been sleeping for 17 years? So why were they appointed if they were that incompetent? Does this mean that the alleged sins of Vedanta have never been discussed in all the dozens of board meetings since 2004?
If Vedanta have not honoured their obligations to invest in Zambia substantially, the solution is to just engage them, give them an ultimatum and deal with them accordingly. The sale agreement was very explicit that any disputes were to be settled by international arbitration, not through nonsensical fake liquidations pushed through a Zambian judiciary where brown envelopes seem to rule.
How is bypassing the law and illegally grabbing KCM from Vedanta a solution to anything? How do we expect to attract better buyers for KCM when all the best companies will not touch KCM with a 3 meter pole? A few weeks ago, the bank accounts of Mr Lungu the liquidator were frozen as reported by News Diggers. I shall not in the least be surprised if serious corruption and wrong doing are uncovered. There is more than a 70% chance that KCM was just being used as a cash cow by the corrupt evil PF regime.
The story of Zamtel mirrors that of KCM. When President Michael Sata took office, he wasted no time in setting up a kangaroo Commission of Enquiry to prove the sale of Zamtel to LAP GreenN was somehow improper. Its outcome was already pre-set and the Commission just went through the motions like a puppet on an invisible string. The final report was a total joke and was used to paralyse and seize the company in one of the first major illegalities of the corrupt PF regime. I always laugh when people claim that corruption in PF started when Mr Sata died.
LAP GreenN had turned Zamtel around within just one year. From a weak bankrupt company with millions in debt and a bloated workforce, Zamtel was transformed into a profitable fast growing company that quadrupled its subscribers and nearly doubled in value, yet with a third of the original labour force!
The corrupt PF cabal took over the company by force and hounded out the CEO Hans Paulsen at the barrel of a gun and deported the CFO Hayee Adnan. How do you think that looked like on the world stage to anyone with billions who was looking for a country to invest in, especially after a credit rating downgrade soon after? PF then run Zamtel into the ground within three years, as reported by the Auditor General.
Today we owe LAP GreenN close to half a billion Dollars as compensation which we do not have. We were slapped with a $380 million judgment in 2017 and interest has been accumulating since then with not even a single payment made as far as we are aware. Zamtel is a shell of its former self under LAP GreenN, with some of the best employees having left. Many Zambians defended and supported this criminality by PF, yet they began crying like little babies when the same criminality was extended to them and manifested through wanton corruption, lawlessness and brutality.
So what is the solution? Very simply, give back the two companies to their original owners. Call them for a round table meeting and sign an agreement that all claims for compensation should be waived in exchange for LAP GreenN and Vedanta being given back their companies. A short 3 year tax break can be thrown in to sweeten the deal and allow for recovery, with a very strong stick shown that no nonsense like failure to pay suppliers on time, pollution, or creative accounting shall be tolerated.
This shall bring back investor confidence and increased FDI. We cannot afford the luxury of the lawlessness and foolishness that characterised the incompetent and inept PF regime for ten years. We need all hands on deck to fix the economy. We need Vedanta to be part of the team of Bally so that with all our collective efforts, he can fix Zambia.
- London High Court orders Zambia to pay $380 million in compensation for nationalizing Zamtel
- Libya in $380m dispute with Zambia over Zamtel takeover
- LAP Green disappointed with PF Government behaviour
- High Court allows LAP Green to take case to neutral country, Government to appeal decision
- FIC seizes Milingo’s accounts, as Chirwa wonders why people are panicking and moving cash out of the country
- In blow to Vedanta, Zambian court rules KCM liquidator to stay in post
- Zamtel in huge losses, firm is technically insolvent-Auditor General
Michael Chishala is a Zambian analyst with interests in Philosophy, Law, Politics and Economics. [email protected]