The Zambian government has reversed the sale of the Zambia Telecommunication Company (Zamtel) to Lap Green Networks, of Libya, following allegations of fraud and corruption by the previous administration.
Lap Green Networks became the majority shareholder in Zamtel, with 75% shares, in 2010, after the then ruling party, the Movement for Multiparty Democracy (MMD) - under the leadership of Rupiah Banda - decided to privatise the service provider.
The company was sold at a total cost of $394 million (R2.9 billion), despite several attempts, including litigation, to block the sale of the company by citizens and shareholders.
The Zambian government then claimed the move was aimed at saving the company from closing, after plans to recapitalise it failed.
But when the new government, led by Michael Sata, came into office in September last year, following the general elections, investigations were launched through the Commission of Inquiry into the controversial sale of the company to Libyans.
In 2009, the Zambian government, through the Zambia Development Agency (ZDA), announced the sale of Zamtel, and chose RP Capitals of the UK as financial advisor to the deal.
Primary bids were received from India's Bharat Sanchar Nigam, Angola's Unitel, Russia's Vimpel Communications, together with Altiomo Holdings, and Lap Green Networks. After months of scrutinising, Lap Green Networks emerged the successful bidder.
But the process was marred by corruption allegations from the public and shareholders, leading to the resignation of the then minister of communications and transport, Dora Siliya, despite pleading innocent.
Damning report
A report by the Commission of Inquiry, which was handed to the president in December last year, revealed irregularities in the sale of the company.
The report, among other things, established that the sale was “fraudulent and irregular”, as Lap Green Networks did not meet any of the guidelines and conditions that were set by ZDA for the sale of the company. The report also established that the previous government politically prevailed over ZDA to have the company sold to Lap Green Networks. ZDA is a semi-autonomous government institution responsible for investments and privatisation in the country.
After the report, Sata instructed the minister of justice Sebastian Zulu to develop a memorandum that gave powers to Cabinet to discuss and decide the fate of the company.
On 4 January, Cabinet decided the sale of the company should be reversed, despite the huge investment that Lap Green Networks has made in Zamtel, due to the manner the company was sold.
Initially, Zamtel acting MD Eve Banda said it “has not yet received official notification from the government on the decision to reverse the sale of the company”.
The firm, however, later issued a statement promising to do “everything possible” to fight for the ownership of the majority stake in Zamtel, claiming the 75% share belongs to Libyans.
But Winter Kabimba, the ruling Patriotic Front's spokesperson, subsequently announced that “the government reversed the sale, because it put the security of the country at risk”.
Kabimba said the sale of Zamtel to a foreign country was not done in the best interest of the citizens, and the Patriotic Front government was resolved to correct such wrongs.
Sata warned during campaigns that he would reverse the sale of the company once elected as president, and advised the previous government to halt the sale. He said the 75% shares in the company should have been sold to Zambians to empower them and give them full ownership of the once publicly-owned company.
However, the previous government still maintains that the sale was done professionally and transparently, and within the guidelines of ZDA. Both former vice-president George Kunda and Siliya maintain there was no corruption and fraud in the sale of the company, as it was done transparently and in the national interest.
Kunda even warned that should the new Zambian government reverse the sale of the organisation, the country risks losing investor confidence.
Siliya is due to appear before the combined team of police, Anti-Money Laundering Unit of the Drug Enforcement Commission, and the Anti-Corruption Commission today, for questioning and possible arrest.
George Kunda's law firm, George Kunda and Company, was reported by the ZDA to have allegedly received $36 000 from Lap Green Networks in unexplained circumstances.
Heavy investment
The Zambian government still owns a 25% stake in the company, which the previous administration said it planned to sell to the public.
Since Zamtel's takeover, however, the new owners have invested millions of dollars to revive the company's operations and improve its services. Two month ago, the firm said it has so far invested $170 million in the expansion of its network capacity and coverage alone.
The investment has resulted in the growing of market share from 3.5% at the time of the takeover (June 2010), to 10.5% of fixed broadband customers, according to the company.
The new owners also managed to bring in new technologies, including a new-generation network, and had been expanding the company's data services, allowing Zamtel to compete favourably with other operators, including SA's MTN subsidiary MTN Zambia and India's Bharti Airtel.
Lap Green Networks has operations in six African countries, including Ivory Coast, Uganda and Niger. It is a subsidiary of the Libyan Investment Portfolio, an investment arm of the previous Libyan regime. The company wanted to use the investment in Zambia as a stepping stone for further investment in the Southern African region.
Things started looking gloomy for Zamtel when the Zambian government reversed the sale of Zesco's optic fibre network. The nationwide optic fibre was owned by a power utility company, but was sold - together with Zamtel - to Lap Green Networks.
But the new Zambian government reversed the sale of the optic fibre, after Zesco complained that it was politically pressured to sell the optic fibre to Lap Green Networks.
By any standard, Lap Green Networks had managed to instil customer confidence in the network, expand the network, and raise competition among Zambia's three telecom operators, resulting in cheaper products and services.
Share
