MoF was involved in privatisation of Zanaco - Lungu

MoF was involved in privatisation of Zanaco - Lungu
By Ernest Chanda
Sun 05 Feb. 2012, 13:01 CAT

MUHABI Lungu says the Ministry of Finance was fully involved in the privatisation of Zanaco's 49 per cent shareholding although he is not sure of the minister's knowledge regarding proceeds from the transaction.

In an interview, Lungu who is former Zambia Development Agency ) director of Investment Promotions and Privatisation said whenever a state entity was being privatised, the line ministry was fully aware of the whole process.

Former finance minister Ng'andu Magande on Friday told the Sebastian Zulu-led Commission of Inquiry into the sale of Zanaco's 49 percent shares that the ministry did not play a role in the privatisation of the bank.

But Lungu said according to the ZDA Act, the relevant ministry was constantly informed about the whole development.

"According to the ZDA Act, the proceeds of all sales from the transaction of a privatised company go into a Privatisation Trust Fund which is held by ZDA. I don't know whether the minister is aware but the Ministry is aware that this money has gone into the Privatisation Trust Account. According to the ZDA Act, the money is only remitted to the government upon request by the government," Lungu explained.

"I don't want to appear to be answering what Mr Magande has said. So I don't want to respond to Mr Magande, I'm going to respond to the process. All state owned companies are held in Trust by the government, by the Ministry of Finance. They've got a department there called IDM, Investment and Debt Management. So, all the companies are held in Trust by the Ministry of Finance for government."

Lungu said any privatisation process started with the line ministry which gave policy direction.

He said for Zanaco, it was under the jurisdiction of two relevant ministries.

"That is the Ministry of Finance and the Ministry of Commerce. And I can only assume that the policy direction was given by those two ministries in terms of whether to privatise or not. Once a directive has been given that privatisation must now commence, then the relevant organisation then becomes Zambia Development Agency," said Lungu.

"The chances are that the US $8 million is in an escrow Account with ZDA because that is a ZDA loan. The money is only remitted to government upon request by the government. And the reason is very simple: when transactions have been finished and then workers perhaps had been declared redundant take their government to court and the court awards them compensation, what you don't want to do is give the money to the ministry because they sue ZDA, they don't sue government. So they will be paid from this account."

Appearing before the Zanaco Commission of Inquiry on Friday, Magande expressed ignorance about the whereabouts of the US$8.25 million paid by Rabo Bank of the Netherlands for the 49 per cent Zanaco shares.

Magande could not give categorical answers to some questions that were asked during his submissions to the Commission.

"I signed the sale and purchase agreement, shareholder agreement and management services agreement and I used to sign many other agreements giving away government assets bearing in mind that the documents were prepared by technical people at ZPA and that the Attorney General has endorsed them," said Magande.

"The finance ministry had a role in privatising Zanaco and it was convinced that ZPA negotiators would come up with a good price. So, I never got into details on how they arrived at US$8.25 million."