Zambia's new president, Michael Sata, has started investigations into last year's controversial sale of the Zambia Telecommunications Company (Zamtel) to Libya's LAP Green Networks, a sub-Saharan Africa mobile operator.
The previous government sold Zamtel for $394 million (R2.94 billion), claiming the deal aimed to save the company from closing after a plan to recapitalise it failed.
However, Sata, who was elected president almost two weeks ago, said the sale of the company was marred by corruption, and immediately constituted an investigative committee to ascertain how the sale of the company was conducted.
In 2009, the Zambian government, through the Zambia Development Agency (ZDA), announced the sale of Zamtel, and chose RP Capitals of the UK as the financial adviser on the deal.
Questionable bidding process
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 emerged the successful bidder.
But the process was allegedly marred by sustained corruption allegations from the public and shareholders, leading to the resignation of the former minister of communications and transport, Dora Siliya.
The report on the sale of the company by the committee is expected in the next 30 days. During his campaigning, Sata promised he would reverse the sale of the company because its privatisation process was marred by corruption, as government officials allegedly sold it to benefit themselves.
Sata said the 75% majority stake sold to LAP Green Networks should have been sold to Zambians in order to empower them and give them full ownership of the once public-owned company. “I want the report within 30 days because Zamtel is a public company owned by Zambians, and we cannot let the company go just like that. Zambians must know how the company was sold,” said Sata at State House last week.
Sata has already reversed the sale of Finance Bank Zambia (FBZ) to First Rand National Bank of SA, claiming the deal was corrupt, as the transaction was not backed by legal documentation.
Previous government sticks by decisions
However, the previous government claims the sale of the company was done in a professional and transparent manner, and within the guidelines of the ZDA, the country's privatisation agency.
By any standard, this is likely to have a negative impact on the growth and expansion of the company, as the future of the investment remains uncertain.
Zamtel MD Hans Paulsen said the Zambian government's decision to investigate the privatisation process of the company was welcome, and that LAP Green Networks was willing to co-operate.
Paulsen said the investigation had to do with the privatisation of the 75% share of the company to LAP Green Networks, “but as new shareholders, we had nothing to do with the privatisation process”.
Paulsen added: “We will co-operate and will be happy to communicate.” LAP Green Networks CEO Abdulbasit Elazzabi and the former Zambian minister of finance and national planning, Situmbeko Musokotwane, signed the share purchase agreement.
The Zambian government still owns a 25% stake in the company, which the previous government 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.
The new owners have also brought in new technologies, including a new-generation network, and have been expanding the company's data services, allowing Zamtel to compete with other operators, such as MTN and Bharti Airtel.
In April this year, the Zambian government froze LAP Green's stake in Zamtel in order to enforce the United Nations-backed sanctions following the unrest that engulfed Libya and ousted Libyan president Muammar Gaddafi from power. Since then, the Zambian government has been financing the operations of Zamtel until such time when the UN lifts all the economic sanctions.
LAP Green has operations in six African countries, including Niger, Uganda and Ivory Coast. It is a subsidiary of the Libyan Investment Portfolio, an investment arm of the previous Libyan regime.
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