Friday, November 25, 2011

Kunda's law firm received K190m from Zamtel - Zulu

Kunda's law firm received K190m from Zamtel - Zulu
By Chibaula Silwamba
Fri 25 Nov. 2011, 13:55 CAT

GEORGE Kunda's law firm received a K190 million payment from a Zamtel account, according to justice minister Sebastian Zulu and Commission of Inquiry technical committee chairperson Dimple Ranchhod.

And Zulu revealed that LAP Green has started externalising money from Zamtel after his five-member commission of inquiry on the sale of Zamtel unearthed illegalities in the 75 per cent shares privatisation to the Libyans.

Addressing a media briefing at the Ministry of Justice in Lusaka yesterday, Zulu said Kunda, the former Republican vice-president and former minister of justice, should have declared interest instead of accusing the PF government of fault-finding in its investigations.

"If George Kunda & Company were in fact advocates for ZDA in this Zamtel transaction, he should have declared his interest; he should not have started accusing the government. If he is the partner in George Kunda & Company, naturally he shares in the profits of that K190 million transaction," Zulu said.

"I know George Kunda & Company was his company but I am not sure if he is still a partner. But since he is connected to that, he should have declared interest."

Ranchhod, a lawyer who chaired the six-member technical committee, said a lot of information was either deliberately not given to her team or was destroyed.

"What we did discover during our sittings is that there was a suspense account for legal fees that Zambia Development Agency held. Obviously when you are investigating something and an account is called a suspense account, you are definitely going to ask what it's about especially considering that legal fees had been specified; each amount paid to every law firm had been specified and was supported by a bill or invoice," Ranchhod said.

"We did query ZDA on what this suspended legal fees were. It was K190 million, so it's not a small amount. Chief accountant Mr Phiri did come back to us and said, ‘these are fees paid to George Kunda & Company'."

She said the committee demanded that ZDA provide a bill showing the legal services that George Kunda & Company had provided on the Zamtel transaction.

"Instead of coming back with the bill, he came back to us and said, ‘in fact we made a mistake, they George Kunda & Company did some different work'. We said, ‘that is fine but because it was on the Zamtel account, can you please show us a copy of invoice so that we can verify that this was different work and not work related to Zamtel'. But unfortunately to date we have not received a copy of this bill," said Ranchhod.

Ranchhod's committee included Misheck Kaoma a procurement specialist, Cosmas Mwananshiku an accountant, telecommunications specialists Dr Mupanga Mwanakatwe and Emmanuel Mbewe, and Don Zyambo a valuations specialist.

Kaoma, Zyambo, Mwananshiku and Mbewe separately told the media briefing that the Zamtel sale was irregular and illegal.

"We Zambians have lost out huge sums of money in this transaction," said Mbewe.

Meanwhile, Zulu said the Rupiah Banda-led government gave Zamtel for free to LAP Green.

He said the US$257 million, which LAP Green was to pay, was equivalent to a licence fee.

"My information is that right now, Zamtel LAP Green is busy externalising money. Let's say there is US$30 million, there could only be US$1 million in the account. They are busy doing that as a result of this report," said Zulu.

The commission of inquiry revealed that the Zambian government paid US$ 334 million about K1.7 trillion to purchase its own 25 per cent shares in Zamtel during privatisation.

LAP Green Network, which bought 75 per cent shares in Zamtel last year, has only paid US$15 million about K76 billion to the Zambian government out of the purchase price of US$257 million about K1.3 trillion while RP Capital Advisors - the advisors in the transaction - received a cash payment of about US$12.6 million about K64 billion from the transaction.

The commission of inquiry recommended the termination of agreements relating to the sale of Zamtel's 75 per cent to LAP Green Network for US$257 million.

It also recommended the immediate termination of the illegal agreement in which Zesco ceded its fibre optic network to Zamtel.

Highly-placed government source said the commission of inquiry found that Zesco signed the agreement under extreme duress.

"The findings were that a joint technical committee comprising Zamtel and Zesco staff was set up under the auspices of the Communication Authority in July on the understanding that the two parties would seek to rationalise and harmonise their optical fibre network roll-out and expansion plans, based on mutually beneficial and agreed commercial terms," the source said.

"But on the contrary, on October 28, 2009 the Zesco board was informed by its chairman that the Ministry of Finance, as a principal shareholder, was directing Zesco to cede its optical fibre network to Zamtel and to cease all commercial operations on their optical fibre networks."

The source revealed that the commission of inquiry discovered that the then Zesco managing director was under immense pressure to sign the Indefeasible Right of Use (IRU).

"In fact, some named individuals threatened the Zesco managing director with the loss of his job and accused him of dragging his feet and holding up the process," the source said.

"What was also discovered was the unfairness in the sharing of revenue under the IRU whereby 80 per cent was to go to Zamtel and the remaining 20 per cent to Zesco and that the provisions of the IRU would apply to all existing and future optical fibre networks to be rolled out by Zesco."

The source said the whole Zamtel transaction was unfair and unacceptable.

"Actually, whilst the Zesco managing director was on an official trip to Egypt, he was forced into signing the single signature page of the IRU agreement under extreme duress and thereafter faxing it back to Zambia on December 17, 2009. So you can see how this guy was abused in this transaction," the source said.

"On the other hand, the Zamtel board retrospectively approved the IRU in a board meeting held on December 24, 2009 while the Zesco board passed a retrospective board resolution at a board meeting held on January 28, 2010 authorising Zesco to sign the IRU agreement which had, in fact, already been signed by the Zesco managing director on December 17, 2009. Sadly, after that, the contract of employment for the managing director of Zesco was terminated."

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