ZNBS confirms $98m NAPSA deal

ZNBS confirms $98m NAPSA deal
By George Chellah
Wed 11 May 2011, 15:00 CAT

ZAMBIA National Building Society (ZNBS) has confirmed that the National Pension
Scheme Authority (NAPSA) will provide the US$ 98 million for the refurbishment
of Society House.

And Transparency International Zambia (TIZ) chapter president Reuben Lifuka says
NAPSA has in the last couple of years made some questionable investments, which
raised public concerns and cast doubts about the investment policy and plans of
the institution.

In a statement issued yesterday reacting to a story that was carried in The
Post’s Tuesday edition, ZNBS stated that in December 2010, they proceeded to
prepare a business plan that was undertaken by an independent consultant.

“The business plan was then the basis for inviting investors to fund the project. After engaging various potential investors both in Zambia and abroad, ZNBS identified the National Pensions Scheme Authority (NAPSA) as a potential financier,” they stated.

“Thus on 11th January 2011, a specific proposal for NAPSA to consider financing the project based on the viability demonstrated in the business plan was presented. On 28th April 2011, NAPSA wrote back to ZNBS confirming that it would finance the project subject to contract negotiations.”

They stated that on September 1, 2010, six bidders submitted their bids at the ZPPA building where tender opening took place.

“By the end of November 2010, a detailed evaluation involving independent evaluators was conducted out of which a successful bidder Zambezi Consortium was selected as the preferred bidder,” they stated.

The ZNBS stated that they embarked on the re-development and development of Society House and Central Arcades more than five years ago. But well-placed government sources yesterday dismissed the justification from ZNBS.

“In government, you don’t invite bids for a project before you have got the money for it. So how did they invite bids before going to NAPSA to get funding? Clearly, you can see that they had already identified someone to do the job and all that remained was to pressurise NAPSA to provide the money. The whole transaction was a calculated move, so let ZNBS not play games, these are serious matters,” the source said.

“Since they are saying that they embarked on this project five years ago, why haven’t they managed to find a financier in the last five years? Why isn’t there a consortium of banks to finance the project because there are so many banks that are looking for where to throw their money?”

The source wondered when finance minister Dr Situmbeko Musokotwane did an analysis to be able to arrive at the decision that the project was viable.

“What process did NAPSA engage in to find that this is a viable project? Does NAPSA have capacity to manage such a lending? Since they are saying that they are ready to provide more details let them show the public the balance sheet of ZNBS for the last five years. Let them also show us who the shareholders are for the company they have created,” the source said.

“Can they tell the public what the contributions payable to NAPSA by ZNBS are over the last five years and what has actually been paid? Let them explain, why did they copy the letter to the ministers when they where looking for money from NAPSA? Let them further state who analysed the transaction for Dr Musokotwane and labour minister Austin Liato, for the two ministers to think that the project is viable.”

The source challenged NAPSA board chairman Dominic Mbangu to deny that he never informed the investment committee meeting about the pressure he was receiving from President Rupiah Banda over the transaction.

“The National Provident Fund, the predecessor to NAPSA was killed because of similar recklessness and abuse of pensioners’ money. And today, NAPSA is going down the same route. Well, since they are willing to provide more details let them disclose who constitutes the Zambezi Consortium,” the source said.

“It’s well-known in government circles that NAPSA was pushed through the involvement of State House to finance this project. Can they deny that Liato and Musokotwane have not been involved in this? Why are there no other financiers since they claim it’s a viable project?”

And TIZ chapter president Lifuka said the story of another scam at NAPSA raises a number of questions about the manner in which public money derived from the social security contributions is being invested and utilised.

“It is our considered view that the media reports on dealings at NAPSA raise fundamental concerns, which government should fully address. In the case of the Society House redevelopment and development, while it is possible that Zambia National Building Society followed all the necessary tender procedures in the selection of the preferred bidder, i.e. Zambezi Consortium, there still is a number of lingering thoughts about the whole transaction?” he asked.

Lifuka said it was a recognised fact that NAPSA has huge sums mobilised through social security contributions and it is one of the biggest pension fund organisations.

“It is to be expected that NAPSA would prudently invest this money in different
projects including property development. Our contention however is that NAPSA is
playing a dual role of collection of pension contributions and investment of
such resources. Such an arrangement makes NAPSA vulnerable to politically
expedient investments and not ones that necessarily provide the best returns.

Under the current setup, it is equally easy for NAPSA to be coerced into making political contributions through investment schemes that ordinarily do not benefit the ordinary people who contribute to it,” Lifuka said.

“NAPSA has in the last couple of years made some questionable investments, which raised public concerns and cast doubts about the investment policy and plans of the institution. Probably, this is now an opportune time for discussions on feasibility of the two functions of NAPSA being separated – with a separate investment arm established and managed by competent fund managers.

On the Society House project, it is necessary for information to be provided on the make-up of the preferred bidder – Zambezi Consortium - who are they and are
these formally registered with the National Council for Construction?

“A lot of public funds through NAPSA are seemingly going to be devoted to this project and the public should satisfy themselves as to the credibility of the process of public procurement and that of the preferred bidder.

Zambia has its fair share of white elephant projects which have been conceived mainly to benefit a few people or organisations and this project needs wider public buy in and any hints of impropriety will erode any remaining strands of confidence in public institutions like NAPSA and Zambia National Building Society.”