LAST week we published an investigation that showed that three government entities, led by the Industrial Development Corporation paid US$44.8 million to acquire 49 per cent shares in a private Chinese company that makes tiles. As expected, many of our readers felt there was no scandal to report about. Others found the story a little complicated to appreciate the gravity of wrongdoing. We would like to urge our fellow citizens not to take their eyes off this story because it’s bigger than it seems. It will not be long before the whole saga is laid bare.

Today, we would like to get started simplifying the issues around this issue while our investigators continue to inform the public about what else we know around this matter. Our people must not be tricked by the press statement and responses to our press queries that the IDC issued last week, there is a scandal here and we will prove it in due course.

What is Marcopolo? This is a tile making company owned by some Chinese under the Wonderful Group of Companies. These Chinese groups of companies are involved in many other businesses in Zambia including the processing of timber, but that is another big story for another day. Today we are talking about Marcopolo. This company was registered in 2016 and was Commissioned for operations in December 2017 by President Edgar Lungu, who also happens to be the board chairman for IDC.

Our people must remember that when we asked IDC who chaired the meeting that approved the decision to spend millions of dollars buying shares in this new company, the Corporation declined to answer that question, in journalism, that is an answer in its own rights. We can conclude that the board chairman chaired the said board meeting. So, therefore, how this Chinese company managed to get the President to officially launch its operations and a couple of years later sell it’s shares to the President’s company at a whooping US$44.8 million is an interesting coincidence.

The agreement to buy shares in this company was made in June 2020, although the IDC now tells us that the decision was made in August, meaning they first started paying the money in June before deciding to buy the company. Again, that is a very interesting memory lapse on the part of IDC. But anyway, the question now is; when did those two Chinese investors decide to sell shares in Marcopolo? When was valuation done? When did the negotiations take place? When we put these questions on a timeline, we find that this company was probably in operation for less than 12 months before IDC jumped in to buy it. The question is why? What was the motivation?

Any person who has ventured into business at whatever level will agree with us that a business takes at least four to five years to start making profit. Even the IDC themselves, we asked them how long it would take them before they can recoup their investment on this deal and they said in five years’ time. So how can it be that for Marcopolo, the investors pumped in (we are told US$35 million as capital) and a year later the company is worth over US$200 million. What kind of magic is that? Where on earth can you find such an entrepreneurship miracle?

We want anyone at IDC or at Marcopolo to show us any other private company whose share price is US$2,000 (K44,000) per share. It will be interesting to see what business that company trades in and how long it has been operational. According to our findings, US$2,000 was the share price for ZCCM-IH when it went to list on the London Stock exchange. Surely, who did this valuation? We ask because from where we stand, these Chinese seem to be suggesting that their three-year-old company is the most profitable entity in this part of Africa.

Let’s come to NAPSA and the Workers Compensation Fund Control Board. These are statutory bodies and statutory entities have an investment policy that limits their level of exposure in a given asset. There are rules that guide them on where they can invest public funds. According to NAPSA’s own rules, the Authority cannot invest in a company that has not been audited for three years. Before an investment can be made, the company selling shares must produce those audited accounts and make them public. We want to see the audited accounts for Marcopolo Tiles Company Limited for the past three years. In fact, the NAPSA guidelines for investment proposals dictates that the company must produce Financial/Cash flow analysis for 5 years. Was this done in the Marcopolo deal? It’s impossible because they bought a company that was less than five years old. Why? What was the motivation?

We have looked at all the companies under “listed equity” where NAPSA holds shares and we have seen that they are 16 of them. Of the 16 companies, the company where NAPSA holds the biggest share is ZCCM-IH at 15 per cent and that is a company listed on the stock exchange. According to the statement that was issued by the Industrial Development Corporation on this matter last week, NAPSA has bought 16.39 percent in this Marcopolo company, making it the largest stake that NAPSA currently has in any company – and this is a private company whose audited accounts are nowhere to be seen.

IDC is leading statutory bodies to gamble with public money, putting it in a company that has no proven track record. We want the IDC to explain to the people how this transaction happened. We are aware, from the little corporate governance we know, that IDC as a company cannot directly interact with the Marcopolo company. There must be a broker, a middleman who handled the deal, and not just any broker but a licensed and reputable firm. Who is that broker who managed the IDC/Marcoopolo transaction?

That’s it for today.