Maravi

Valuation of Zanaco wasn't done properly - Kashita

Valuation of Zanaco wasn't done properly - Kashita
By Kabanda Chulu
Tue 31 Jan. 2012, 13:00 CAT

THE valuation of Zanaco Plc assets was not done properly because some properties owned by the bank are worth more than the K42 billion (US$ 8.25 million) paid by Rabobank, says Andrew Kashita.

Welcoming President Michael Sata's directive that the sale of Zanaco be investigated to ascertain if the transaction met the criteria of the privatisation programme, Kashita, who was a minority shareholder at the time the bank was sold, said many concerns were raised but the previous government gave no answers.

He said it was a big anomaly to offer the bank for sale in 2007 based on 2004 financial accounts.

"During campaigns for 2006 elections, late President Mwanawasa announced that government has no intention of selling the bank but in 2007, they changed their minds and sold the bank without informing Zambians, including some of us who had minority shares. They also brought the ZNOC debt of K248 billion to Zanaco," Kashita said.

"As shareholders, we demanded to see the evaluation report to understand how the value of shares was determined to arrive at this figure (US$8.25 million) which can amount to certain properties and assets owned by the bank but then finance and commerce ministers Ng'andu Magande and Kenneth Konga respectively, and their team were not cooperative and up to now this report is not available despite the bank having been listed at the stock exchange. So we are totally dissatisfied with the way Zanaco was sold."

He said that irregularities characterised the sale of Zanaco.

"It is fine for Zanaco to have new banking technology but we still feel this deal was not properly done because the criteria used to give four per cent shares to ZNFU was not transparent and it is also costly to have a chairman who lives in Netherlands but board meetings are held in Zambia," said Kashita.

"Minority shareholders were not allowed on the negotiating team and ordinarily, financial institutions in Zambia fall under the finance ministry but Zanaco was placed under the ministry of commerce and the number of directors has been reduced to six, thus lacking countrywide representation. So we hope the Commission of Inquiry will provide answers to these concerns."

And sources at Zanaco disclosed that Rabobank has sold everything including institutional houses and the training centre hostels.

"When a manager is transferred, the bank has to keep him in a hotel whilst looking for a house and when people are being trained they stay in hotels too, which is costly," said the sources.

"Even the US$3 million availed to the bank for training is applied by Rabobank officials from Netherlands who bring in foreign consultants who are not even fluent in English and they have disturbed salary structures whereby some people having similar grades are paid differently."

When asked to comment about the Commission of Inquiry looking into the sale of Zanaco, Konga said he has no comment and that the government was at liberty to launch investigations into any matter.

Former commerce permanent secretary Davidson Chilipamushi, who was board chairman when Zanaco was sold, said the commission would find out if anything was done ‘under the belt.'

"But I am confident everything was done transparently and the negotiating team did their best as records could show at ZDA," said Chilipamushi.

Zanaco was sold in April 2007 for US$ 8.25 million, with Konga assuring that the actual sale price of the bank would be known after three months at the completion of the evaluation of assets.

Konga told Parliament that in accordance with the sale and purchase agreement between government and Rabo bank, 10 per cent of the offer price was received on 22 January 2007 while the remainder was received on 3rd April 2007.

Konga disclosed that Rabo Bank's gross bid on net assets of the bank as at 31st December 2004 was at US$10 million, adding that government would within 90 days appoint an independent consultant to evaluate the net asset value of the bank.

Zanaco's net assets as at 31 December 2004 stood at US$20.5 million.

Zanaco's 49 per cent shares were sold to Rabo Financial Institutions Development, RFID, a subsidiary of Rabobank.

RFID and in accordance with the sale and purchase agreement between the Zambian government and the bank, took over the management and operations of Zanaco after the completion of the sale.

Rabo bank's acquired 49 per cent with the understanding that four per cent will be sold to the ZNFU and in 2009, the government offloaded 25. 8 per cent shares on the Lusaka Stock Exchange.

Labels: ANDREW KASHITA, PRIVATISATION, RABOBANK, ZANACO

posted by MrK @ 10:17 AM