Zambia, ABSA US$100m scam– who is involved?
- Monday, July 6, 2009, 15:43
- Special Reports
- 45 comments
Jean-Pierre Bemba
On 15th August 2003, a motion to impeach President Levy Patrick Mwanawasa SC was moved in the National Assembly by UPND Chief Whip, Crispin Sibeta.
Sibeta laid impeachment charges that accused Mwanawasa of corruption, nepotism and breaches of the Constitution.
Rooted in the twelve allegations and twenty five counts, was one corrupt allegation that President Mwanawasa received kickbacks from an oil firm and importer of crude oil, Trans Saharan Trading (TST).
MMD Vice- President and Kapompo West Member of Parliament Enoch Kavindele laid 32 documents on the table in Parliament supporting an Opposition impeachment motion against his former boss and MMD President, Levy Patrick Mwanawasa. Many thought Kavindele was suffering from a poor taste of sour grapes. He was fired three months before this motion as Republican Vice-President by Mwanawasa.
Mwanawasa accused Kavindele of practising corruption.
Among the documents Kavindele laid on the table were two books written by Simon Zukas and Andrew Sardanis entitled ‘’Into Exile and Back’’ and ‘’Africa- Another Side of the Coin’’.
Kavindele stated that the 32 documents he had laid on the table of Parliament were to show that Mwanawasa was inherently corrupt and that some of his nefarious activities could be traced to his time when he was practising as a lawyer, his tenure as Republican Vice-President under President Frederick Chiluba and his presidency since 2002.
He recounted how Mwanawasa had tasked a team comprising himself, and Finance Minister Emmanuel Kasonde to raise party funds for the MMD.
Kavindele stated that they duo raised money from many sources including Trans-Saharan Trading (TST) who gave the MMD USD100, 000.00.
Kavindele said that of this amount, USD60, 000.00 was given to Mwanawasa in person through Emmanuel Kasonde. Other amounts were given to MMD National Secretary, Newstead Zimba and to State House Principal Private Secretary; Jack Kalala who was given K20million.
Kavindele also accused Mwanawasa and his wife Maureen of being involved in the importation of 30,000 metric tonne maize worth USD7, 350,000.00 through their ‘friend’. He stated that the going rate for maize was USD125.00 per tonne but Mwanawasa had instructed that the importer be paid USD245.00 per tonne which had resulted in an over payment of K17 Billion. (Daily Parliamentary Debates for the Second Session of the Ninth Assembly dated Friday August 15th 2003).
He stated that this importation of this K37 billion maize was done by Minister of Agriculture Mundia Sikatana despite the protestation by Finance Minister Emmanuel Kasonde, who stated that Zambia had a bumper crop and the maize importation was too expensive for millers.
This contract was given to Maureen Mwanawasa’s relation Eddie Chibweshya through his South African company called Space Ages International without Sikatana allowing any tender procedures citing ‘directives from State House’.
Kavindele also accused Mwanawasa of showing his corrupt tendencies as early in 1992 where he procured University of Zambia land without payments and had since built his house there.
Mbita Chitala defended Mwanawasa strongly calling the impeachment charges as fictitious. He accused Kavindele of benefitting from oil and Maize transactions.
He further accused Kavindele of giving illegal authority to LAMISE Investments to import 4500 metric tonnes Maize. He charged that the law would visit Kavindele for his ‘corrupt dealings’ emanating from his time whilst he held the position of Republican Vice- President.
Chitala also defended the allegations that Maureen had received K700 Million government funds and used it on her private initiative in the Maureen Mwanawasa Community Initiative (MMCI) stating that the ‘’ the work of the First Lady is outstanding. Her institution was assisting vulnerable people.’’
He continued that: ‘’In the first four provinces she has so far visited, namely Southern, Western, Northern and North-Western provinces, people appreciate her work.’’ He cited Choma District as a shining example of her work where she had created 166 environmental conservation women’s clubs.’’
Chitala was however silent on why K700 million government funds were used for these private activities.
Chitala also defended Mwanawasa for not paying Zambia National Service (ZNS) K160 million the outstanding bill of grading the road to his Teka Farm joking that ‘’the President never commanded ZNS to grade any road to his farm or do any work or project on his farm whatsoever.’’
Chitala said all the twelve allegation and their 25 counts were mere fantasy and were premised on ‘falsehood’.
A motion to impeach Mwanawasa on charges of corruption, nepotism and violating the Constitution was defeated by a vote of 92-57.
Bob Sichinga, Edith Nawakwi, and other opposition members of parliament supported the motion. Eric Silwamba, Derrick Mbita Chitala and Dipak Patel viciously opposed the motion.
Who could have believed at this early stage that Mwanawasa was corrupt and nepotistic? Who could have believed that Mwanawasa’s wife, Maureen was involved in maize importations? Who could have believed the charges against Mwanawasa or his administration especially that he had made the fight against corruption as his hall mark policy?
Many characterised the impeachment motion, though serious, as attempts by Mwanawasa’s enemies to stop him from the noble cause he had embarked on of fighting corruption!
TRANS SAHARAN TRADING (TST), THEY CAME, THEY STOLE, THEY LEFT!
Trans Saharan Trading obtained offices in Nangwenya Road, Lusaka in August 2001 and cited in their documents their lawyers as MNB partners (Mutembo Nchito, Nchima Nchito, Dr. Patrick Matibini and Elijah Banda).
Although ZNOC where the sole importer of crude oil in Zambia, TST anticipated that they would take ZNOC’s place.
When Mwanawasa assumed office he quickly dissolved the Zambia National Oil Company (ZNOC) accusing it of insolvency and stating that it could not meet its huge liabilities. ZNOC was a parastatal, designated with the sole duty of importing crude oil to Zambia
On 8th April 2002, Minister of Finance Emmanuel Kasonde announced that:
‘’By a special resolution of the shareholders’ (Minister of Finance) meeting, the Zambia National Oil Company (ZNOC) has been wound up and dissolved. This action arises because of an urgent need to rationalise and streamline the supply of crude oil to Zambia to maintain a permanent and sustainable supply of petroleum products to Zambia.’’
Earlier Minister of Energy Kaunda Lembalemba had informed the nation that INDENI and TotalFinaElf would take over the role of ZNOC. He announced that an interim tender had been awarded to the two firms to import 180,000 metric tonnes of crude oil. TOTAL held 50% shareholding in INDENI.
He however emphasised that this contract was a short term measure in the wake of the ‘’collapse of ZNOC’’.
Treasury documents showed that ZNOC owed ZANACO USD45million and USD20MILLION to Standard Chartered Bank. The total debt burden of ZNOC was estimated to be in excess of USD100 million.
Fred Mmembe and Edith Nawakwi had accused President Frederick Chiluba and his Assistant for Economic Affairs Donald Chanda of benefitting from transactions at ZNOC. Donald Chanda was Board Chairman for Indeni, TAZAMA and ZNOC.
Chiluba defended this position comparing it to the USA where fuel as a strategic commodity, is under the Presidency’s office.
Zambia being a landlocked country will continue to have perennial fuel problems and therefore the building of strategic reserves, the monitoring of its prices and the efficient importation of crude oil (feedstock) for its refinery at INDENI is vital. The processing of this crude oil and the build up of its processed reserves remain a key driver to a stable economy.
Zambia requires about 600,000 tonnes of oil per year with the bulk used as heavy fuels in the mining sector.
Some people had encouraged Mwanawasa to dismantle ZNOC describing it as ‘‘Chiluba’s corrupt infrastructure’’.
ZNOC was duly dissolved.
TST CLINCHES THE DEAL – AUGUST 2002
In August 2002, in murky circumstances, the Zambian government awarded Trans Saharan Trading (TST) to be the sole supplier of crude oil to Zambia canceling the contract earlier given to regional suppliers TotalFinaElf in March 2002.
AMALGAMATED Bank of Southern Africa (ABSA) gave a finance facility of USD100million to TST. This facility was given following the financial guarantees given by the Republic of Zambia through Bank of Zambia.
ABSA was invited in 2001 to provide the finance facility for ZNOC’s oil procurement following their failure to secure a long term facility with local banks. ZNOC had an haphazard and ad-hoc arrangement with ZANACO.
However ABSA were ‘advised’ to abandon the negotiations with ZNOC as it was ‘a likely sinking ship.’
Following the dissolution of ZNOC in March 2002 ABSA were shepherded to TST!
ABSA signed the USD100 million finance facility following assurances from the new government that TST would be the sole supplier of crude oil importation to Zambia. To this effect Government issued the necessary guarantees and securities.
The deal with TST included the acquisition of feedstock from the suppliers, operations, and payments to TAZAMA for pumping and for storage.
In effect the government guarantees gave TST the sole mandate to procure, import, refine, market and sell the feedstock
In August 2002, TST proceeded to import its first Cargo worth USD20million promising Zambians of cheap pump prices.
Soon after its first importation, TST made a ‘donation’ of USD100, 000.00 to the MMD. Vice- president Enoch Kavindele received the money and gave Minister of Finance, Emmanuel Kasonde USD60, 000.00 for onward transmission to Mwanawasa.
Mwanawasa received the USD60, 000.00. Later Principal Private Secretary Jack Kalala also received a K20million. The balance was given to the MMD National Secretary Newstead Zimba.
TST DEAL ABRUPTLY CANCELLED-APRIL 2003
On 15th April 2003, Mwanawasa announced that he had used his presidential decree and powers to prematurely terminate the supply contract Zambia had with TST.
He also banned minsters and their relatives from doing business with government. ‘’If you (government ministers) business is more important for you, it is better for you to resign as you cannot have it both ways.’’
There were allegations that his Vice- President, Enoch Kavindele was involved in the setting up of TST and VODACOM in Zambia. Kavindele denied such links stating that his son Enoch Kavindele Junior was the one connected to the deals!
After this public attack, Kavindele issued a statement condemning his boss and accusing him of practicing dictatorial tendencies by establishing the Constitution Review Commission (CRC) without consulting his colleagues in Cabinet.
It was inevitable. The bad blood and public utterances were symbolic of a serious rift between the President and his Vice.
On May 28th 2003, Mwanawasa addressed the nation making dramatic announcement that he had fired his Vice-President Enoch Kavindele and his Minister of Finance Emmanuel Kasonde.
He ;later replaced them with Nevers Mumba (Vice- President) and Ngandu Peter Magande (Minister of Finance and National Planning).
In his letter of dismissal to Kavindele, Mwanawasa accused him of ‘’failing to share the vision of high integrity.’’
He accused Kavindele of receiving a donation of USD100, 000.00 from Trans Saharan Trading (TST) on behalf of the MMD and only declared USD60, 000.00.
He stated that when he confronted Kavindele about the irregularity in money received from TST, he said Kavindele told him that he intended to use the balance to ‘’repair MMD vehicles procured in 2001 which were now in deplorable condition!’’
He also accused Kavindele of authorising TST to import to Zambia two shiploads of 90,000 metric tonne of crude oil without his (Mwanawasa’s) authority.
He further accused Kavindele of conniving with Finance Minister Emmanuel Kasonde to give Sable Transport a maize contract without following tender procedures and using this transaction for their personal pecuniary benefits.
He also demanded that Kavindele pays the debt of K206 million he owed the Zambia National Service (ZNS) for construction of a dam and rehabilitation works done at his farm.
Kavindele responded by declaring himself Party President. He stated that Mwanawasa was ‘forgetful’ hence his denial of knowledge about the specific circumstances surrounding the USD100, 000.00 donation from TST.
On his address to party cadres that marched to State House on June 1, 2003, Mwanawasa justified the dismissal of his Vice President, and Minister of Finance.
He said that ‘’you can accuse me of all sorts of things and call me all sorts of names but I am not worried because my only worry is the welfare of the people.’’ He continued: ‘’I don’t care if the decisions I have made make me unpopular, I want to leave a legacy that Zambia had a President who did not tolerate indiscipline. I can now see a corrupt free Zambia which these good-for-nothing individuals failed to do in the ten years!’’
He lamented that; ‘’that I sometimes feel isolated when I am being attacked. But I know that the silent majority are with me. I will not be pushed into resignation like last time. I resigned because I was frustrated and I was not the final decision maker.’’
This speech symbolises Mwanawasa’s puzzling double faced personality. The sincerity of his words and the naivety of his demeanour portrayed a ‘truthful’ picture and his explanations appeared sound. However this public image contrasted drastically with his actual and private activities.
Mwanawasa spoke with a stutter and was more believable than the ‘fast talking’ political opponents and ‘crooks’ he usually accused of corruption.
Mwanawasa appeared more credible and vulnerable than those keen to expose his corrupt nature. Few questioned his long standing relationships with shady dealers and characters going back to his lists of drug dealers and peddlers that formed his clientele at his law firm.
For example, in this instance he had received a bribe of USD60, 000 from TST. Mwanawasa knew who TST were and what they represented yet he chose not decline this ‘donation’ to the party!
His anger was that Kavindele had declared only USD60, 000.00 instead of USD100, 000.00! The principle of the MMD receiving this bribe characterised as a ‘donation’, from a firm with a suspicious government oil deal was never a subject of condemnation as shown by Mwanawasa’s own letter!
At the same time, his wife Maureen Mwanawasa was involved in the importation of 30,000 metric tonne of Maize without any tender process, through Eddie Chibweshya and his Space Ages International worth over USD7 million.
Yet he chose to fire his Minister of Finance, Emmanuel Kasonde for giving Sable Transport the importation of 4500 metric tonnes of maize without tender process!
Mwanawasa owed the Zambia National Service (ZNS) K160 million yet he directed that Kavindele promptly settles his K206 million debt with it!
The selective nature of using corruption allegations against his political enemies increasingly become apparent.
Many could not reconcile the image of Mwanawasa who received wide support for ‘his fight against corruption’ from donors, civil society and many Zambians and the other image of a Mwanawasa who was increasingly entangled in his corruption web and, that of his wife and his officials.
He directed ACC to investigate Kavindele and TST. Nothing came out of these investigations
TST- WHO IS TST?
Diamond Works was a Canadian company based in Vancouver. It was listed on the Canadian Stock Exchange. It owned Trans Sahara Trading (TST).
The Canadian listing was designed to give it credibility.
The company is owned by Tony Buckingham and his partner Antonio Teixeira. Diamond Works was financed by U.K’s Lyndhurst ltd, a company controlled by a consortium led by Teixeira.
Buckingham also owns Heritage Oil and Gas involved in Kazakhstan, Russia, Gabon, Congo and Uganda.
The duo, Buckingham and Teixeira operate a complicated maze of offshore subsidiaries and joint ventures such as TST.
Antony Teixeira is a pivotal businessman in Diamond Works and TST. He is known by the United Nations for his criminal activities in war-torn areas and has been cited in many indictment documents as a businessman dealing in blood diamonds, criminal networks, gun-running and mercenary operations (He owned Executive Outcomes- the official Mercenary firm recently banned in South Africa).
Diamond Works owned mines in Sierra Leone, South Africa, Angola, Congo and Central African Republic (CAR).
Antonio Teixeira is the brother-in-law to Congolese Warlord, Jean-Pierre Bemba. The 47 year old Bemba is married to Lillian Teixeira. He heads a rebel group turned political party – the Movement for Liberation of Congo (MLC).
The Teixeiras are Portuguese businessmen running ‘businesses’ in war torn countries. They are war profiteers! It is for this reason that Bemba had strong backings from South Africa, Libya, Russia and Portugal organised by Antonio Teixeira.
The diamonds mined in these war-torn or conflict areas, such as Congo, Central African Republic, and Sierra Leone are stamped as certifiably clean to escape the rigours of the international certification system –the Kimberley Process.
Jean Pierre Bemba nearly won the 2006 Congo Presidential Elections. He got 42% against winner and incumbent President Joseph Kabila’s who got 58%.
Bemba was indicted in 2008 and arrested by the International criminal Court (ICC) for serious charges of crimes against humanity and war crimes in the Central African Republic (CAR) dating back to 2003. He is currently in The Hague facing these charges.
Bemba’s father Jeanot Saolona Bemba is a businessman and Congolese politician in his own right who held ministerial portfolios in Mobutu Seseko and Laurent Kabila’s government. His sister is married to Mobutu’s son Nzanga.
Teixeira continues to operate in Africa and feting heads of states with ‘small bribes’.
Diamond works has been renamed Energem Resources. This is common to international criminals and conmen who constantly change names and companies to escape scrutiny.
CONCLUSION
The TST deals in Zambia were conducted in a criminal manner, typical with TST’s known international reputation.
It operated and imported crude oil in Zambia without a clean tender process, without obtaining a licence from the Energy Regulation Board (ERB) and without obtaining a correct type of feedstock needed by INDENI to crack it.
In April, May and June 2003, TST caused serious fuel shortages and held Zambia at ransom when its lawyers obtained an injunction restraining INDENI from importing crude oil until TST’s feedstock on a Ship Ruby 111 was pumped, refined and sold.
Mwanawasa had canceled the deal and directed that any official that ‘touched’ the TST oil would be fired.
At this stage, Mutembo Nchito had also sued TST for its failure to pay legal fees amounting to USD 738,750.00 due to MNB. TST was now being represented by Dennis Wood and Vincent Malambo.
At the heart of this scandal are the questions that beg answers. Who gave the authority for the supply contract given to Trans Saharan Trading? Who issued the guarantees and securities to ABSA?
How was Mwanawasa allowed to cancel the supply contract even in the face of this legal nightmare that would result in Zambia losing USD74.3 million? Was Mwanawasa encouraged to renege on the TST deal so that someone would walk away with USD100 million from ABSA?
Other than Mwanawasa, all those involved in this scandal are alive and should be made to account or proffer explanations as this matter is a serious threat to Zambia’s poor economy.
In fact records show that government, signed guarantees with ABSA in March 2002, before TST even won any tender. At this stage the supply contract was given to TotalFinaElf following the dissolution of ZNOC.
Further the government guarantees with ABSA were ‘discharged’ in October 2002, two months after TST got its first contract!
This withdrawal was unilateral and appears illegal as terms and conditions of the facility agreement could not allow such an action.
When ABSA placed TST under receivership, in a last ditch attempt to recover USD100 million, TST had 40,000 metric tonnes of stock at INDENI and TAZAMA.
Energy and Water Development Minister George Mpombo issued a statement assuring the nation that KPMG had since been appointed to oversee the TST affair and KPMG officials in Hastings Mtine and Zahir Sheik were appointed Receiver Managers to carry out the exercise on behalf of ABSA.
Mpombo assured management at TAZAMA and INDENI that lawyers Vincent Malambo (For TST) and George Kunda as Attorney General (For government) would handle all legal issues to ensure that Zambia did not incur any unnecessary financial burden from the TST deal with ABSA.
He assured the nation that the stocks would be sold to offset any obligations TST had with ABSA.
So what happened? What happened to the stock at INDENI and TAZAMA? How come Zambia still owes ABSA USD74.3 million?
During this process ABSA even lost the bid to buy ZANACO when Mwanawasa called off the negotiations.
When ABSA were shortlisted as key buyers and preferred bidder of ZANACO, the plans were scuttled when the TST deal was thrown in the works.
Mwanawasa announced at a press conference he held on 16th June 2004 that ABSA had been dropped as preferred bidders to buy ZANACO because ‘’they were tying the TST debt to the purchase of ZANACO’’.
Mwanawasa stated that he had called off the negotiations and that the claim by ABSA that government owed it money was ridiculous and amounted to threats! He said: ‘’such investors who use threats are not welcome!’’
Yet his own government had issued the guarantees to ABSA in 2002!
Mwanawasa even mocked ABSA for using his counter-part, Malawian President Bakili Muluzi. He said he had informed Muluzi that ABSA were welcome to ‘’re-open the negotiations as long as Zambia was not placed in a weaker position through threats.’’
He informed the nation that the Zambian government had also opened criminal investigations against TST officials.
This clearly was a complicated fraud that allowed international criminal fraudsters to obtain USD100 million from ABSA using Zambia’s goodwill, guarantees and securities and walk away while Zambia was left to assume the liabilities. Zambia now faces the misfortune of paying ABSA for this fraud when the criminals in Zambia and those at Diamond Works laugh all the way to the bank!
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The full story of Mwanawasa’ corruption will one day be told. These are insightful revelations of what really happened. Am sure the lawyers for ABSA are relishing this free evidence
Yes the Mmembe’s Mwanawasa was very corrupt by nature.Old habits never die hard.barely some month as Solicitor General, KK fired him for corrupt practices that risked the country and Zambians at the hands of apartheid South African supremacist regime.In the run up to 1991 and after MMD took over, he went into overdrive corruption and impropriety over Essa Galeodu assets whom he engineered his deportation and took over his assets in the country.
Mwanawasa should be prosecuted in abscentia!
NSONGO: Sad news Mwanawasa was busy stealing though he was busy talking about the fight against corruption. Moureen should be prosecuted and all assets and properties confiscated as they did to Chiluba.Power is sweet no wonder every one want to be a president, Sondashi has formed a party hoping to go and enjoying himself with his wife. Awe mwandi bulanda pa zambia..
This issue was brought up during LPMs time, The MMD is corrupt whether during Chiluba, Mwanawasa or R.B. This case should however not be ingored despite the fact that LPM died. All those involved should be brought to book like Chiluba, Chungu and the other on other exposed case. Lets separate crime from politics and freedom
I guess this article is a work of plunderers and thieves. Where were you when Mwanawasa was alive? Levy Mwanawasa may have had a bit of some weaknesses, but he tried his best to deal with corruption and improve governance system in Zambia. What is good is that nobody will erase Mwanawasa`s legacy no matter how much lies you try to spread. Similarly, no one will erase Chiluba`s legacy of plunder and theft, he will go with his legacy to the grave.
what is clear from all this is Zambia has been a broken society ever since independence. There has been no transparency under all the present and past presidents. All the presidents including the current one have been dishonest with public contracts. Zambia is rotten!
Am not surprised,though am stil stud,g the dosier,the mother of corruption is levy,widow.but,the question is does,rb have the guts to take these pipo to court?
No wonder the monkeys have taken over the liberalization of Zambia because Zambian people are too docile. Despite all the revelations from Kavindele and the others people still vehemently defended Mwanawasa. Just like what is happening now, Tetamashimba and his cronies are busy defending Rupiah and Dora AND THINGS ARE GOING FROM BAD TO WORSE.Ba Kolwe have seen what people have not seen.
Mwanawasa’s corrupt nature has left the family tree in a dangerous world where they will find no secure hiding place.They risk being jailed and left poor than they were before Levy’s miracle into power.
There is Joseph Salassini at ZNBC as mwanawasa’s nephew,Masebo and her hearses plus multi million Dollar bill make Zambia clean fraud, Rayan Chitoba at DEC, ZAWA, the give away fraud sale of world’s largest open pit KCM mine and ZANACO at cheap US $ 25 million. There is Maureen Kabuko’s overnight megalomaniac economic dysnatry from TST oil deals, maize imprt deals, telecommunication deals, MoH deals to tenders in most GRZ purchases without forgetting the US $10 million requested whilst in France when china and France had paid all bills 100%.
Zambia Watchdog, i want to commend u for this investigative reporting hope u continue with this spirit as we need to know exactly what happened/happening so that as we make comments, we are objective.
its sad that these we the happenings behind the TST saga.
We have been told Maureen has more than USD40M, let the govt grab it the we can remain with a 34M balance which kavindele and is it Emmanuel will also make some contributions, the pressman also.
the question which begs an answer however is; who signed the gueranttee?
During this same time , 6000 metric tonnes 0f crude oil worth about K2.3 billion disappeared mysteriously between Dar-es-salaam (Tanzania) and Ndola (Zambia). The Operations Manager at Tazama in Ndola and the Tank Farm Engineer in Dar-es-salaam were demoted. These were just sucrificial lambs. Tazama Management even authorised the pumping of water in a by-pass crude oil line in Tanzania to recover some of the missing crude oil. Nobody knows how such an amount of crude oil could just disappear in thin air without any logical explanation. Somebody somewhere knows what happened.
During this same time , 6000 metric tonnes of crude oil worth about K2.3 billion disappeared mysteriously between Dar-es-salaam (Tanzania) and Ndola (Zambia). The Operations Manager at Tazama in Ndola and the Tank Farm Engineer in Dar-es-salaam were demoted. These were just sucrificial lambs. Tazama Management even authorised the pumping of water in a by-pass crude oil line in Tanzania to recover some of the missing crude oil. Nobody knows how such an amount of crude oil could just disappear in thin air without any logical explanation. Somebody somewhere knows what happened.
Don’t remove MMD unless you’re sure – Sondashi
FORMER Minister of Works and Supply Ludwig Sondashi has cautioned Zambians against voting out the MMD for the sake of change.
He said Zambians should know people who can improve the country’s economy before considering voting out the MMD.
Dr Sondashi said this in Kitwe yesterday when he launched his political party to be called the Forum for Democratic Alternatives (FDA).
He said it will be difficult to join the Patriotic Front (PF) and United Party for National Development (UPND) pact because of differences in ideologies with his political party.
Dr Sondashi, however, said he can only join the pact if he is allowed to become its president and lead it into the 2011 general elections.
Those who attended the launch however criticised Dr Sondashi for forming the political party for the sole purpose of going to State House.
This is when Dr Sondashi said he wanted to go to State House to enjoy himself.
Dr Sondashi said his children and wife, Virginia, have been suffering ever since he resigned as Cabinet minister from the previous governments.
“I want to go to State House to enjoy with my wife and my children because they have suffered following my resignations from previous governments.
I want my wife to be first lady also,” Dr Sondashi said
He said his wife rebuked him on several occasions when he resigned from his positions in government but that he assured her that one day he would make it to State House.
Dr Sondashi however clarified his statement after a Mr Nyereti wondered why the former minister had formed his party just to go and enjoy himself in State House.
“I am the only one who is ready to reduce my presidential powers when I am elected in 2011,” Dr Sondashi said.
He said the FDA would bring Zambians together and that the republican presidency would rotate from one province to another to discourage tribalism.
Dr Sondashi admitted that he was one of the leaders who created the problems that the country is currently going through and that he will not retire from active politics until he changes the situation obtaining in the country.
Dr Sondashi said he is confident that his party will remove the MMD from power in the 2011 elections.
And FDA Kafue organiser Trust Chitonge denounced PF president Michael Sata and UPND leader Hakainde Hichilema, saying they had no capacity to turn around the country’s economy.
Mr Chitonge accused Mr Hichilema of failing the country during the privatisation of some parastatals and that there was no way he can manage the affairs of the nation.
He also accused Mr Sata of failing to make any meaning contribution in the previous governments he served.
Mr Chitonge urged people to rally behind the FDA in 2011 if they wanted a better future for their children.
Already all of Maureen Kabuko’s traced overnight ill gotten wealth have taken “caveat” from Government pending judicial and presidential decree for freeze and state possession.
since membe and mutembo are both still alive.,can they shed some light.but i hope ba ZW you are not just up to fight levy’s legacy.because of late he’s been your targett and he is not there to defend himself.
Again, there will be people who will claim that the motive of this detailed write-up on the under-cover activities of the Mwanawasa regime is meant to tarnish his legacy. No! If corruption and other vices took place and are being revealed to such intense detail it should not matter to the Zambian people whether the writer’s motive favours or destroys the accused. What should matter is whether the allegation are of any substance. People, this is our money and if any revelation is made by one of the thieves who were trying to steal together we need not concern ourselves with how and why one or some of the thieves got aggreived and decided to report the rest to law enforcement agencies. To a large extent, this infact helps us save tax-payer’s money by not assigning huge budgets to investigative wings to come up with information that we could otherwise obtain for free!
I love this type of reporting. Thanks ZW!
Ba Levy, totally stripped naked. Let the ones who benefited from him pay or go to the jele. why shud you tickle our eyes and ears by brining this story if culprits are still on the loose? ZW since you have this information why not send it to ACC and police so that criminal investigations are commenced?
Both Levy and Chiluba are in this corruption.Nice article but it is clear that the one who wrote the article is avoiding the centre point of this corruption, which is the illegal dissolution of ZNOC and the stealing of ZNOC assets and business by Mwanawasea and Chiluba. We will not let you thiefs to tell lies any more. You are all going in.
The author of this article is being here by given 24 hours to state the real saga regarding ZNOC, please tell us why you have avoided stating the facts that are in 100 paged document that EX ZNOC Executive Dennis Mumba submitted to parliament
For your information, When ZNOC negotiated the ABSA facility, there was not going to be any government guarantees given to ABSA, the oil financed by ABSA was going to provide the security. This oil was to be monitorited by interdepent inspectors. There was to be a Tender were for the most competive supplier was to be selected. Who changed these clauses.
Bank of Zambia will have a lot to explain, they had earlier on refused to give a US 30 million guarantee for a ZNOC facility with Standard Chartered Bank of London, after having made written commitments earlier on resulting in ZNOC paying Standard Bank over USD 300,000 after the Bamk of Zambia backed out. Why did they change the ZNOC ABSA facility arrangement.
Who ever wrote this article is trying to protect Chiluba, Katele, VJ, Silwamba thers who are in the Total Outre – Mer fraud at Indeni.
I give you 24 hours to correct you self and report what is contained in 100 paged document of EX ZNOC Executive Dennis Mumba submissions to Parliament through the Clerk of national Assembly.
All of you thiefs be on notice, you will not go away.
Please note that ZNOC was not Chiluba corruption infrastructure. In fact Chiluba was busy undermining ZNOC operations through his OP, ZRA, ZANACO, Auditor General, lawyers and private audit firms they illagally appointed as ZNOC receivers and liquidators. Chiluba appointed Mwanawasa to be Zambian President in an arrangement where Mwanawasa was to turn a blind eye to Chiluba with Total stealing ZNOC and the entire oil infrastructure in Zambia. The ZNOC receivership was challenged by ZNOC board, but Kaunda Lembalemba dissolved the ZNOC board in order to fraustrate the board court action. The liquidation it self is illegal and was challenged in court by Dennis Mumba EX- ZNOC Chief Executive. Mwanawasa manipulated Judge Imasiku who made a decision which is not based on the law in order to perpertuate the corruption that has gone on in the oil sector. This ABSA corruption saga is just a tip of the ice berg. It is show time guys. You can lie all the time.
Serious comments above make a good article stupid. Joe Salasini is not a nephew of the late President Mwansawansa and I advise that facts should checked before misleading the world. Don’t be pressured to comment if you are not sure of what these facts. Other wise a good article by ZW
Dawa05, you have a POINT. Zambians are clever in thinking,but they remain dull. They have the inability of calling a Spade a Spade,and a Shovel a Shovel, where were you when Levy was still alive ba Kolwe? Mwaletina becoz he was a Giant Lawyer? You culprits ‘Bakolwe’ ! Lets hope you wont regret RB’s regime as well, idiots. Umwenso,after someone is dead,
im actually not suprised as i heard most of this infor before LPM passed on this just comfirms some rumours but people where so afraid of him and anyone who questioned his opinion was dismissed.he did not take critisism of other opinions. im not shocked as everyone knew this but had no balls to speak up. maureen should be tried and im sure if done in good fail and way most of that money can be retained. they should pay ZNS the balances too.
#1. Good comment. These people they close their mouth when it suits them. But when kicked out thats when they want to talk. Where was Kavindele when Levy was around? Why didn’t this article come out when Levy was there. The same people will do the same when RB leaves office. This time they are praise singers because they want a job. Please lets lear to grow up.
I just love the detail in this article. Even if you doubt the intention, it is clear that the author knows what he/she was writing about. What i find amazing is that the people who want us to ignore the corruption under Mwanawasa have failed to challenge this the issues raised in this article. They are only saying you are talking because he is dead. That can’t be an answer. This author was quoting documents from parliament. Is that not authentic? Zambians, corruption is corruption no matter who is involved. Let us act. The government is going to pay ABSA money meant to develop Zambia while you are busy defending the criminals. Let us open our eyes and see. Am glad that there are organisations like this one willing to bring out such issues which can’t be published elsewhere even in those newspapers which claim to hate corruption.
It has always been a fact that Levy and his kama wife were corrupt. They are the ones that brought back tribalism and nepotism through employment of Lambas and Lenjes ( Like me) in companies like ZESCO and ZAMTEL. The appointment of officers to key positions in the army for example was based on hpw one was closely related to Levy and ka Maureen.
Good old story for a weekend pa Zed
Dear Zambians,
does anyone know where I can get an international lawyer probono- I seriously want to sue the Zambian politicians (Mwanawasa included) for plunder and causing my poverty. If anyone knows of such an organisation, please let me know.
From the postings I have noticed the term MMD is being used too
loosely as a result it has no logical traction whilst maintaining an emotional
“punch bag, feel good” potency. Let us put a logical face on what we mean by the highly emotional charged word “MMD”. Let us talk about individuals and their deeds and assets.Let us not be fooled by the rebirth of the conscious of Mr Sata, Miss Nawakwi, Mr Harrington, Mr Hichelema, Mrs Mwanawasa, Fred Mmembe and others. Mr Sata was Chiluba’s right hand man for 9 years and 10 months and he saw no wrong. Both Mr Sata and Miss Nawakwi are
extremely far wealthier now than was the case before MMD came into power. We need to know what assets they own and how they acquired them. The former Minister of Transport, Mr Harrington, presided over one of the most
corrupt ministries, during Chiluba’s reign, now we are led to believe he is now for due process. HH should count every dollar he has in his account and for each one he should remember the lost child sniffing glue in towns across Zambia, the under fed child,the child dieing needlessly in empty hospitals, the millions of children and young adults cheated out of a future, all as a result of a bogus scam called “privatisation” in which he suspended any of his senses of patriotism, humanity, fairness in order to line his pockets. Mr
Mmembe of the post, although he did not brew most of the poison concoction, he still held the poison chalice firmly to our lips, making sure not a drop of the virulent poison is wasted in an effort to leave us weak, useless and senseless and ready to be used by his next paying customer. Mrs Maureen Mwanawasa, just like Chiluba, Hell and Jail await you! Just ask yourself why Levy could not step down despite pending fatal strokes.
Can someone please tell me how Darlington Mwape is able to build a massive, million dollar plus house, along Kafue road on a government salary? The house has even incorporated a luxurious room specifically designed for smoking cigars in. The man in the expensive suits and FTJ esque monogrammed shirts surely has something to tell the ACC.
To understand Mr and Mrs Mwanawasa and relatives like Sylvia Masebo you have to understand the morally challenged background they came from. Go back to the 1980′s money hungry Sylvia Masebo was happily opening her
legs wide for Nigerian drug dealers to the point that one of them made her their live in concubine whilst Levy collected the fees and befriended drug dealers of all nationalities, Indian, Lebanese, and West African. As for “do anything for money” Maureen she was known for her speciality her home recipe blow jobs this brought her notoriety in Livingston and the Copperbelt. Apparently she has not fully given up on her old trade – an enraged Levy with the aide of a servant got wind of his Mrs’s sexual escapades at state house in his absence this led him to exclude her from the Independence Day celebration at state house. He took the further action of moving out of state house to state lodge but cooler heads prevailed and encouraged him to return to state house. Mrs “money grabbing” Regina Chiluba is no angel or
shrinking violet it is rumoured her two breasted cock massage won her friends at Zccm and other parastatals. Chiluba apparently is not her
first outside of marriage affair. Morally bankrupt people like Mwanawasa and Chiluba deserve such women.
please let leave the big to rest in peace why have u wait untill is dead to come up with all this.
Ba Zambians; please fire MMD now. This party is too corrupt and too corrupt.
All corruption cases in zambians have one thing in common: all happened under the watch of MMD…actually these guys are more corrupt than UNIP.
It is time to put a stop to MMD,,
MMD MUST GO NOW…ALL
Ba Zambians; please fire MMD now. This party is too corrupt.
All corruption cases in zambians have one thing in common: all happened under the watch of MMD…
Those that are against information as such as this should know one thing, “that when you want to call a spade a spade, you should also be ready to call crime a crime”.
Mwanawasa was not a god niether is he going to be one. Yes he was he good leader, but not a perfect one. which means that, were he went wrong, people should be free to say it out that he was wrong. let us not hide him in the name of the dead.
we always new that mwanawasa will be in trable when he leaves office.its good that he passed on, atherwise he would ve being going to courts just like chiluba.Anyway tere is the wify she knew abault the deals let her answer this we cant afford to pay ABSA
This article has the hallmark of Dickson Jere. I can vet with my last pesso.
I think there are a lot of holes in the story. flip flopping, numbers do not add up (i.e talk about thousands and then millions vice versa). Zambia’s GDP is estimated $17.423 billion (2008). $100m is about 6% of national GDP. Please make some sense to me that no one would notice that amount very quickly. sorry just reading through as a zambian. I remember when people said Kaunda had stolen billions of dollars???????????????? well maybe I do not know how to count money, butI surely know what it can do!
Check out story below dated 7/8/09 from Watchdog business section:
“Mining sector to contract in 2009″
The mining industry in Zambia is forecast to grow at an average rate of 10%during 2008-2013. The industry is expected to reach a value of ZMK2.094bn (US$0.5bn) in 2013.
Now this is real money we are talking about!!!!! again $100m is quite some change gentlemen.
DENNIS MUMBA’S FULL SUBMISSION ON ZNOC TO ZAMBIAN PARLIAMENT
Fabritiuslaan 5
2241 JR
Wassenaar
Nethelands
The Clerk of The National Assembly
National Assembly
Parliament Buildings
P.O.Box 31299
Lusaka 10101
Zambia.
October 4, 2005
Dear Madam,
PUBLIC ACCOUNTS COMMITTEE: REPORT OF THE AUDITOR – GENERAL ON THE REVIEW OF OPERATIONS OF THE ZAMBIA NATIONAL OIL COMPANY LIMITED.
Kindly refer to your letter dated 28th May 2003 in which letter you requested me to prepare a written memorandum containing my responses to the issues raised in the Auditor General’s report on the operations of Zambia National Oil Company Limited and later appear before the Public Accounts Committee on Tuesday 3 rd and Wednesday June 4,2003. Reference is also made to my letter dated 2 rd June 2003 where I advised that there was a legal matter pending before the courts of law between myself and Zambia National Oil Company Limited (in liquidation) in course number 2002 / HP / 0419.Among other matters, some of the issues contained in this course have a direct bearing on the Auditor General report and that therefore it would be sub judice to respond or discuss as requested the Auditor General’s report while the case in course number 2002 /HP/ 0419 is still pending determination before the courts of law. Reference is also made to your letter of 2 rd June 2003,where you confirmed receipt of my letter dated 2 rd June 2003.For easy of reference these letters are hereby attached in annexure 3,4 and 5. Since for now there is no case in court regarding this matter, I therefore deemed it necessary to respond to the Auditor General report on the operations of Zambia National Oil Company Limited.
First and foremost, allow me to thank God, through his son, my lord Jesus Christ, for his grace in protecting and providing for me and my family during the trying period that we have gone through since December 2001 for standing up against the powers that be in Zambia and international forces in order to protect Zambian resources.
I would like to state that I was the Chief Executive of Zambia National Oil Company (ZNOC) at the time the company was purportedly put in an illegal politically motivated Receivership by ZANACO which was later followed up by an MMD government illegal fraudulently motivated and sponsored liquidation.
Before I address the specific false issues raised in the false audit report of Auditor General’s report I would like to share with you some pertinent information surrounding the ZNOC saga.
I wish to state from the outset that the illegal ZNOC liquidation, was a premeditated conspiracy fraud scheme perpetuated by people in whom state power and authority had been vested, using a wide range of institutions and people both in the private and public sectors. In the private sector some international oil companies, print media, banks, legal, accounting and audit firms were used while in the public sector, civil servants, Zambia Revenue Authority, ZANACO and The Energy Regulation Board were used in order to facilitate the conspiracy to carry out massive fraud against our country, Zambia and its people through the illegal liquidation of ZNOC. What is at stake in this matter, is not only fraud, but also how the security of Zambia has been compromised for political expediency and personal enrichment. There is no doubt that this fraudulent scheme was conceived by some MMD government leaders in the Former Second President Dr F.J.Chiluba administration and ruthlessly and mercilessly executed during President Levy Patrick Mwanawasa S.c. era and sadly I must say with the full knowledge of President Levy Patrick Mwanawasa S.c.
Through this fraudulent scheme there was been:
1. A direct theft on the Zambian Government treasury of K838.645 billion, the ZNOC factious debt that Miss Josephine Mapoma, Permanent Secretary in The Ministry of Energy and Water Development certified which debt the Zambian Government resolved to take over,
2. US$ 36 million value of ZNOC crude oil in TAZAMA Pipelines has not been accounted for
3. Very soon it will be four years since this scheme was executed and by which time US$ 240 million in form of ZNOC profits would have been siphoned out of Zambia through TST and Total Outre mer arrangements.
ZNOC board and management had dispelled a series of MMD government machinations to have ZNOC killed and the last tramp card the New deal MMD fraudulent schemers had to use in order to perpetuate their fraud scheme was to falsely link ZNOC management to the plunder of Zambian resources, through President Mwanawasa and his ministers pronouncements in Zambian Parliament and elsewhere, the Auditor General report and other various state sponsored unfounded adverse press report, purely on account of the fact that the ZNOC Board Chairman Mr Donald Chanda also happened to have been President Dr F.J.Chiluba Special Assistant for Economic Affairs. All the accusations that have been labeled against ZNOC are false and were designed so that the new deal MMD government could hide the fraud they had perpetuated against the Zambian people, and it is for this reason why the Mwanawasa government does not want ZNOC issue to be determined in the courts of law or by an independent tribunal.
When INDENI Refinery was reconstructed in December 2000,unfavorable tax environment was deliberately created against ZNOC Petroleum Products refined at INDENI Refinery, because Ministry of Finance and National Planning was refusing to reinstate the 25 % customs duty on imported finished petroleum products in line with the Customs and excise Act. The law requires that imported finished petroleum products be charged 25 % customs duty. When INDENI was gutted based on ZNOC recommendation as a way of mitigating cost of oil, this duty was reduced to 5%. However when INDENI was recommissioned in December 2000, The Ministry of Finance under Dr Katele Kalumba the current MMD National Secretary and ZRA under the chairmanship of Mr E.G Kasonde were resisting reinstating this duty to 25 % in line with the law. Coupled with the fact Zambia Revenue Authority under Mr Kelvin Donavan an expatriate Commissioner General and Mr Emmanuel Kasonde as Board Chairman, started overcharging ZNOC refined petroleum products EX – INDENI refinery by taxing the products based on the selling price instead of the cost of manufacturing in line with schedule 6 of the Customs and Excise Act, while on the other hand imported finished petroleum products were being taxed on cost up to the boarder point of entry based on schedule 5 of the Customs and Excise Act, and the fact that ZNOC did not have its own retail (filling stations) outlets made oil marketing companies import and market imported finished petroleum products at the expense of the locally produced INDENI petroleum products, making ZNOC loss 90 % of its market share of the national demand. With only 10 % of the national demand it was impossible to efficiently operate the Zambian Petroleum sector system of TAZMA, INDENI and ZNOC whose operational efficiency depended on volumes, resulting in frequent shutdowns in the system operations. Without ZNOC taking the dispute it had with ZRA over the taxation of petroleum products refined at INDENI Refinery to the Revenue Appeals Tribunal, The entire system of refining crude oil at INDENI Refinery would have collapsed on account of taxation, particularly that this same 25 % customs duty on imported finished petroleum products was again reduced to 5 % by the President Mwanawasa’s Government through a statutory instrument signed by Mr E.G.Kasonde then as Finance Minister as reported in the post of 25th November 2002.
ZRA also through a letter signed by the current Commissioner General Mr Msika made a directive that oil marketing companies should be paying taxes applicable on ZNOC petroleum products EX – INDENI Refinery, directly to ZRA without the same payments passing through ZNOC books there by compromising the audit trail in the accounting of taxes on petroleum products
ZNOC management protested in writing against ZRA directive, to ZRA itself and also to the Ministry of Finance and national planning, and advised them that the directive was a recipe for fraud to take place in the accounting of taxes on petroleum products. On two occasions I wrote Mr Kelvin Donavan ZRA expatriate Commissioner General with a copy to the Ministry of Finance Secretary to the Treasury requesting the Commissioner General to confirm receipt of certain amounts of tax monies that ZRA should have collected directly from Oil Marketing Companies. Mr Mtonga, the Ministry of Finance Secretary to the Treasury responded to my letter by directing the Commissioner General to respond to my letter and address the concerns I had raised. In both instances however the Commissioner General could not confirm receipt of the amounts I had indicated and neither could he address my concerns. Failure by ZRA to confirm the tax receipts from oil marketing companies and ZRA insistence to continue operating a system that compromised the audit trail did not make sense particularly that this was the first time in the many years that I had worked for ZNOC that the audit trail in tax collections was being compromised.
All efforts to have the ZNOC dispute with ZRA regarding the basis of taxation of ZNOC petroleum products EX – INDENI Refinery, resolved amicably were frustrated by the Commissioner General who used to refuse to listen from any one, indicating that he only got instructions from Dr Katele Kalumba then Minister of Finance and National Planning. ZNOC management were on the other hand continuously being restrained by the board under the Chairmanship of Mr Donald Chanda from taking the matter to the Revenue Appeals Tribunal because a decision in ZNOC ‘s favor would compromise Zambia’s chances of meeting the revenue collection bench mark with International Monetary Fund (IMF).
In July 2001, I had a sudden attack of meningitis and my life was only saved after I was evacuated to Morning Side Hospital in South Africa where I was hospitalized. The evacuation and the Morning Side Hospital bills were paid for by the World Bank, who were my wife’s employers at the time.
When I returned to the office in mid August 2001,after sick leave of about six weeks, I attended a meeting called by, Dr Katele Kalumba Minister of Finance and National Planning, attended by, Mrs Stella Chibanda, Dr Kalyalya from Bank of Zambia, Kelvin Donavan expatriate Commissioner General from Zambia Revenue Authority, Mr John Janes, Managing Director of Standard Chartered Bank, and Mr Timothy Mushibwe Partner in Deloittes and Touche. I was surprised to learn at this meeting that ZRA had actually been exceeding its revenue collection bench marks.
Mr John Janes and Mr Timothy Mushibwe informed the meeting that while I was sick in hospital in South Africa, Mr John Janes, together with Standard Chartered Bank Board Chairman, Mr George Sokota who is also the Managing Partner of Deloittes and Touche, had a meeting in the office of the then Vice President Mr Enoch Kavindele, attended by Mr Emmanuel Kasonde, then ZRA board chairman and Mr Donald ZNOC board chairman. It is important to note that while Standard Chartered Bank management attended this meeting, ZRA management represented by Mr Kelvin Donavan and ZNOC management represented by the Acting Chief Executive Mr Lutangu Inambwae were not in attendance. Mr John Janes went on to produce minutes of the meeting they had in the Vice President office where Mr Emmanuel Kasonde had made a commitment that since ZRA had exceeded its collection bench mark target, ZRA was ready to pay Standard Chartered Bank whatever amounts the bank was owned by ZNOC and Mr Timothy Mushibwe Partner in Deloittes and Touche went on to circulate a Deloittes and Touche proposal of a mechanism to achieve this objective. It is important to note that all the people who were reported to have attended the meeting in Vice President Kavindele’s office later on came to play a part in either the illegal Receivership or liquidation of ZNOC in one way or another.
No reasons were given as to why Mr Emmanuel Kasonde, Mr Donald Chanda ZNOC board chairman and Mr George Sokota, did not attend the meeting that was called Dr Katele Kalumba then Minister of Finance and National Planning. Mrs Stella Chibanda the technocrat from the Ministry of Finance who were present however advised Dr Katele Kalumba that, there was no government financial regulations that could allow to implement what Mr Emmanuel Kasonde had committed ZRA to Standard Chartered Bank in the Vice President Enock Kavindele’s office and therefore Mr Emmanuel Kasonde / Deloittes and Touché proposal was not implemented.
Since the reason of ZRA revenue collection bench marks with the IMF and the World Bank could no longer be used by the ZNOC board to prevent management from sueing ZRA, ZNOC management proceeded to sue ZRA in August 2001 in the Revenue Appeals Tribunal. The Revenue Appeals Tribunal which heard this matter comprised Mr Micheal Mundashi who later on came to be President Mwanawasa’s lawyer in the Presidential election petition, as chairman, sitting with Mr Timothy Mushibwe a Partner in Deloittes and Touche. This is the same Mr Timothy Mushibwe a Partner in Deloittes and Touche who presented the Deloittes and Touche proposal to use ZRA tax monies to pay Standard Chartered Bank and Doctor John Mulwila. ZNOC was represented by Mr Albert Wood. The ruling in this matter was supposed to have been delivered in December 2001,and the parties had been summoned by the Tribunal for delivery of judgment in December 2001 but for unexplained reasons judgment was deferred, and only came to be passed in ZNOC’s favor four months later on 26 April 2002, three weeks after illegal ZNOC liquidation on 4 th April 2002.
The over K100 billion Tax refund that ZRA was supposed to pay ZNOC was enough to discharge the entire ZNOC liabilities with ZANACO and Standard Chartered Bank. The ZNOC inability to meet obligations to ZANACO and Standard Chartered Bank was therefore artificial created through MMD government sponsored machinations so that eventually the scheme to defraud Zambia through ZNOC’s liquidation could be achieved using the ZNOC debt with Standard Chartered Bank and ZANACO as coverer up reasons.
Further the fact that the oil tax monies that ZRA is supposed to have collected from the oil marketing companies in the period December 2000 to April 2002 ie the period when the tax collection audit trail was compromised by ZRA through a directive issued by the expatriate Commissioner General Mr Kelvin Donavan but signed for on his behalf by the current Commissioner General Mr Miska, was not properly accounted for is evidenced by the following facts:
1. The expatriate ZRA Commission General failed on two occasions to confirm in writings tax amounts that I indicated he should have received at certain periods of time.
2. ZRA made a false claim on the ZNOC liquidator that ZNOC owned it K427,148,659,004 ( K427 billion ) This money was supposed to have been collected directly from oil marketing companies in the period December 2000 to April 2002 as per ZRA directive when the tax collection audit trail was compromised. The fact that ZNOC was being shown as a debtor in ZRA books, for ZRA to lodge in such a claim with the ZNOC liquidator simply means that this money was either not collected from oil marketing companies. If it was collected then it was not properly accounted for.
3. The K100 billion tax refund that ZRA was supposed to refund ZNOC is also part of the tax monies that ZRA collected directly from oil marketing companies on ZNOC’s behalf when the tax collection audit trail was compromised by ZRA through a directive letter signed by the current Commissioner General Mr Miska. ZRA therefore found it difficult to re – imburse ZNOC the K100 billion tax refund as ruled by the Revenue Appeals Tribunal because the original tax receipts might not have gone to ZRA confers. The timing of the Revenue Appeals Tribunal judgement, coming three weeks after ZNOC illegal liquidation among other reasons has something to do with the accountability of oil tax monies collected during this particular time.
In February 2001,Zambia National Commercial Bank (ZANACO) sued ZNOC and BP (Zambia Limited) in course number 2001 /HPC / 0073 claiming that the bank was entitled to collect ZNOC receivables from oil marketing companies including B.P and appointed MR Arthur Ndhlovu as Collateral Manager to monitor and collect ZNOC receivables from Oil Marketing Companies and deposit the monies into ZANACO.
ZNOC disputed ZANACO claims and made a counter claim in court that the ZNOC debt with ZANACO be determined by the court. BP (Zambia limited) was represented in this same course by Mr Levy Patrick Mwanawasa S.c. At one time Judge Chibomba had referred this cause to mediation before Mr Geoffrey Simokoko. When the course was in mediation, ZNOC presented all the documentary evidence relating to the matter and proof that the ZNOC debt to ZANACO was US $ 10.3 million while ZANACO did not submit anything. While the matter was in mediation at one time Mrs. Maureen Mwanawasa came in place of Mr Levy Mwanawasa S.c. to represent B.P (Z) limited.
As part of the preparation for the INDENI Refinery start up arrangements after the refinery reconstruction, ZNOC management had issued a selective tender to three to four prospective companies to supply oil to Zambia.
At one time when ZNOC management were in a meeting at Citibank boardroom with the bank Managing Director, the secretary to the Citibank managing director came and called me out of the meeting saying that the Minister of Finance and national planning Dr Katele Kalumba, calling from London had directed that she calls me out of the meeting and answer the phone call he had made on Citibank Managing Director line. When I was on phone Dr Katele Kalumba directed that ZNOC should cancel the selective tender because ZNOC was no longer going to be involved in the oil supply chain.
I called for a board meeting, but the board reaffirmed its resolution for a selective tender and proceed to make a split award to Glencore and Total International. I later came to establish from Total International officials that Dr Katele Kalumba then Minister of Finance and National Planning made the call to me while I was at Citibank (z) offices from a London Hotel when he was in the company of Total International officials.
In February 2001,Mr David Saviye then Minister of Energy and water Development, presently Zambia’s ambassandor to China issued written instruction that he had decided to put in place what he referred to as “ Interim Agreements” to last 60 days, where the mandate to procure oil was removed from ZNOC and transferred to INDENI Refinery, and appointed a committee to co –ordinate the oil importation and supply with Mr Moses Nzama from Energy Regulations Board as Chairman and Mr Malambo from the Ministry of Finance as secretary. However AGIP the then other shareholder in INDENI Refinery refused to allow INDENI Refinery to be used as collateral for oil financing and the IMF also refused to allow the Zambian Government to use tax revenue monies for oil procurement. The interim arrangement committee under Mr Moses Nzama and Mr Malambo under instructions from Dr Katele Kalumba then Minister of Finance and National Planning and Mr David Saviye then Minister of Energy and water Development, made arrangements with a company called Tranfigura backed by China Construction Bank and National Bank of RSA. Under this arrangement Tranfigura was supposed to bring in crude oil, and immediately get the refined petroleum products from ZNOC crude oil displaced from the TAZAMA pipeline by Tranfigura crudeoil. Tranfigura was supposed to pay user fees to TAZAMA and INDENI. Additionally Tranfigura was supposed to pay ZANACO US $ 25 per metric ton as repayment of ZNOC debt to ZANACO. All the parties to this arrangement led by ERB, ZANACO, TAZAMA, INDENI signed to implement this arrangement. However for the arrangement to be implemented, they needed ZNOC’s consent for the following reasons
1. It was ZNOC crude oil that was going to be displaced from the TAZAMA pipeline but whose proceeds were to immediately go to Tranfigura while the new Tranfigura crude oil in the TAZAMA pipeline was to become the new ZNOC crude oil.
2. For the TAZAMA, INDENI, system to operate, they need to have the ZNOC Terminal storage facilities for refined finished petroleum products.
Miss Josephine Mapoma, Permanent Secretary in The Ministry of Energy and Water Development sent Mr Moses Nzama with instructions that I should sign the document were all the above mentioned companies had signed. When I refused to sign the document, Mr Moses Nzama rang Miss Josephine Mapoma, from my office, and Miss Mapoma, applied a lot of pressure on me to sign the document but I still refused to sign it. I refused to sign this particular document for the following reasons:
1. The Tranfigura oil supply agreement and the China construction Bank and National Bank of RSA financing agreements were not availed to ZNOC, therefore the cost of the oil supply by Tranfigura and the financing costs of the participating banks could not be determined and as such there was no way to establish the profits that Tranfigura was going to make from the deal.
2. Further it did not make sense for the proceeds realized from ZNOC crude oil in Tazama Pipelines to go to Tranfigura while ZNOC creditors remained unpaid.
In fact the document I was supposed to sign to effect this agreement, only came to me after, The Secretary to the Treasury Mr James Mtonga had refused to sign the same documents earlier on, saying that he was going to be the last person to sign after every one else had signed. Since I refused to sign, Mr James Mtonga also did not sign and the Tranfigura arrangement therefore fail through.
The ZNOC board strongly advised Mr David Saviye then Minister of Energy and water Development in writing of the dangers of his directive and requested him to reflect and reconsider his directive and the board went on to seek audience with Mr David Saviye over the same matter.
The machinations of Interim committee under Mr Moses Nzama of Energy Regulation Board (ERB) and Mr Malambo from the Ministry of Finance and National Planning under instructions from then Energy Minister Mr David Saviye and then Finance Minister Dr Katele Kalumba the current MMD National Secretary to remove the oil procurement mandate from ZNOC were not implemented because ZNOC management and Secretary to the treasury Mr James Mtonga refused to sign the Trafigura deal. Efforts to transfer the oil procurement to INDENI Refinery before Total took over the AGIP shares also failed through because AGIP refused to allow INDENI refinery to be used as collateral for oil financing facility. Attempts to transfer the oil procurement mandate to TAZAMA pipelines also failed because the IMF refused to allow the MMD Government to use tax revenues for oil procurement. Further when the machinations of Dr Katele Kalumba then Minister of Finance and National Planning the current MMD National Secretary and Mr David Saviye then Minister of Energy and water Development, presently Zambia’s ambassandor to China reached President Dr F.J.Chiluba he overruled Minister Mr David Saviye directive and ordered the mandate of oil procurement to be returned to ZNOC.
The events that later on subsequently transpired have come to reveal the fact that the return of oil procurement mandate to ZNOC was only temporal because the schemers of fraud in MMD were planning for a second assault on ZNOC which assault soon came to manifest itself in the crude illegal methods they used at the end of October 2001 using ZANACO to place ZNOC in illegal Receivership which later on led to a President Mwanawasa led MMD Government illegal liquidation of ZNOC perpetuated in order to defraud Zambia and its people.
When the oil procurement mandate was returned to ZNOC, company management under guidance from the board started evaluating various oil financing facilities, and among the facilities evaluated was a PTA bank facility backed by bank of Oman, before ZNOC settled for the US$ 65 Million Oil Financing Facility with ABSA Bank of South Africa.
Through conversation with Total International officials I came to pick up information that some Government Ministers in the President Dr F.J.Chiluba MMD government were not happy with the arrangements that ZNOC was making with ABSA bank regarding the US $ 65 Million Oil Financing Facility, because it was competing with their plans to transfer ZNOC’S role to INDENI Refinery once Total International acquired the AGIP shares in INDENI Refinery and therefore the implementation of the ABSA Oil Financing facility by ZNOC would make the scheme to transfer ZNOC’s role to Total International at INDENI Refinery impossible to implement if ZNOC continued to be viable.
The US$ 65 Million Revolving Oil Financing Facility that ZNOC negotiated with ABSA was not a simple generic financing facility but a specific tailor made structured facility designed to meet the needs of all the Zambian petroleum sector stakeholders namely, INDENI, TAZAMA, ZANACO, ZNOC and its customers covering, various technical aspects like facility documentation, pumping and refining agreements, escrow accounts, oil tender document, insurance and stock monitoring, generating various related agreements. ZNOC had intellectual property rights to the US$ 65 Million ABSA Oil Financing Facility and in addition to this, ZNOC on 27th September 2001 had paid ABSA Bank US$ 50,000 through Stanbic bank (Z) in order to secure and dedicate the US$ 65 Million credit lines for ZNOC’s use. The main agreement, the US$ 65 Million Revolving Oil Supply Credit was executed by ABSA and ZNOC on 14th September 2001,the pumping and refining agreements with TAZAMA and INDENI were also executed. The Escrow Agreement was also executed by ABSA, ZNOC and ZANACO in mid October 2001.ZANACO Deputy Managing Director Mr George Mwambazi and the Bank Secretary Mr Amos Siwila signed the escrow account on behalf of ZANACO and myself Dennis Mumba ZNOC Chief Executive and ZNOC company Secretary Mrs Mwaka Samundengu Ngoma, signed on behalf of ZNOC. This Escrow agreement provided for the payment of US$ 24 million to ZANACO from ZNOC crude oil in TAZAMA pipelines that was going to be displaced by ABSA financed crude oil and ZANACO was to discharge it security charge over ZNOC upon payment of this amount. ZNOC management was mandated to sign the Escrow agreement where ZANACO was to be paid US$ 24 million immediately on implementation of the ABSA Financing Facility even though what was due to ZANACO was only US$ 10.3 million, because ZNOC could not wait until the quantum of the debt was settled in court, since the nature of ZNOC business was such that without financing facilities, it was almost impossible to do business and it was considered that, any overpayment to ZANACO could be recovered later once the matter involving the disputed ZNOC debt to ZANACO was resolved, and the ABSA Financing Facility provided an opportunity to ZNOC to come out of the ZANACO bondage. Through a letter dated 29th October 2001, ABSA bank informed ZNOC that the US $ 65 million Oil Financing Facility had been finalized and that ABSA Bank credit committee approval had been obtained and the facility was therefore ready to be implemented.
The advantages of this facility were as follows:
• All the proceeds to be realized from ZNOC 90,000 metric tons crude oil in the TAZAMA pipeline valued at approximately US$ 36 million was to go to ZNOC and was to be used to pay lump sum amounts of US$24million to ZANACO and balance to Standard Chartered Bank and other creditors within one and half months after implementation of the ABSA Financing Facility.
• Payment to other ZNOC unsecured creditors were to be paid from future ZNOC profits
• The facility amount of US$ 65 million guaranteed security of supply in that it provided for procurement of a minimum of three 90,000 mt crude oil shipments depending on the world prices
• The facility provide for a robust system of payment to service providers INDENI and TAZAMA.
• There was no dedicated crude oil supplier. A supplier or suppliers were going to be chosen through a Tender process. Tender documents to be used for selection of supplier had been generated as part of the facility documentation.
• Since the financier and the supplier were going to be different, that could have provided ZNOC an opportunity to negotiate better terms with the supplier.
• Oil Marketing Companies were to be given seven days credit before paying for their uplifts. The cost of borrowing to the oil marketing companies was to be drastically reduced since ABSA was going to charge international interest rates based on libor which is cheaper than the kwacha interest rates.
• No Zambian Government or Bank of Zambia guarantee was required
All the documents relating to this US $ 65 Million Oil Financing Facility were forwarded to the relevant ministries, i.e. Ministry of Energy and Water Development, Ministry of Finance and National Planning and Ministry of Legal Affairs.
Despite ZANACO having been carried along by ZNOC in the negotiations with ABSA and the fact that ZANACO was to receive US$ 24 million within less-than one and half months on implementation of the facility, ZANACO was instructed to sabotage the US$ 65 million ZNOC / ABSA Oil Financing Facility by illegally appointing a Lusaka lawyer Mr Richard Mandona, a partner in Permanent Chambers as ZNOC Receiver Manager on 31st October 2001, two months before the 2001 Presidential and Parliamentary general elections. It is important to note that Permanent Chambers are the personal lawyers of Former Finance and national Planning Minister and current MMD national Secretary Dr Katele Kalumba.
Mr Samuel Bwalya Musonda, the then ZANACO Managing Director, told me that he was summoned by ZANACO Chairman Mr Simukowa to attend a meeting in the office of the then MMD National Secretary and Minister of Information Mr Vernon Mwanga. He said that when he reached Mr Vernon Mwanga’s office, he found Mr Simokowa, Mr Eric Silwamba, the then Presidential Affairs Minister and Mr Vernon Mwanga who told him that they had received MMD intelligent information that Standard Chartered Bank, paradoxically through its chairman Mr George Sokota, who was later appointed ZNOC liquidator, were working in conjunction with opposition political parties, and were planning to put ZNOC in liquidation as a way of causing confusion in the country during the election time through disruptions in oil supplies. Mr Musonda, told me that he was therefore instructed to place ZNOC in what he referred to as “Friendly Receivership” in order to forestall the Standard Chartered Bank threat, which Receivership was to be lifted after the elections.
He further went on to say that the selection of Mr Richard Mandona, a Lusaka Lawyer and partner in Permanent Chambers to be made as ZANACO appointed ZNOC Receiver Manager was made on ZANACO behalf by Mr Eric Silwamba, the then Presidential Affairs Minister.
Of course what Mr Samuel Musonda was telling me regarding the Standard Bank threat were lies, because the ZNOC financing facility agreements with Standard Chartered Bank did not confer any such powers on Standard Chartered Bank that could have enabled the bank to put ZNOC in liquidation. The main motive of their action was to sabotage the ZNOC / ABSA Oil Financing Facility in order to pave way for the Total International, Total Outre – mer scheme at INDENI Refinery. It is for this reason why the announcement of the ZANACO appointment of Mr Richard Mandona, a Lusaka Lawyer and partner in Permanent Chambers as ZNOC Receiver Manager was made by then MMD national Secretary Mr Vernon Johnson Mwaanga, and later on when ZNOC was put in the illegal MMD government sponsored liquidation, on 4th April 2002, Total Outre – mer was the first company to be given the ZNOC ‘s role and profit potential before Trans Sahara Trading Company (TST) came into the picture. Mr Vernon Johnson Mwaanga, then MMD national Secretary, appeared on Zambia National Broadcasting Television, with Total Outré – mer, Chairman, a West African Mr Omar Gee, promoting Total Outré – mer and the new arrangements that the Mwanawasa new deal MMD government had put in the oil sector. This West African gentleman to date is the Chairman of Total Outré – mer.
When celebrating 100 days in office, President Levy Patrick Mwanawasa S.c. himself appeared on Television Zambia and healed the liquidation of ZNOC as one of the hallmark of his success in 100days in office, and yet President Mwanawasa had the full knowledge that what he was holding out as success was in fact a gigantic fraud on Zambians
On 13th December 2001,using cause number 2001 / HPC / 0073 where ZANACO had sued ZNOC and BP (Z) limited, and where Mr Levy Patrick Mwanawasa S.c was representing B.P (Z), the ZNOC board of directors challenged the ZANACO appointment of Mr Richard Mandona, as ZNOC Receiver Manager. The ZNOC directors were represented by Mr Mumba Malila, who later on President Levy Mwanawasa S.c. came to appoint as Chairman of Human rights Commission. The ZNOC board challenged ZANACO appointment of Mr Richard Mandona, as Receiver Manager for the following reasons:
1) That the Appointment of the Receiver was not in line with the provisions of the Debenture
2) That in order to facilitate the repayment to ZANACO, ZNOC and ZANACO had entered into an Agreement relating to the Escrow Account and other Arrangements, with Total International Limited on 27th April 2001,and that this agreement had not been repudiated.
3) To further facilitate the repayment by ZNOC to ZANACO of the outstanding amounts if any on the loan facility, ZNOC entered into another Revolving Oil Financing facility agreement with ABSA Bank Limited under which ABSA Bank would avail ZNOC a facility of US$ 65 million.
4) That by ZANACO’S very own acts had frustrated all efforts aimed at repaying them through the agreements referred to above.
5) That ZNOC directors were advised by Counsel that it was wrong in law for ZANACO to appoint a Receiver under a debenture while litigation was still on going. There was multiplicity of actions
The ZNOC Directors further prayed for the following:
a) A declaration that the appointment of the Receiver Manager Mr Richard Mandona under the Unlimited Debenture was contrary to the provisions of the said Unlimited Debenture and is therefore wrongful.
b) An order of injunction restraining ZANACO by itself, servants, agents employees or whom from appointing any other receiver in respect of the ZNOC and an order restraining the Receiver already appointed from further acting or performing any duties under the Deed of Appointment or under the Unlimited Debenture.
c) An order for a reconciliation of ZNOC account at ZANACO.
d) A declaration that the interest applicable on the account is simple interest and not compound interest and an order that the compound interest be reversed.
e) An order that factious charges that ZANACO charged in respect of funding costs, penalty charges, interest on penalty and other such charges not supported by law or agreement debited to ZNOC account be reversed.
f) A declaration that the Deed of Assignment dated 26th November 1997 was not valid over the receivables from the crude oil that was in the Pipeline.
g) A declaration the ZANACO had no right to appoint Mr Arthur Ndhlovu as a Collateral manager to monitor ZNOC’s sales to ensure that ZNOC receivables were channeled into ZANACO.
h) An order that the sum of K328,149,930 plus interest of Collateral Manager’s fees paid to Mr Arthur Ndhlovu be reversed.
i) Damages for trespass occasioned by the Collateral Manager.
j) Any other relief that the court may deem fit.
k) Costs of the action.
The documents containing the above were lodged in court on 16th December 2001 and served on parties to cause number 2001 /HPC/ 0073 including Mr Levy Mwanawasa S.c who was representing B.P (z).
Every early in the morning, around 6.30 hours, on 17th December 2001, the late Mr Harry Mwanawasa phoned me at my house. He told me that his brother Mr Levy Mwanawasa S.c. wanted to meet me at 20.000 hours at his Kabulonga House. At the agreed time I went to Mr Mwanawasa’s Kabulonga house. Mrs. Maureen Mwanawasa opened the door for me and served me Coca cola while I waited for Mr Levy Mwanawasa S.c.
When Mr Levy Mwanawasa S.c. came, he told me that he had gone through ZNOC directors challenge of ZANACO appointment of Mr Richard Mandona, as ZNOC Receiver Manager, and he wanted to get more details so that he could use his influence as MMD Presidential candidate and BP Lawyer to have the matter settled amicably.
I told Mr Levy Patrick Mwanawasa S.c the following details:
That when I took over as ZNOC Chief Executive from Mr Everisto Kasunga, the company had a negative net worth of about US$ 60 million and included in the ZNOC liabilities was ZNOC debt at ZANACO which debt was incurred during the time Mr Everisto Kasunga was Chief Executive with Mr Ken Njeleka as ZNOC Director of operations when when Miss Edith Nawakwi was Minister of Energy and water Development and Mr Romance Sampa then Permanent Secretary in Ministry of Energy and Water Affairs was the ZNOC board chairman and I served under Mr Mr Everisto Kasunga, firstly as Finance Manager and later as Director of Finance
Four months after I became Chief Executive, on Monday, 17th May 1999, INDENI Refinery was gutted. The initial indications were that the refinery was going to be reconstructed with in eight months. ZNOC management advised the Government that given ZNOC negative balance sheet status, the company could not engage in the importation of finished petroleum products without government assistance. It was after these representations that Bank of Zambia was asked to start giving financial guarantees for the imported finished petroleum products during the INDENI Refinery crisis. I advised Mr Mwanawasa that there was nothing strange about this arrangement because even under ZIMCO, Bank of Zambia guaranteed an oil financing facility with Burgan Bank of Kuwait when there was the Gulf crisis. The ZIMOIL balance on the outstanding amount that was called on Bank of Zambia through the Burgan facility was transferred to become as part of ZNOC liability, after the demise of ZIMCO which liability ZNOC subsequently paid to Bank of Zambia
I advised Mr Mwanawasa that some of ZNOC proceeds realized from the sale of imported finished petroleum products were utilized to settle the following:
• US$ 12 million to Standard Chartered Bank for the feedstock stuck in the TAZAMA pipeline as the result of the INDENI fire
• US$ 7.8 million payments to TAZAMA and INDENI during the shut down period for their past services relating to the pumping and process of crude oil before 17 th May 1999, fire at INDENI Refinery.
• US$ 35.2 million payment to ZANACO for servicing ZANACO old debt accumulated from the letters of credit associated with the importation of crude oil by Mr Everisto Kasunga, before the INDENI Fire.
• US$ 2.4 million payment to Total International payment for buy back of crude oil used for the agitation of TAZAMA pipeline during shut down to avoid sludge formation in the pipeline.
I also advised him that the following had negative effects on the cash flow
• ZNOC had to incur a US$ 3.5 million loss in order to claim increased cost of working capital on the insurance policy.
• US$ 1.3 million excess transit loss during importation of finished petroleum products claimed on Total international.
• US$ 1.8 million excess storage loss claimed on INDENI refinery.
• US$ .559 No shows CIP deliveries claimed on Total International.
I went on to advised Mr Mwanawasa that for a considerable period of time, there had been International pressure applied on the Zambian Government to close INDENI Refinery and turn the TAZAMA Pipeline into a finished petroleum products line, and that these same international forces had taken the gutting of INDENI Refinery and the weak ZNOC financial position at the time as an opportunity to achieve this particular objective, and to this effect the following happened during the time INDENI Refinery was out of service.
The World bank funded TAZAMA Rehabilitation Project was cancelled by the bank midway through the project circle due to the non implementation of some of the project co – ordinationalities by the Zambian Government.
The paradox of this matter however is that all the TAZAMA Rehabilitation Project co – ordinationalities which the Zambian Government could not meet under the TAZAMA rehabilitation project were all incorporated into Zambia country conditionalities under HIPC in the letter of intent which the International Monetary Fund, The World bank and Dr Katele Kalumba then as Minister of Finance and National Planning signed on behalf of Zambian Government. Therefore the TAZAMA Rehabilitation project co – ordinationalities became Zambia country conditionalities under HIPC.
Every time there was IMF and World Bank HIPC review missions to Zambia these missions always used to have meetings with Oil Marketing companies namely Total, Mobil, AGIP, and B.P at World Bank offices in Lusaka before any HIPC letters of intents were signed with the Zambian Government, consequently the following stringent conditions were introduced in the HIPC letter of intent signed by the IMF and The World Bank with then Minister of Finance Dr Katele Kalumba.
1. That INDENI Refinery was not going to be re – constructed
2. ZNOC will come out of the supply chain and became a manager of strategic reserves
3. 25 % Customers duty on imported finished petroleum products that has always applied since TAZAMA and INDENI were constructed in 1969 and was part of the TAZAMA and INDENI construction agreements between the Zambian Government and AGIP was not going to be rein stated
I further went on to advise Mr Levy Mwanawasa that the ZNOC problems after INDENI reconstruction were induced because there was a conflict of interest between what ZNOC wanted to do in the interest of Zambia and the interest of some leaders in MMD government who were manipulating the IMF and World Bank by giving them false data like the fictious ZNOC debt at ZANACO to apply conditionalities on the petroleum sector that could make ZNOC, TAZAMA and INDENI fail to operate and use that as an excuse for these companies to be taken over for free by front foreign companies that some MMD leaders had formed with some multinational companies.
I told him that at the center of this conflict, was the fact that ZNOC had expressed an interest to acquire the AGIP filling stations distribution net work, in order to facilitate the ZNOC’s ability to have an influence on the petroleum products pump prices in the country which had been liberalized. A three man Zambian delegation led by Mr Mwamfuli the then Permanent Secretary in the Ministry of Energy and Water Development, with Mr Fred Nzama INDENI Refinery General Manager and myself Dennis Mumba (ZNOC Chief Executive) traveled to Italy to express the Zambian Government desire through ZNOC to acquire the AGIP filling stations distribution network and meetings were held with Italian Government and ENI, the holding company of AGIP.
I told Mr Mwanawasa that on my way from Italy after the above meeting with AGIP, I passed through London where I was supposed to sign a US $ 35 Million Oil Financing Facility with Standard Bank of London. The need for this facility was created for two reasons. The initial projection of the refinery reconstruction moved from the initially anticipated 8 months to 18 months. The financing facility structures which were in place in the first 8 months were stand alone facilities which could not be revolved once utilized. With the prolonged importation excise therefore there was need to have a long term revolving facility. The Standard Bank of London facility was structured in such as way that Bank of Zambia was going to issue US$ 10 million guarantee and then subsequent guarantees up to the maximum limit of US $ 35 million issued as and when the previous guarantees issued by Bank of Zambia were retired. All throughout the negotiation the Bank of Zambia was informed at every stage and there was Bank of Zambia undertaking in writing regarding its commitment to this facility. However when the time came for this facility to be signed, after I traveled from Italy where we expressed ZNOC interest to acquire the AGIP filling stations distribution network, Miss Chilufya Mbalasha, Bank of Zambia Deputy Governor then who had also traveled to London to sign this facility was suddenly not authorized to sign the facility.
In the middle of the INDENI crisis, US $ 35 million Oil Financing Facility between ZNOC and Standard Bank of London was therefore aborted because while we were in London the then Minister of Finance Dr Katele Kalumba, (the current MMD National Secretary ) signed a further conditionality with the IMF and The World Bank, prohibiting issuance of any guarantees to parastatal companies. Bank of Zambia therefore backtracked on this US $ 35 million Oil Financing Facility at the last minute leaving ZNOC to pay over US$ 300,000 in fees. The last minute abortion of this facility caused very serious operational and financial management of the crisis which culminated into calls of previously guaranteed facilities to be made on the Bank of Zambia, which could have been avoided if this facility had been allowed to be implemented.
I told Mr Mwanawasa that with hindsight of events, the letter of intent with the IMF and The World Bank was signed so as to not only sabotage the US$35 million Oil Financing Facility with Standard Bank of London in the middle of the INDENI crisis but also to sabotage ZNOC strategic plans to acquire the AGIP filling stations distribution network and to pave way for Total International to take over ZNOC’s role and profit potential in the petroleum sector once Total International took over the AGIP shares in INDENI Refinery.
I advised Mr Mwanawasa that there was a letter written by the then Minister of Finance Dr Katele Kalumba to Total International in which letter he had given up the Zambian Government pre – emptive rights to the AGIP shares in INDENI Refinery without following the Zambia Privatization procedures on how pre – emptive rights are given up. Dr Katele Kalumba had indicated in this letter that the Zambian Government was ready to have Total International take over the AGIP shares in INDENI Refinery and become a strategic equity partner in INDENI Refinery.
I went on to advised Mr Mwanawasa that it was in order to avoid a repeat of what happened with the US $ 35 Million Oil Facility with Standard Bank of London, why ZNOC management negotiated a US $ 65 Million Oil Financing Facility with ABSA Bank which did not involve any guarantees being issued by Zambian Government or Bank of Zambia, and that the illegal ZANACO appointment of Mr Richard Mandona, a Lusaka Lawyer, and partner in Permanent Chambers as ZNOC Receiver Manager was for all purposes and intent, intended to sabotage the ABSA US$ 65 Million Oil Financing Facility, like the way the letter of intent with IMF and The World Bank was used to sabotage the Standard Bank of London US$ 35 Million Oil Financing Facility.
I told Mr Mwanawasa that as part of the scheme to kill ZNOC, there was a deliberate attempt to inflate ZNOC debts. I advise him that immediately after Mr Richard Madona was illegally appointed as ZNOC Receiver Manager by ZANACO, Total International lodged in a claim for US $ 11.6 million, through a Lusaka Lawyer, Miss Beatrice Mulafwi when what was due to Total international was only US $ 360,000. On request for a brief by Mr Richard Mandona, on the Total International claim of US$11.6 million ,On behalf of ZNOC management, I detailed reasons to Mr Richard Mandona, why the Total International claims were false and Mr Richard Mandona, appreciated the reasons that ZNOC management advanced in writing to him and he in turn sent a letter to Total International disputing the Total International claim of US 11.6 million.
I told Mr Mwanawasa that Zambia Revenue Authority was also being used to create an artificial ZNOC cash flow constraint by deliberately overcharging ZNOC petroleum products produced from reconstructed INDENI Refinery and the persistent refusal by the ministry of Finance to reinstate the 25% customs duty on imported finished petroleum products imported by oil marketing companies resulting in the ZNOC failing to recapture 90% of the market causing intermittent operations of TAZAMA and INDENI
It is important to note that almost all institutions that ZNOC had serious disputes with ZRA and ZANACO were under the control of the Ministry of Finance, and these disputes were not there before and only arose during the tenure of office when Dr Katele Kalumba the current MMD National Secretary became Minister of Finance and National Planning, and all the IMF and World Bank letters of intent conditionality with the above stated adverse terms on petroleum sector were signed by Dr Katele Kalumba the current MMD National Secretary when he was Minister of Finance and National Planning without consultations with the Ministry of Energy and Water Development. The report that claimed that I,000 Fuel Tankers were unaccounted for was prepared by Miss Anna Chifungulwa when she was in charge of internal audit of the Ministry of Finance when Dr Katele Kalumba the current MMD National Secretary was Minister of Finance and National Planning. The Auditor General’s office is also under the Minister of Finance. The Auditor General commissioned the ZNOC audit which resulted in the false audit report on ZNOC when Dr Katele Kalumba the current MMD National Secretary was Minister of Finance and National Planning.
I told Mr Mwanawasa S.c. that the reconstruction of INDENI refinery, presented an opportunity for ZNOC to make supernormal profits which came about as a result of the following.
• At the end of the importation excise, when INDENI was reconstructed, the rail transportation rate EX – RSA was US$ 218.43 per metric ton for gas oil and the pump price prevailing at the time reflected for the recovery of this transport element. When INDENI was reconstructed, the US$ 218.43 per metric ton transport element in the pricing formula was substituted by US$ 53 per metric ton made up of TAZAMA Pumping fee of US$ 21 per metric ton and US$ 32 per metric ton, INDENI processing fee, (broken down into US$ 24 processing fee and 6.5 % allowable process loss).There was therefore a saving in gas oil transportation of US$ 165.43per metric ton (i.e. the difference between US$ 218.43 and US$ 54 per metric ton) when INDENI was reconstructed. The situation was the same for other refined petroleum products as well. I advised Mr Mwanawasa, that ZNOC had potential of making US$ 10 million profits per every 90,000metric tons shipment and since on average 6 shipments were handled every year the company had potential to make profits of about US$ 60 million per year. I cautioned Mr Mwanawasa that the existence of this profit potential was at the core of transferring ZNOC role in the Oil sector to Total International at INDENI Refinery because the existence of this profit potential was know to the Ministry of Finance and National Planning through Financial plans that ZNOC used to submit to them from time to time so that the same financial plans could be submitted to the IMF and the Worldbank.
I advised Mr Mwanawasa that ZNOC could not reduce the pump price immediately to the level which reflected the reconstructed INDENI Refinery and TAZAMA Pipelines production costs for the following reasons:
1. There was need for ZNOC to recover the replacement cost of the 90,000 metric tons of crude oil that was stuck in the pipeline for 18 months during the shut down period. This was so because in the 18 months period the world market price of oil had more than doubled.
2. It was in the ZNOC strategic plans, that the ZNOC was going to use the super normal profits to be generated upon INDENI reconstruction, as a result of the above indicated freight differentials, to pay all outstanding debts and reduce the pump prices after six months of full operations
3. The actual operational efficiency of the TAZAMA and INDENI system had not yet been ascertained. For example, in the initial periods INDENI operational losses were 20% instead of the allowable 6.5%, and the products yields were also not in line with the expectations.
4. The Zambia Revenue Authority, under the Chairmanship of Mr Emmerneal Kasonde, was unfairly taxing petroleum products ex – INDENI at selling price while taxing finished imported petroleum products at cost. This unfavorable taxation regime had serious consequences on ZNOC for the following reasons:
a) On account of ZRA adverse taxation of ZNOC Ex – INDENI petroleum products, the ZNOC, TAZAMA / INDENI system could not recoup 90% of the national petroleum products market. Coupled with the fact that ZNOC did not have its own filling stations, this market was therefore lost to finished imported petroleum products imported by oil marketing companies, resulting in frequent shut downs of TAZAMA and INDENI operations.
b) All the super normal profits that ZNOC generated on reconstruction of INDENI, as a result of the freight differential explained above, were held in the form of over taxation by ZRA, consequently hampering ZNOC strategic plans. This situation was further compounded by the fact that ZRA had issued a directive that taxes due on ZNOC petroleum products sold to oil marketing companies should be paid directly to ZRA without the money passing through ZNOC books, thereby compromising the audit trail in the accounting of tax revenues.
I also told Mr Mwanawasa that the highly publicized claim by ZANACO that ZNOC owned it US $ 51 million was not true and was also part of the scheme to kill ZNOC.I told him that the correct debt was US 10.3 million and that ZANACO had been practicing false accounting and the differences between ZNOC and ZANACO were made up of the following differences:
1. US$ 4,165,046.30 overstatement in the values of letters of credits that ZNOC opened through ZANACO.
2. US$ 26,365,403.18 ZNOC deposits that ZANACO deliberately misposted to cover factious entries that ZANACO themselves had created
3. K123,641,421,950.50 (K 123 billion ) false ZANACO created entries posted to unilaterally ZANACO created ZNOC accounts. The account numbers of these questionable accounts are 0030240000000681,0036140000020061,0036140000020057,0030240000000779,0036140000020097 and 0030240000000867.
I told Mr Mwanawasa.S.c. that given the false entries and accounting that I had seen ZANACO practice against ZNOC I was convinced that there was something seriously wrong at ZANACO and if the case in which ZNOC had counter claimed to have the ZNOC debt at ZANACO settled by the courts, proceeded to be determined by the courts, I was certain that ZANACO was going to collapse.
I advised Mr Mwanawasa .S.c. that in national interests he should do the following:
Have the matter involving ZANACO, ZNOC and B.P settled outside court and use ZNOC to recapitalise ZANACO by the following means:
• The US$ 65 million ABSA Oil Financing Facility was structured in such a way that ABSA was only going to have a lien on the crude oil in the TAZAMA pipeline that it would finance and 90,000 metric tons ZNOC’S crude oil in the TAZAMA pipeline would therefore be displaced by the ABSA Financed crude oil and the proceeds realized there from would be approximately US$ 36 Million. ZNOC Management and the board would be willingness to pay ZANACO more than it was legally entitled to as demonstrated by the fact that in the three party Escrow agreement that was signed in October 2001 by ZANACO, ZNOC, and ABSA, ZANACO was going to be paid USD 24 Million within one and half months of implementation of the US$65 Million ZNOC/ABSA Oil Financing Facility. I indicated to Mr Mwanawasa that in national interests, ZNOC board and management were ready to even let ZANACO be paid entire the US$ 36 Million to be realized from the sale of refined petroleum products from the ZNOC crude oil in TAZAMA pipeline.
• I told him that I was convinced that judgment in the case involving ZNOC against ZRA before the Revenue Appeals Tribunal was going to be in favor of ZNOC because ZRA had failed to provide any arguments to justify their actions. I therefore proposed to Mr Mwanawasa that a further US$ 10 million would be paid to ZANACO from the ZRA refund to ZNOC, once the judgment was passed, while the reminder of the refund of another US$ 10 million would be used to pay ZNOC debt to Standard Chartered Bank.
• I went on to proposal that the ZNOC debt to Bank of Zambia would then be paid within less than 12 months, given the fact that the prevailing selling price of petroleum products at the time was favorable because of the supernormal profits to be made due to the transportation differential explained above which provided ZNOC with an opportunity to make profits of a minimum of US$ 60 million per year.
I advised Mr Mwanawasa.S.c that by allowing ZNOC implement the US$ 65 million ABSA Oil Financing Facility, it was not only going to bring about financial stability in the banking sector in Zambia, but that it would also provide the government with an opportunity to solve the ZANACO problem without using public funds to recapitalise it. There after then the government could insistitute investigation to determine what could have contributed to the erosion of the capital base at ZANACO, while both institutions ZANACO and ZNOC would have been preserved.
I told Mr Mwanawasa.S.c. that the decision by the MMD government to disposal of the 50% shareholding that the Zambian government had in B.P (Z) limited and AGIP, two biggest oil marketing companies then, removed government influence in the distribution and the marketing of petroleum products which gave rise to the cartel machinations which the country has been experiencing regarding petroleum products pump price fixing. I advised him that it was in an attempt to address the problem of petroleum products pump price setting in a liberalized market and the proposed future role of ZNOC as Manager of strategic reserves that the Zambian Government had committed its self in the HIPC programme with the IMF and the Worldbank ,that ZNOC expressed the interest to acquire the AGIP filling stations distribution network when AGIP decided to disinvest from Zambia. I Further cautioned Mr Levy Patrick Mwanawasa.S.c that transferring ZNOC’S role to Total International was going to extend the cartel machinations from the downstream petroleum distribution to the upstream petroleum sector as well i.e. crude oil importation and refining, compromising the security of the country in the process.
I advised Mr Mwanawasa.S.c. that in the letter of intent that the IMF , The World Bank and Dr Katele Kalumba then as Minister of Finance and National Planning signed as part of the HIPC conditionality for Zambia, there was a declaration that ZNOC was going to come out of the oil supply chain and became a manager of strategic reserves. Dr Katele Kalumba as Minister of Finance and National Planning agreed to this conditionality without stating out the modalities of how the same was to be achieved. A strategic reserve holder in whatever market, be it financial or
commodity market has to have sufficient financial muscle to:
• Maintain the reserves
• Be able to meet the emergency challenges that would arise from time to time
• Be able to intervene in the market from time to time should the situation so dictate.
I advised Mr Mwanawasa.S.c. that even the IMF and World bank conditionalituies of making ZNOC as manager of Strategic reserves would not be attained if the ABSA US$ 65 Million Oil Financing Facility was not implemented by ZNOC , because such a Strategic Reserve Manager role entailed there being common utilization of the TAZAMA Pipelines and the INDENI Refinery by ZNOC as manager of strategic reserves and the private sector oil companies, and without ZNOC or indeed the government having its own financing capacity, the strategic manager role of ZNOC / Zambia government would be an illusion because the IMF and the World bank would not allow the Zambian Government to use public funds for oil procurement purposes.
I advised Mr Levy Mwanawasa S.c that this was one of the reasons why ZNOC management strongly supported the implementation of the ABSA US$ 65 million Oil Financing Facility by ZNOC.
I went on the tell Mr Mwanawasa.S.c. that the adverse publicity on ZNOC in both private and government media was based on unfounded allegations and claims and that the same was ostracized by the MMD government as part of the overall strategy to perpetuate the scheme to defraud Zambia through the killing of ZNOC.
I have no reason to believe that Mr Mwanawasa.S.c. did not agree with me, because he asked me to recommend to him what he should do immediately to protect the country. I told him to write ZANACO and Standard Chartered Bank .He on his part asked me to put in writing all that I had told him but that I should not sign the report. He offered that my hand written report could be typed for me by his trusted Indian Secretary whom he claimed kept all his secretes. I politely declined this offer by telling him that I would type the report since I was conversant with Microsoft word. I submitted my typed unsigned report to Mr Mwanawasa not only once but on two occasions. My first report which contained what I have explained above was first given to him on 19th December 2001 and second one on 7th January 2002 after he became President when he phoned me and requested me to give him another report claiming that he had misplaced the first one when moving into State House
Below is the exact quotation of Mr Mwanawasa’s letter dated 19th December 2001.
Dear Sir,
Re:ZAMBIA NATIONAL OIL COMPANY LIMITED (IN RECEIVERSHIP)
I have received information that you instructed the person purported to be appointed Receiver of this company to proceed with the receivership and dispose of either the entire undertaking or the assets of the company to Total International Limited. I am of the strong view that Zambia National Oil Company Limited is very essential and provides a strategic service to this nation and it should not be liquidated in a light manner and since a new administration will come in office in a few days time, which I am confident I will have the privilege to lead, I would be most grateful if you would please let me know what you find objectionable to the ABSA facility which Zambia National Oil Company Limited has arranged and under which I understand that payment to your bank and Zambia National Commercial Bank Limited could be made within one and half months time.
I look forward to hearing from you as early as possible.
Yours Faithfully.
Signed
L.P.MWANAWASA SC
MMD PRESIDENTIAL CANDIDATE
Copy of this letter to Standard Chartered Bank is attached on annexure1 and 2. Similar letter with the same wording was also sent to ZANACO.
On 20th December 2001, I wrote a letter to Mr Richard Mandona, the ZANACO appointed ZNOC Receiver Manager informing him that I was proceeding on leave because I was one of the directors who had decided to challenge ZANACO the debenture holders who had purportedly appointed him as ZNOC Receiver Manager.
On 21st December 2001 Mr Richard Mandona, wrote me a letter advising me that he had fired me as ZNOC Chief Executive.
On the same day 21st December 2001 I left the country, for security reasons, only to return around 5th January 2002.
When I returned to Zambia in January 2002, after the 2001 Presidential and parliamentary general elections, Mr Mumba Malila told me that Mr Donald Chanda ZNOC board chairman went to his offices on 21st December 2001 and demanded that Mr Mumba Malila withdraw the ZNOC board action challenging ZANACO appointment of Mr Richard Mandona, as ZNOC Receiver Manager claiming that the action was only taken by me without the support of other directors. Mr Mumba Malila told me that he requested Mr Donald Chanda to put his demands in writing, which Mr Donald Chanda did with a copy to Mr Richard Mandona, ZANACO appointed ZNOC Receiver Manager. Mr Mumba Malila indicated that he could however not effect Mr Donald Chanda’s directive because the courts were on recess for Christmas at the time. I was extremely surprised to learn that there was such a written instruction from Mr Donald Chanda, because immediately after ZANACO appointed Mr Richard Mandona as a ZNOC Receiver Manager on ZNOC on 30th O
My immedaite reaction to all this is that Mwanawasa’s era require an immediate probe. Corruyption allegations are popping up dangerously so often aginst this administration. I agree with the author that other than Mwanawasa, the rest of these thieves are alive. Wouldnt the author bother to take this analysis to the ACC. I dont like Mumba’s submission, he used strong and uncouth language uncharacteritic of a Chief Executive Officer.Why would he submit his report to the Clerk of National Assembly? why didint he offer to submit to the Public Accounts Committee? The contents however help shed light to why ZNOC was liquidated to pave way for the TST fraud. I also agree that the dissolution was unnecesary. The corruption and thieving has continued in the oil sector because we dissolved ZNOC. The sector remains a cash cow for the MMD.
J ”the Binder” Mpalwe
Here we go again, there are so reports going around, most of which one is unable to authenticate. It is difficult to even comment on such reports. Some of these reports, if true, make me wonder what has happenned to our Country. The get rich quick schemes are now get super rich before time. If the two presidents indudged in criminal activities, what do you expect from a poor civil servants: kapoko, salasini just to mention a few. God have messy, Zambia is for sale, my prayer is ‘God give us a fairer bidder otherwise we are finished.
Here we go again, there are so reports going around, most of which, one is unable to authenticate. It is difficult to even comment on such reports. Some of these reports, if true, make me wonder what has happenned to our Country. The get rich quick schemes are now get super rich before time. If the two presidents indudged in criminal activities, what do you expect from a poor civil servants: kapoko, salasini just to mention a few. God have messy, Zambia is for sale; my prayer is ‘God give us a fairer bidder otherwise we are finished’.
It is just one of those stories to confuse the unsuspecting bloggers!