Maravi

Rabobank fears for its reputation over Zanaco deal

Rabobank fears for its reputation over Zanaco deal
By Chiwoyu Sinyangwe
Tue 07 Feb. 2012, 13:01 CAT

RABOBANK fears damage to its reputation by the ongoing probe into how it acquired 46 per cent stake in Zanaco, says Netherlands-based corporate affairs director Arnold Kuijpers.

And Kuijpers says Rabobank paid the US $8.25 million it bought Zanaco for, contrary to some witnesses who testified that there is no documentary evidence the Treasury received the proceeds of selling the 2010 euromoney best bank in Zambia.

Meanwhile, chairman of the commission of inquiry Sebastian Zulu yesterday quizzed witnesses on the lack of adequate representation of Zambians on the board of the "truly Zambian bank".

Kuijpers, the first Zanaco board chairman in the post-privatisation era, said the Dutch financial giant wanted to maintain its high reputation levels in each country it had operations in.

"One of the very important issues for Rabobank that do we really engage in this part of the world or any other part, avoiding reputation damage is crucial," Kuijpers said. "We need not to be seen in the Netherlands, United States, in Europe or any other country as a bank that would be involved in practice that would not be fully legal. That creates a huge damage to us."

Kuijpers said Bank of Zambia had provided a waiver for Rabobank to own more than the maximum 25 per cent maximum shareholding restriction for any investor in a commercial bank operating in Zambia.

He presented a letter from BoZ confirming the waiver. And Kuijpers gave a breakdown of how Zanaco paid the sale and purchase price of US$8.25 million in 2007, with the bulk of money deposited into Zambia Privatisation Agency (ZPA) account.

"At the completion date, one of the documents, which is the share purchase agreement has been signed in January of 2007," said Kuijpers.

"At that moment in time, Rabobank was asked to deposit 10 per cent of the consideration equal to US $825,000. It was agreed between the consultant of the government PwC PricewaterhouseCoppers of Kenya and the government that the fee for PwC would be paid at the day completion, but they sued Rabobank instead of government. So, the money being paid at Rabobank at completion was US $8.25 million minus the 10 per cent deposited in January and minus US $665,000 that was paid to PwC for consultancy offered to government and for the remaining amount that was paid by Rabobank was US $6.76 million which was paid into the GRZ privatisation revenue account held at Zanaco, held with account number 003041000000008747 and it was done via an international swift transfer."

And Zulu, who is also justice minister, said a number of witnesses had complained of lack of representation of Zambians on the Zanaco board in the post-privatisation era.

Zanaco is currently owned 46 per cent by Rabobank which is also responsible for appointing three board of directors which includes both the chairman and chief executive officer.

The government owns 25 per cent and nominates two executive directors to the board, while Zambia National Farmers Union which owns three per cent stake in the Bank has one independent board of directors.

The more than three thousand Zambian individuals and institution investors who won the 26 per cent listed stake in the bank have no representation on the board.

This structural setup has rattled some nationalists and ordinary citizens, and Zulu quizzed both Kuijpers and Zanaco managing director Martyn Schouten.

But Schouten explained at the time of privatisation, Rabobank bought the bank together with management rights. Schouten said there was nothing irregular or illegal in the manner Rabobank acquired majority stake of Zanaco.

"Rabobank controls 46 per cent shareholding in Zanaco and its single largest shareholder in Zanaco," said Schouten. "Therefore, it is just logical that the single largest investor who is also a strategic investor should have an important responsibility in the management of affairs of the business."

On the continued absence of shareholder on the board to represent the minority shareholders comprising Zambian individuals and institutions holding their stake in the bank via listed entity on Lusaka Stock Exchange (LuSE), Schouten said: "The board of directors and management are aware of this as it has been an Annual General Meeting (AGM) item in the past and we are currently looking at finding a possible solution which shall be taken to the AGM for discussion."

And former commerce permanent secretary Dr Davidson Chilipamushi said price was not the sole consideration when the government sold Zanaco to Rabobank.

Chilipamushi, who was the last chairman of Zanaco before the contentious privatisation process opposed by key stakeholders like opposition political parties, unions and the church, said there was nothing illegal and irregular about the Zanaco sale.

Labels: PRIVATISATION, RABOBANK, ZANACO

posted by MrK @ 3:48 PM