We are not benefitting from foreign investment because of corruption
By The Post
Tue 15 Feb. 2011, 04:00 CAT
Zambia, like any other country in the world, needs foreign investment. Foreign investment is a form of financing that we cannot afford to ignore. And it comes with great benefits. But, like any other form of financing, it comes with challenges of its own. And these need to be weighed and balanced or reconciled.
But, like any other form of financing, there has to be a benefit in it for us. Like it is with debt flows and other forms of financing, we should only engage it when it’s of benefit to us. And this is the point old Aaron Milner is trying to make when he says, “Zambians must benefit from the investment that western and eastern nations are deriving from the country.”
It is not foreign investment for the sake of it. It is foreign investment for the benefit of our people. We say this because foreign investors don’t only bring their money and technology here, they also come to take something more valuable and much bigger than their investment. And they should not be allowed to take all that without consideration to the Zambian people. For every tonne of copper or other minerals they take, there must be an appropriate return to the Zambian people.
For every benefit an investor derives from the resources of our people and from simply doing business here, there must be a reasonable return to our people. If this is not so, there is nothing our people will benefit from foreign investment. In fact, we will be doing the future generations a great injustice because they will find all the valuable minerals depleted or totally finished without anything to show for it. If this generation that governs our country today is not able, for one reason or another, to engage foreign investors profitably, then there is no need to bring them here at all. We will be better off leaving the natural resources of our country unexploited so that the future generations can have something to lean on.
We have continued to give away the resources of our country for nothing. Colonial conquest and plunder left us with very little benefit from the resources of our country, if not nothing. This practice cannot continue forever if we are to survive and develop as a people. We cannot continue to allow transnational corporations to plunder our resources for no benefit to our people like they did during the colonial days. There has to be a new approach to foreign investment. Other nations are benefiting from foreign investment, they are getting better deals from transnational corporations. Why can’t we do the same? One simple explanation for this is the incompetence and corruption of our representatives. It is not a favour to us for any transnational corporation to come here and exploit our natural resources. They will only come here if there is something in it for them. We should also allow them to come here if there is something in it for us. We should reach fair deals with transnational corporations where we both benefit – it should be a win-win situation where we both benefit something. If it is only the transnational corporations that are benefiting from the investments in our country, then we cannot say these are fair deals. But, like any other negotiated deal, the competence and uprightness of the negotiators is important. We cannot say with confidence that we have been well-represented in these deals. And we don’t want to believe that the poor deals we have gotten from foreign investors are simply a result of incompetence on the part of our representatives and nothing else. We are much more inclined to believe that we have gotten these poor deals as a result of corruption on the part of our representatives. Our representatives are invariably recipients of all sorts of favours from investors.
When one looks at the corruption crimes of Frederick Chiluba and his tandem of thieves, it is clear that they were receiving kickbacks, bribes and all sorts of favours from foreign investors who they had even gone to the extent of thinking were their personal friends. And in this belief, they thought money could flow from foreign investors into their pockets without any legal or moral issues being raised. We saw in the case of Gen Wilford Funjika how that rat Rathi was bribing him, paying school fees for his children and extending all sorts of favours to him in return for the business that Zambia National Service was offering him. Clearly, Zambia National Service was poorly represented in its dealings with Rathi – the deals benefitted Rathi and Gen Funjika, and not Zambia National Service. This is the same for most of the deals our representatives are cutting on our behalf. When they go to the Chinese, they give them everything they want at very little benefit to the nation but at much greater benefit to themselves.
The Chinese investors, like other investors in our country, become their personal financiers, fundraisers for their election campaigns, suppliers of automobiles and other campaign materials for them to be reelected so that the deals continue unabated. This is where we lose out. Nations with less corrupt political leaders and other public servants benefit more from their dealings with foreign investors. As a result of this, it will be unwise for us to turn our hatred towards foreign investors.i Yes, it is foreign investors who are corrupting our representatives.
But our representatives wouldn’t be corrupted if they did not want to be corrupted, if they were incorruptible.
[Here comes the 'good fellow hypothesis'. There has to be strict oversight, monitoring and transparancy, from as many different bodies as possible - the ZRA, parliament, the press, the public, if not more. There is corruption everywhere, and hoping for uncorruptable individuals is amateur hour. I don't want to sound harsh, because I agree with most of this editorial. It is just that is no surprise that corruption remains unchecked when there are no checks. - MrK]
They are being corrupted by foreign investors because they are corrupt – foreign investors are simply cashing in on their greed, selfishness and vanity.
[And perhaps by something more sinister too - the belief that there are too many people in the world. - MrK]
Today, even the most useless, a clear conman calling himself a foreign investor with a few thousands of dollars in his pocket will meet the President, the ministers of finance, commerce and industry, mines and so on and so forth without much ado. They are falling over each other to befriend foreign investors so that they can help them in their businesses, their farms and other ventures. That’s how our representatives are making money by selling the resources of our country to foreign investors for nothing, for peanuts, for a song.
This is the case with the mining companies. There is no need for us to turn our anger on Mopani over its tax issues. Mopani may not be straight in its dealings with us but this company is allowed and helped by our representatives to behave in this way. When it comes to their dealings with foreign investors, our representatives stop thinking, they are blinded by their corruption and as such cannot pay attention to detail. Mopani may not be involved in tax evasion.
[It certainly is. Selling copper to itself at basically breakeven price and then selling it on the international market at market price is a clear case of fraud. It is tax evasion, not tax avoidance. Also, when it looks like Mopani has made no profits, it is also under no obligation to pay dividends to it's shareholders. Again, a clear case of fraud on a massive scale. Remember that it is not only the Zambian government that holds Mopani shares through ZCCM-IH, but ZCCM-IH is also floated on international stock exchanges - shareholders there are being defrauded too. And underdeclaring profits to avoid dividend payouts may be in violation of exchange rules. - MrK]
Theirs may end up being a case of tax avoidance. Tax evasion is illegal but tax avoidance is legal. Tax avoidance is simply a process of arranging one’s tax affairs in such a way that he can, within the law, reduce the amount of tax payable.
[No bloody way. Underdeclaring a company's profits is fraud, not 'tax avoidance'. Tax avoidance is setting up a corporation in the Cayman Islands, for instance. - MrK]
It differs from evasion which is knowingly breaking the law to reduce a tax liability by the deliberate concealing of income or the false claiming of allowances and so on and so forth. We don’t know what the investigations will tell us about Mopani on this score. Every person is entitled, if he can, to arrange his affairs so that the tax attaching is less than it otherwise would be. If he succeeds in ordering them so as to secure that result, then however unappreciative we may be of his ingenuity, he cannot be compelled to pay an increased tax. No one in this country is under the smallest obligation, moral or other, to arrange his legal relation to his business in such a manner as to enable the Zambia Revenue Authority to put the largest possible shovel into his stores. Of course, this is not to say such ingenuity should be regarded as a commendable exercise or as a discharge of the duties of a good person.
Those in authority have a duty to seal the loopholes in what is found to be unacceptable tax avoidance. It’s clear to us that the case of Mopani, if it is not one of tax evasion, is certainly one of unacceptable tax avoidance. There is no way transactions between Mopani and Glencore AG can be said to be independent or at arm’s length. These are transactions between associated entities. Glencore is not an independent trader buying copper cheaply from Mopani and selling it at a higher price elsewhere. Where either the buyer or the seller is controlled by the other party to the contract, or both are controlled by a third person, a sale at a price other than market price should result in adjustment by the Zambia Revenue Authority of that price to the open market price and taxed accordingly. Our tax laws have to be very clear on this score. If they are not clear, companies like Mopani will get away with it because where there is doubt as to the meaning of a statutory provision, the taxpayer must be given the benefit of the doubt. There is no equity in taxation.
Until we remove corruption from government business, things like these will continue to be the order of the day. And no amount of foreign investment will benefit our country and remove the anguish of poverty from the faces of our people.
Labels: ANUJ KUMAR RATHI, BRIBERY, FDI, NEOLIBERALISM, TAX EVASION, WILFORD FUNJIKA, ZNS
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Task Force arrests Funjika’s fugitive co-accused
Written by Kabanda Chulu
Friday, December 26, 2008 11:40:00 AM
THE Task Force on Corruption has arrested and detained Anuj Kumar Rathi who was a co-accused in the case involving the convicted former Zambia National Service commander General Wilfred Funjika.
Rathi was indicted and appeared in court for corrupt practices jointly with Gen Funjika in June 2004 and during the same time, Rathi was granted bail to seek medical attention but the co-accused (Rathi) fled the country and has been on the run until December 22, 2008, when he was arrested in Lusaka.
Confirming the arrest and detention of Rathi at Woodlands Police station yesterday, Task Force on Corruption public relations officer Victor Makai said officers have been tracking Rathi during the past four years.
However, Makai refused to explain exactly when Rathi came back into the country or which country, Rathi had fled to.
“We confronted and apprehended him at Pamodzi Hotel in Lusaka on 22nd December 2008 and he went into a state of shock and was rushed to Coptic Orthodox Hospital where he received medical attention,” Makai said. “Upon discharge from hospital, Rathi was detained at Woodlands Police Station and yesterday, he underwent formal arrest procedures but it is immaterial for now to state how he came back or which country he fled to.”
The arrest of Rathi, whose co-accused Gen Funjika has been jailed, comes barely a month after another fugitive Xavier Chungu came back into the country and was formally arrested and he is currently being detained in prison facing several charges.
Rathi is represented by Chifumu Banda and would appear in court as soon as possible on contempt charges first and later on the original charges of corruption.
Initially, Rathi and Gen Fungika were arrested in March 2004 and the pair was charged with corrupt practices.
It was alleged that between December 3 and 5, 2001, Gen Funjika received 15,000 pounds as gratification for awarding Seymon Holdings, a company owned by Rathi, a contract worth 72,000 pounds, to supply berets, jerseys and raincoats to the Zambia National Service, without following tender procedures.
Labels: ANUJ KUMAR RATHI, TASK FORCE, WILFORD FUNJIKA
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Task Force arrests Funjika’s fugitive co-accused
Written by Kabanda Chulu
Thursday, December 25, 2008 10:23:46 AM
THE Task Force on Corruption has arrested and detained Anuj Kumar Rathi who was a co-accused in the case involving the convicted former Zambia National Service commander General Wilfred Funjika.
Rathi was indicted and appeared in court for corrupt practices jointly with Gen Funjika in June 2004 and during the same time, Rathi was granted bail to seek medical attention but the co-accused (Rathi) fled the country and has been on the run until December 22, 2008, when he was arrested in Lusaka.
Confirming the arrest and detention of Rathi at Woodlands Police station yesterday, Task Force on Corruption public relations officer Victor Makai said officers have been tracking Rathi during the past four years.
However, Makai refused to explain exactly when Rathi came back into the country or which country, Rathi had fled to.
“We confronted and apprehended him at Pamodzi Hotel in Lusaka on 22nd December 2008 and he went into a state of shock and was rushed to Coptic Orthodox Hospital where he received medical attention,” Makai said. “Upon discharge from hospital, Rathi was detained at Woodlands Police Station and yesterday, he underwent formal arrest procedures but it is immaterial for now to state how he came back or which country he fled to.”
The arrest of Rathi, whose co-accused Gen Funjika has been jailed, comes barely a month after another fugitive Xavier Chungu came back into the country and was formally arrested and he is currently being detained in prison facing several charges.
Rathi is represented by Chifumu Banda and would appear in court as soon as possible on contempt charges first and later on the original charges of corruption.
Initially, Rathi and Gen Fungika were arrested in March 2004 and the pair was charged with corrupt practices.
It was alleged that between December 3 and 5, 2001, Gen Funjika received 15,000 pounds as gratification for awarding Seymon Holdings, a company owned by Rathi, a contract worth 72,000 pounds, to supply berets, jerseys and raincoats to the Zambia National Service, without following tender procedures.
Labels: ANUJ KUMAR RATHI, CORRUPTION, TASK FORCE, WILFORD FUNJIKA, ZNS
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Funjika's case confirms Chiluba's corruption - kk
By Brighton Phiri, Laura Mushaukwa and Noel Sichalwe
Friday March 14, 2008 [03:00]
DR Kenneth Kaunda yesterday said former Zambia National Service (ZNS) commander Lieutenant General Wilford Funjika’s jail sentence confirmed former president Frederick Chiluba’s corrupt mind. Commenting on the decision by the High Court to sentence Lt Gen Funjika to nine months imprisonment, Dr Kaunda said he felt sorry for the former service chiefs who were currently being prosecuted for having been polluted with Chiluba’s corrupt mind.
“Young man, Funjika’s imprisonment is a very sad development. I hope and pray that Chiluba’s corruption disease does not spread and that those polluted are isolated. This is not the Funjika I knew when I was president of this country. He was a young, developing and promising officer,” Dr Kaunda said.
“This is a Chiluba development. Funjika was completely destroyed by Chiluba’s regime. I hope and pray that those officers currently serving in President Mwanawasa’s administration will use this case to see that President Mwanawasa is not like Chiluba.”
Dr Kaunda reminded public officers that President Mwanawasa was following the path that was there under the UNIP administration. He urged public officers to help President Mwanawasa develop a different and honest path of running the country’s affairs.
And Task Force chairman Maxwell Nkole has said the decision by the High Court to sentence Lt Gen Funjika to nine months imprisonment was a great morale booster in the fight against corruption. Nkole said for the first time, there was a signal from the criminal justice system that corruption was here to stay and needed to be fought.
“We feel that our efforts are not in vain. It motivates us to do more,” he said.
Nkole said although Lt Gen Funjika’s sentence had been upgraded to nine months, he expected a much longer sentence considering the gravity of corruption.
Transparency International Zambia (TIZ) president Reuben Lifuka noted that the state of health should not be used as an excuse for handing light sentences on people convicted of corruption.
"While we appreciate and are compassionate about the state of health of Gen Funjika, we are also mindful that this should not be an excuse for letting off lightly those who have been found guilty of corruption," Lifuka said. "The judiciary plays a pivotal role in the fight against corruption and for a while now, we have been concerned at the type and nature of punishment given to offenders.
The sentences clearly have been mild and a light slap on the wrist in most cases and it can be concluded that these sentences are ineffective especially if the intention of the government is to use the investigation and prosecution of high profile cases as a deterrent to those who may be inclined to engage in such activities."
Lifuka said TIZ had been advocating for a high level of activism by the judiciary to send a strong message that corruption, especially grand and political corruption, would not be tolerated.
Lifuka, however, said some of the judgments passed had not been commensurate with the alleged offences and had raised concern in the anti-corruption movement on the efficacy of the fight against corruption.
"We generally consider the revision of the suspended sentence a fair judgment. However, we strongly feel it should not have come to this if the lower court had done its work properly," he said. "The judiciary needs to be bold and courageous in dealing with issues of corruption. In their judgments, the judiciary should be aware of the seriousness of corruption.
We therefore appreciate that judge Musonda has aptly highlighted the severe consequences grand corruption has on the social, economic and political developments of the country. However, we hasten to add that even the other four types of corruption mentioned by judge Musonda are serious and should not be considered as acceptable and those engaged in such acts should equally face the wrath of the law.
"The clarity and boldness exhibited in this case should remain the hallmark of the Zambian judiciary. We have been disappointed before, especially on cases of political or electoral corruption and it is our considered view that the judiciary have, in some instances, not risen to the occasion and what we have previously seen are judgments which acknowledge the seriousness of corruption but fail to categorically mete out appropriate sanctions."
He said the judgment should send a clear message to other controlling officers like permanent secretaries, commanders of the armed forces, Inspector General of Police that their actions would continue to come under close scrutiny.
"For too long, the Zambian people have sat on the fence and we have inadvertently praised and adored those among us who are corrupt. As a people, we have failed to sufficiently denounce corruption no matter the size of the act," he said. "In 2008, we want to urge each and every Zambian to play an active role in their own environment to eradicate corruption.
While we all appreciate and demand that President Mwanawasa and his cabinet should provide leadership in this fight, it is incumbent that we are all fully engaged and contribute to cleaning up government and society as a whole."
Labels: CHILUBA, CORRUPTION, KENNETH KAUNDA, WILFORD FUNJIKA, ZNS
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Funjika goes to jail
By Laura Mushaukwa
Tuesday March 11, 2008 [03:00]
LUSAKA High Court judge Phillip Musonda yesterday sentenced former Zambia National Service (ZNS) commander Lieutenant General Wilford Funjika to nine months imprisonment, quashing the two-year suspended sentence slapped on him by the magistrates’ court. And judge Musonda said sickness as a mitigatory factor had been diminished by legislative incursion in sexual offences.
This is in a matter in which the two-year concurrent suspended sentence that Ndola High Court Deputy Registrar Jones Chinyama, sitting as a magistrate in Lusaka, imposed on Lt Gen Funjika on December 31, 2007 was being reviewed by judge Musonda pursuant to the provisions of section 337 of the Criminal Procedure Code Cap 88 of the laws of Zambia.
Under this section, the High Court may call for and examine the record of any criminal proceedings before any subordinate court for the purpose of satisfying itself to the correctness, legality or propriety of any sentence or order made.
Chinyama suspended Lt Gen Funjika’s sentence on the basis that his health was failing as he was just recovering from a stroke he suffered earlier.
In the magistrates court Lt Gen Funjika was convicted for two counts of corrupt practices by public officer contrary to section 29 (1) and abuse of authority of office contrary to section 37 (2) (a) as read with section 41 of the Anti Corruption Commission Act number 42 of 1996.
Particulars of the offence were that between December 3 and 5, 2001, when he served as ZNS commander, an amount of 15,000 British Pounds was paid to his children, Mumbelunga and Viera, by Seymon Holdings as an inducement or reward after he offered them a contract.
On the second count, Lt Gen Funjika was alleged to have between October 22 and November 1, 2001 abused his authority of office by awarding a contract to Seymon Holdings Limited for the supply of single breasted nylon raincoats valued at 12,000 British Pounds without following tender procedures in order to gain property or advantage.
Magistrate Chinyama convicted Lt Gen Funjika, suspending his sentence for two years and ordered him to pay back 15,000 British Pounds to the state, which he did.
In the matter before judge Musonda, prosecutions lawyer Mutembo Nchito in his submissions thanked the court for taking interest in a matter of public interest highlighting the gravity of corruption and the complexity of sentencing.
But in his submissions, Lt Gen Funjika’s lawyer Remmy Mainza appealed to the court not to quash the sentence of the lower court as it was proper.
After listening to the pleadings, judge Musonda in his ruling explained that under section 338 of the Criminal Procedure Code, the court had the powers to vary or reverse the decision of the subordinate court if it was of the view that a different sentence should have been passed.
Judge Musonda broke down corruption into five types, citing the corruption that Lt Gen Funjika was charged with as the most serious of them all. Judge Musonda said such kind of corruption invited a custodial sentence as it was done by greedy public officials who were well paid and society did not get value for its money.
He said he should not be misunderstood when he said the learned principal resident magistrate was not well meaning. Judge Musonda added that sentencing was a complex subject and there was need for the court to fashion sentencing principles for the lower courts.
He said corruption had devastating effects on the development of societies and economies as it diverted resources from productive sectors to areas of wasteful consumption. Judge Musonda noted that grand corruption incapacitated government from providing society’s basic social needs like health care, which may result in the poor dying. He said it was this view on corruption that had to be taken into account when sentencing.
On the medical condition of a convict being a factor in sentencing, judge Musonda said no medical report was tendered in evidence, adding that the extent to which the health of an individual might be mitigatory was a troubling question.
He observed as notorious a fact that the majority of people who committed heinous sexual offences were afflicted by HIV/AIDS but the legislature imposed a sentence of 15 years on them. Judge Musonda wondered if the court should impose a sentence less than 15 years just because the convicts pleaded to being infected with a terminal disease even when society was so indignant about such offences.
He pointed out that sickness as a mitigatory factor had been diminished by legislative incursion in sexual offences.
“Why and when should it diminish the seriousness of otherwise a serious offence? My view is that little weight should be attached,” judge Musonda said.
He said although Lt Gen Funjika had shown extreme remorse and diligently served Zambia at one time, grand corruption was a serious offence. Judge Musonda lamented that it was not pleasant that the other co-adventurer escaped punishment and urged the government to ban such companies (in this case Seymon Holdings) by having them blacklisted in their own countries.
He set aside the suspended sentence slapped on Lt Gen Funjika by the magistrates court ordering him to appear before University Teaching Hospital (UTH) medical experts for examination before serving his sentence.
“I set aside the suspended sentence and impose what criminologists call a sharp short sentence which is reformative and a deterrent to other controlling officers and public officers, especially those who procure goods and services for government. The courts will not condone such conduct,” ruled judge Musonda.
“The convict shall serve nine months with hard labour with effect from March 10, 2008. It is ordered that a medical examination by UTH medical experts be conducted before he can formally start serving the sentence.”
And commenting on the ruling, Lt Gen Funjika wondered why the matter had been brought up as no one appealed, saying he had complied with the conditions he was given by the magistrates court.
Labels: WILFORD FUNJIKA
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