The sale of the Zambia Telecommunications Company (Zamtel) to LAP Green Networks of Libya was illegal and fraudulent, according to a report by the commission of inquiry set up to investigate the deal.
The report puts the future of Zamtel on knife's edge and is likely to have a negative impact on the growth and expansion of the company.
Presenting the findings of the inquiry to Zambian president Michael Sata, the commission's chairperson, Sebastian Zulu, who is also the minister of justice, said the transaction was fraudulent and illegal.
Zulu said the evaluation of Zamtel assets by RP Capital, of Cayman Islands, was highly incompetent and misleading.
The fraudulent and incompetent transaction, Zulu said, resulted in Zamtel being undervalued.
“The company was undervalued at $38 million despite the Zamtel having a book value of $81 million,” said Zulu, when presenting the report on Thursday.
Zulu further disclosed that the single sourcing of RP Capital to evaluate Zamtel was illegal, as the tender could have been floated to allow other companies to bid.
In receiving the report, Sata directed Zulu to develop a memorandum of understanding to enable Cabinet to make a final decision on the sale of the company.
“It is Cabinet that will decide either to reverse the sale of the company or allow the company to continue operating,” said Sata.
Sata constituted the commission of inquiry last month to investigate last year's controversial sale of Zamtel to LAP Green Networks, a sub-Saharan telecoms company.
The previous government sold Zamtel for a total cost of $394 million, claiming the deal was aimed at saving it from closing after plans to recapitalise it failed.
However, Sata, who was elected president a month ago, said the sale of the company was marred by corruption and immediately constituted a committee to ascertain how the sale was conducted.
Primary bids were received from various foreign telecoms companies, including 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 transaction forced the then minister of communications and transport, Dora Siliya to resign, following sustained public criticism and litigations.
LAP Green Network owns 75% of the shares in Zamtel, while the Zambian government owns the rest.
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 Zamtel should have been sold to Zambians in order to empower them and give them full ownership of the once state-owned company. Zamtel is Zambia's only total telecommunications solutions service provider, offering broadband Internet, fixed and mobile services.
When the committee to investigate the sale of the company was instituted, Zamtel MD Hans Paulsen said the Zambian government's decision to investigate the sale was welcome and that LAP Green Networks was willing to co-operate.
Paulsen said that as new shareholders, they had nothing to do with the privatisation process of the company.
By any standard, Zamtel has improved its operations to international standards since LAP Green Networks took over management of the company.
If the Zambian government reverses the sale, LAP's plans of further expansion in Africa will suffer a serious setback. Surprisingly, even before the outcome of the inquiry was made known, the Zambian minister of information and broadcasting, Given Lubinda said he had set up a meeting with LAP Green Networks' management to chart the future of the company in Zambia.
Last week, Libya's National Transitional Council (NTC) appointed a new CEO to take stock of LAP Green Networks in Zambia and eight other African countries.
Abdul Rahman Al Shater was appointed new acting CEO to strongly push for the growth of LAP Green Networks' expansion programme.
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