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There was nothing irregular with Dora engaging RP Capital – Kunda

There was nothing irregular with Dora engaging RP Capital – Kunda
Written by Chibaula Silwamba
Wednesday, February 18, 2009 8:11:01 PM

VICE-President George Kunda yesterday said there was nothing irregular with communication and transport minister Dora Siliya's engagement of RP Capital Partners to value Zamtel. And Vice-President Kunda said the government has no knowledge that President Rupiah Banda's son, Henry, was linked to RP Capital Partners Limited.

Addressing journalists at his office in Lusaka over the controversy concerning Siliya's signing of a Memorandum of Understanding (MoU) with RP Capital Partners Limited at a contract sum of US$ 2 million [about K10.3 billion] in total disregard of advice from the Attorney General's Chambers, Vice-President Kunda said Siliya was a lay person.

He said there was nothing unusual about the engagement of RP Capital Partners because they have special skills.

"This is a clarification on the Memorandum of Understanding signed between the government of the Republic of Zambia acting through the Ministry of Communications and Transport and Zambia Development Agency and RP Capital Partners Cayman Islands Limited," said Vice-President Kunda, who was accompanied by Siliya and tourism minister Catherine Namugala. "From the outset, it must be made clear that Hon. Dora Siliya, Minister of Communications and Transport who is at the centre of the controversy is a lay person. She is not a lawyer nor for that matter a State Counsel or eminent lawyer well versed in legal matters. Both Hon. Siliya and the entire establishment in the Ministry of Communications and Transport depend on legal advice and guidance from the Ministry of Justice and the Attorney General's Chambers."

Vice-President Kunda, who is also Minister of Justice, said the comments being made in The Post on the MoU were based on documents which were leaked, incomplete, selective, premature and illegally in their possession and do not portray a complete picture of the matters in dispute.

"Government has taken note of the various comments made by the Post newspaper and some politicians and lawyers on the Memorandum of Understanding signed by the minister of Communications and Transport, the Zambia Development Agency and RP Capital Partners Cayman Islands Limited. The issues raised by The Post newspaper in this matter are of a legal nature and therefore they require legal interpretation. By the way, most of the issues raised by The Post newspaper nowadays are legal in nature and they require lawyers like myself to be responding to some of the legal issues," Vice-President Kunda said. "Notwithstanding this position, however, the matter has been heavily politicised and it appears to us in government, unfortunately that The Post newspaper in this case has acted as investigator, prosecutor, judge, jury and executioner. Fairness and justice cannot be achieved if all these functions and roles are embodied in one body or entity [The Post newspaper]. In this scenario, The Post newspaper is also calling witnesses of a certain inclination to prove its case."

He observed that opposition political parties had also jumped on the bandwagon.

He said there could be no justice in such a scenario.

"In the case under reference the Minister of Communications and Transport and her Ministry referred the Memorandum of Understanding in question to the Ministry of Justice and the Attorney General's Chambers for legal advice and clearance as per constitutional provisions and the laws of Zambia," he said. "In this regard, all government ministries and departments refer Memoranda of Understanding and Agreements to the Ministry of Justice for clearance by the Attorney General's Chambers.

"At this juncture, it is important that I shed some light on the legal provisions applicable to the operations of the Attorney General's Chambers and its actual operations."

He said the Attorney General's Chambers was regulated by Article 54(3) of the constitution with respect to the clearance of Memoranda of Understanding, Contracts and Agreements.

"Article 54(3) of the constitution requires the legal advice of the Attorney General to be sought before any agreement, contract, treaty, convention or document to which government is a party is concluded [signed]. The normal procedure therefore is for any intended MoU, Agreement, Contract etc to be referred to the Attorney General's Chambers for clearance," Vice-President Kunda explained. "In this situation, the term Attorney General's Chambers is used deliberately to show that it is a collection of lawyers under the supervision of the Attorney General.

In this regard the Attorney General is assisted by the Solicitor General and State Advocates."

He said the Solicitor General was authorised to clear MoUs, Agreements, and contracts on behalf of the Attorney General in terms of Article 55 (5).

"...Which provides as follows: '"Any power or duty imposed on the Attorney General by this constitution or any other written law may be exercised or performed by the Solicitor General. (a) Whenever the Attorney General is unable to act owing to illness or absence, and (b) in any case, where the Attorney General has authorized the Solicitor General to do so," Vice-President Kunda explained.

He said State Advocates below the Solicitor General could also approve agreements, MoUs and contracts with the authority and direction of the Attorney General or the Solicitor General.

"For all intents and purposes the Solicitor General is the deputy Attorney General and this is the position in the Commonwealth," Vice-President Kunda said. "It is not possible for the Attorney General to approve all the Agreements, Contracts, MoUs in person. With regard to procurement documents, MoUs, Agreements etc, the same practice and procedure is followed. In fact the Public Procurement Act No. 12 of 2008 requires such documents to be approved by the Attorney General and can also be approved by the Solicitor General in terms of Article 55 (5) of the constitution."

Vice-President Kunda, therefore, said on the MoU concerning RP Capital and the government of Zambia, the Solicitor General cleared the Ministry of Communications and Transport to go ahead and sign the document.

"This MoU was dealt with by an Acting Principal Counsel and the Solicitor General before the Attorney General dealt with the matter. The Acting Principal Counsel on behalf of the Solicitor General on 21st November, 2008 rendered his [her] opinion on the MoU. This opinion was rendered in the name of the Solicitor General. The Solicitor General rendered a further opinion on 25th November, 2008 on the same Memorandum of Understanding. On 5th December, 2008, the Solicitor General rendered his final opinion clearing the MoU for execution or signing," Vice-President Kunda said. "It must also be emphasized that the Solicitor General held further consultations with the minister of communications on this MoU. The MoU was finally signed on 22nd December, 2008 by all the parties."

He said at the time of signing the MoU the Solicitor General had cleared and approved the MoU, which had taken into account comments of the Solicitor General.

"For all intents and purposes, the Solicitor General was acting on behalf of the Attorney General," Vice-President Kunda said.

He said the Zambia Development Agency (ZDA) was a party to the MoU because it had a role to play in the privatisation of state owned enterprises and in rendering technical advice to government on such privatization or divestiture.

"Thus apart from RP Capital Partners, the intention is for the ZDA to work with RP Capital Partners in the evaluation of the assets and as specified in the MoU," he said. "The MOU covers the provision of consultancy services for valuation of ZAMTEL assets and the possible sale of government stake in Zamtel. The ZDA is mandated by the Zambia Development Agency number 11 of 2006 to plan, manage, implement and control the privatisation of state owned enterprises, that is why it is a party to the MoU."

He explained that even in respect of those companies privatized by the then Zambia Privatisation Agency [now under ZDA], external consultants or transaction advisors were invariably retained to provide expertise in the valuation and privatization of state owned enterprises.

"On this aspect, I speak from experience as former Attorney General and member of the defunct ZPA Board," Vice-President Kunda said. "Thus comments being made in the Post newspaper on the MoU are based on documents which are leaked, incomplete, selective, premature and illegally in their possession and do not portray a complete picture of the matters in dispute. The statement made in Parliament by the Minister of Communications and Transport is a true reflection of the status quo based on the documents available to government."

He argued that by law an MoU was often used in situations where parties either do not imply a legal commitment or where parties could not create a legally enforcement agreement.

"This is the general rule. However, depending on the intention of the parties an MoU may sometimes contain binding provisions. The essence of an MOU as opposed to an outright agreement is therefore to express the intention of the parties," Vice-President Kunda said. "Members of the public may also wish to know that MoUs are referred to the Attorney General's Chambers for legal opinion and clearance as a matter of routine."

He said it was also common for ministers to sign MoUs.

Vice-President Kunda said that had been going on even before the current government came into office.

"The implementation of MoUs is left to permanent secretaries and government officials. Permanent secretaries may also sign MoUs," he said.

He said the procurement process for consultancy services was regulated by the Public Procurement Act number 12 of 2008, which repealed and replaced the Zambia National Tender Board Act CAP 394 of the Laws of Zambia.

"For your information the procurement of consultancy services is different from other types of procurement under the Act. In this regard, the Act permits the procurement of consultancy services by way of limited selection. Limited Selection means a procurement method for consulting services where bids are obtained by direct invitation to a short list of bidders without open advertising," Vice-President Kunda explained. "This quotation is from section 2 of the Public Procurement Act No. 12 of 2008. This specific provisions apply to Consultancy Services. We cannot apply provisions relating for example to procurement of oil or construction of buildings or goods to consultancy services.

"In relation to the MoU and the selection of RP Capital partners the relevant section in the Public Procurement Act is section 30 which refers to limited selection and provides that limited selection may be used where - (a) the consulting services are only available from a limited number of suppliers; or (b) there is an urgent need for the consulting services and engaging in open selection would therefore be impractical."

He said under this section it is the discretion of the ministry or entity or body requiring consultancy services to determine whether limited selection or single sourcing, as per common parlance, was appropriate in the circumstances.

"It is not for the entire world to determine this question," Vice-President Kunda said. "In formulating the MoU the minister of communications and transport worked closely with her permanent secretary and some of the correspondence was addressed to the permanent secretary by the Ministry of Justice on the MoU."

He said the Solicitor General ably advised the Ministry of Communications and Transport to ensure that they were within the Ministry's threshold for tender purposes.

"He wrote in one of his letters and I quote: 'My understanding from the brief I received is that this would be an initial consultation ahead of any decision to sale or Cabinet discussion. In this regard in paragraph 3.2, I advise that caution is exercised to ensure that the proposed costs of United States dollars fifty thousand [US$50,000] is within the Ministry's threshold for tender purposes," Vice-President Kunda read. "Members of the public may wish to know that the ministry's threshold is K7 billion for tender purposes. The US$ 50,000 for the valuation as per the MoU, which is equivalent to about K275 million is far below the authorised threshold of K7 billion."

Vice-President Kunda said for avoidance of doubt the tender process that was applied in the case of RP Capital Partners as prescribed in the Public Procurement Act did not require advertisement.

"The process of a limited selection or single sourcing is appropriate and common for the engagement of experts or consultants with special skills such as lawyers, doctors, valuers, financial advisors etc. In fact there are some professions which ban their members from responding to advertisements because such conduct is demeaning hence they can only be engaged by single sourcing," Vice-President Kunda explained.

On whether the process of partial privatisation of Zamtel was approved or not by Cabinet, Vice-President Kunda said the intention of the Ministry of Communications and Transport was to table the matter before Cabinet after the valuation of the Assets was done by ZDA and RP Capital Partners.

"...For Cabinet to decide whether ZAMTEL should be privatised and the mode of privatization," Vice-President Kunda said. "There has been misconception that a fee of US$2 million [about K10.3 billion] has been paid to RP Capital and partners. The true position is that the fees of five per cent of the value of the company with a minimum fee of US$2 million will only be payable upon a successful sale of the company. This is subject to tender board approval being obtained and all the legal requirements of the Zambia Development Agency Act being complied with."

He, therefore, said it was premature to say US$2 million had been paid or would be paid.

"At this stage, I must also mention that relevant aspects of the Attorney General's opinion dated 5th January, 2009, which was rendered after his return from African Union Human Rights Commission duties abroad for almost a month will be considered when Cabinet sits to consider the Privatisation of Zamtel. After all the Attorney-General is a member of Cabinet," Vice-President Kunda said.

And responding to questions from The Post on Attorney General Mumba Malila's letter to the Ministry of Communications and Transport barely two weeks after the MoU was signed criticising the manner in which Siliya signed the MoU without taking into account the Solicitor General and acting Principal Counsel's advice, Vice-President Kunda maintained that as far as the government was concerned the Solicitor General had cleared the MoU.

Labels: DORA SILIYA, GEORGE KUNDA, PRIVATISATION, ZAMTEL

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