25 January 2012 GOVERNMENT’s decision to compulsorily acquire the 75 per cent shareholding of LAP Green Network in Zamtel comes against a backdrop of sordid revelations regarding the corrupt manner in which the sale was conducted. The decision announced by President Michael Sata yesterday is, in our view, the strongest message from the Patriotic Front Government that it will not countenance corruption and will not shy away from invoking all powers at its disposal to protect national interest. The sale of Zamtel to the Libyan firm was widely viewed, fromthe outset, as flawed and corrupt because of the decision to marginalise the Zambia Development Agency (ZDA) whose role was usurped by RP Capital of Cayman Islands, the so-called transaction advisors, who executed the whole process, from the flawed valuation to the final sale. ZDA was created by an Act of Parliament and is the only body legally mandated to oversee the privatisation process in Zambia. The commission’s report has accused the ZDA of dereliction of duty and says senior management at the Agency should be held culpable for the careless manner in which they conducted and supervised the sale. If there was nothing fraudulent in the manner in which this whole process was driven, LAP Green would not have failed to avail the sale agreement to the commission of inquiry chaired by Justice Minister Sebastian Zulu, which exposed all the transgressions committed by Lap Green Networks, RP Capital and all their collaborators in the MMD regime. Salient points and findings contained in the commission’s report are worth re-visiting in order to expose the corruption which characterised the Zamtel sale, and why Government has deemed it “desirable and expedient” to compulsorily acquire the 75 shareholding of Lap Green Network in Zamtel. First flaw: RP Capital was single-sourced to value Zamtel assets against the better judgment of many people who viewed this mode of engagement as a recipe for corruption. Then Communications and Transport minister Dora Siliya was roundly condemned but the decision to engage RP Capital was upheld by the powers-that-be. Second flaw: LAP Green Networks failed three mandatory pre-qualification. bidding criteria, namely that a prospective bidder must have at least US$250 million shareholding equity for private entities, or a minimum market capitalisation of US$500 million for public listed entities and a minimum of five years of licensed operation in telecommunications industry, in addition to having more than three million subscribers on fixed mobile or fixed wireless network. LAP Green Networks failed in all three areas and should have been disqualified. The commission has recommended that a civil suit be instituted against RP Capital and their legal advisors, Simmons and Simmons, for professional misconduct and negligence for qualifying LAP Green in spite of it failing to meet the mandatory pre-qualification criteria. Third flaw: RP Capital conducted what the commission has described as an “incompetent and misleading” valuation of Zamtel assets resulting in the company being grossly under-valued at US$38 million despite the parastatal having a book value of US$81 million and a much greater value at the time of the sale. As a consequence of the flawed valuation, the Libyan firm was to pay only US$257 million for 75 per cent shares. Of this amount, the Zambian Government has todate only received US$15 million while RP Capital was paid its fees in full of US$12.6 million, which represents five per cent of US$257 million. By contrast, the previous government decided to pay for the 25 per cent shares it already owned in Zamtel and paid a total of US$334,440,000 in what was termed as Tax shares and a Subscription Amount. In short, Zamtel was grossly under-valued and the government paid more than it received from Lap Green Networks. Fourth flaw: The commission discovered that the negotiating team appointed by the ZDA was not independent as required by the law under which the Agency was set up and did not negotiate in the best interest of the Zambians. On the basis of these facts, the commission concluded, and rightly so, that the Zamtel sale was a clear case of economic sabotage which pervaded and compromised key Government institutions to the extent that Government decisions and policy were being managed by a foreign consultant. We hope the PF Government will allow the new Zamtel to operate as a viable business entity and avoid accumulating huge bills which remain unpaid for long periods. This was one of the maladies which afflicted the old Zamtel and contributed to its losses. Be the first to Write a Comment ! More News on allAfrica.com Powered By WizardRSS.com | Full Text RSS Feed | Amazon WordPress Plugin | Android Forum | Hud Software
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Zamtel Saga – Corrupt Deal Back-Fires
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It depends on who one wants to believe. The Zambian courts of law or a commission of Enquiry that started with the Hypothesis that the sale is illegal and will be reversed!
The PF through its President said very clearly long before it came into government that they would take back ZAMTEL and give back Finance Bank to its owners. If that decision was made BEFORE the enquiry, how can it be justified? Imagine a Judge telling you that once your case comes up before him, he will sentence you to prison. Then a trial is held and hocus pocus, he finds you guilty!