UPND leader Hakainde Hichilema has saluted Attorney General Likando Kalaluka State Counsel for rendering a legal opinion to the effect that the takeover of State-Owned Enterprises (SOEs) by the Industrial Development Corporation (IDC) and plans to privatise them contravenes the Minister of Finance Incorporation Act, the Zambia Development Agency (ZDA) Act and the Securities Act.
And Hichilema says the clarification from ZAFFICO that the Minister of Finance has since written his approval this month for the listing of the company on the Lusaka Stock exchange raises more questions of impropriety.
On October 18, 2019, Kalaluka, who is the Chief Government Legal Advisor, wrote a legal opinion stating that the Zambia Forestry and Forest Industries Corporation (ZAFFICO) was illegally under the IDC, and as such, its proposed listing on the Lusaka Stock Exchange (LuSE) could not be done without amending the law that vested ownership of all government companies in the hands of the Minister of Finance.
He went on to state that the proposed listing of ZAFFICO on the Lusaka Stock Exchange was unattainable, while the “alleged” takeover of government companies by the IDC was not done in conformity with the law.
“The proposed listing on the Lusaka Securities Exchange at the behest of IDC is untenable because it is at variance with the Minister of Finance (Incorporation) Act, which vests property of the government exclusively in the Minister on one hand and on the other, it contravenes the ZDA Act and the Securities Act. In this case, the listing of shares on the Lusaka Securities Exchange can only be at the instance of the Minister of Finance because the shares vest in the Minister and NOT the IDC,” Kalaluka explained.
“There is currently no legal framework under which IDC can ride on to properly assume ownership of the shares in the government-owned companies in the absence of the Minister of Finance (Incorporation) Act, ZDA Act and Securities Act being amended. The alleged takeover of the government companies by IDC may not have been done in substantial conformity with the above Acts, which are the applicable laws for the purposes of government property and transfer of property thereof.”
He guided that for the listing of ZAFFICO to go ahead, there was need to amend the stated laws.
“In the context of the law, the inescapable conclusion is that there is need to amend the said laws in order to legally transfer the shareholding from the Minister of Finance to IDC in line with government policy so as to properly deal with listing of ZAFFICO and other companies in order to transfer shareholding into private hands,” stated Kalaluka.
After the exposé was published yesterday, ZAFFICO issued a statement, assuring prospective investors that the ownership impropriety had since been corrected by the Minister of Finance who has given authority for ZAFFICO to list.
“The story is allegedly based on an opinion by the Attorney General which has been taken out of context, with respect to an inquiry made by ZAFFICO on the legal process necessary for the successful listing of ZAFFICO. The specific resolutions relating to the listing of ZAFFICO requires that the resolution be that of the Minister of Finance. The Minister of Finance issued his written approval of the listing of ZAFFICO Limited on 5th November 2019,” stated ZAFFICO acting managing director Manuel Mutale.
“We urge investors, stakeholders and members of the public to dismiss the reports suggesting the Attorney General in any way or form suggested that the IDC illegally owns shares in ZAFFICO.”
But Hichilema said the Attorney General was right to warn that the takeover of State companies by IDC and the planned listing of ZAFFICO was not backed by law.
“We knew that after this opinion that Kalaluka gave, there were going to pressure him to rescind it or they were going to come up with hasty measures to correct the illegality. That’s what they are doing now. They want to oppress Kalaluka and even threaten his tenure as Attorney General although he is telling them the truth. If you say the minister wrote the authority for IDC to list ZAFFICO, that raises more questions. When was the IDC incorporated? Who was the Minister of Finance at the time? When has this authority been written this month? They are covering up illegalities,” Hichilema said.
“It is time for Zambians to commend Kalaluka. There are things that he has not done properly but on these two accounts, including his legal opinion on ministers’ illegal stay in office, he has conducted himself well, we must commend him. But we should not stop at commending him, we must stand behind the Attorney General because he is an officer of the people of Zambia. He is an officer of the 17 million Zambians. He is employed to render a legal opinion to us through an organization called government, through an organization called Ministry of Finance in terms of this IDC saga. We agree with the Attorney General and finally, the Attorney General has had the courage to do the brave thing.”
He then demanded that President Edgar Lungu steps down as IDC board chairman because he was threatening technocrats.
“And it is also wrong that the IDC chairman is the President. No decent President would become a chairman of a parastatal company. A President should have a lot of work to do. It shows that he is idle. When our time in office comes, God’s will, courtesy of the people of Zambia, I will never sit as chairman of IDC. We’ll end that misnomer. This man has time to sit in a board meeting; how can someone with a vision and mission sit as chair of IDC? And tell me which genuine board member will oppose a chairman who is President also? Which genuine technical member of staff of the IDC will advise something against what the chairman wants and the chairman happens to be the President? No one!” Hichilema observed.
“So it means the whole board is dead. It means that board will not conduct good business on behalf of the people of Zambia. That anomaly must be changed. Actually, I use this opportunity to say that he must step down from that role, he is messing up IDC. Already, they have made some commitment to some people to buy ZAFFICO as we said it before. Now they want to come round and deliver on those promises which they did illegally at the disadvantage of ZAFFICO workers, the traders who live on timber. The PF has a vested interest in a certain group of nationality, they want to hand over these assets as they promised.”
He noted that government was moving at lightning speed to sell State assets because the Treasury was depleted.
“Now that they know there is no more money in the Treasury, they are now going to the parastatals such as ZAFFICO and other quasi-government institutions and they are moving at a speed which is unprecedented because they have already committed to certain buyers that are known. Generally, Zambians know which buyers they want. They have what they call open transactions, appearing to be genuine transactions but there are a lot of underhand movement of resources and money to converge to individuals and key players in PF in the form of corruption just to cover these transactions,” Hichilema said.
“I am saying to the people of Zambia; time has come for them to put their foot down on these illegalities. When they are done with ZAFFICO, what will they do? They will go to another asset. And it is these transactions which are even scaring the IMF because the appetite for excessive expenditure has continued under the PF. These are some of the things we warned about four or five years ago. And we have been prosecuted for the same things. Now everybody can see that money will be siphoned from ZAFFICO through these illegalities.
He noted that IDC was silent over the Zesco debt and load-shedding because the institution had no answers to give.
“They are silent because they have no sensible explanation to give to Zambians because they know the truth but being told to say wrong things. I think they have chosen to be silent because the PF are telling them to tell lies. And if you are professional in IDC, you cannot agree to tell lies because they’ll will catch up with you sooner or later. Zambians will know you are part of the scam. And I think they are quiet because they know that the situation is out of control,” Hichilema said.
The UPND leader wondered how Zambia would spend US$42 million to import power (for two months) that would only reduce load shedding by two hours.
“Let’s concentrate on finding solutions to the power crisis. 18 hours of load shedding cannot be acceptable. How can any leadership that has common sense spend $42 million plus million to import power from South Africa, only for two hours reduction of load shedding? There is no reduction, the load shedding is even getting worse. The right thing is to pay Maamba what they are owed so that you can bring back 130 megawatts into circulation and Maamba will operate more than 2 months and you have a better reduction in load shedding,” said Hichilema.
“Alternatively, for us, that $42 million, we would have invested it in 30 megawatts of solar power station which would have produced power in seven months and it would have produced power for 20 years. Can you see the lack of seriousness in PF? By the way, if you pay Maamba, the money stays in the economy and you protect jobs. The Bible is very clear, where there is no vision, there is no leadership, the people perish. That’s why we are perishing today. The answer is a change of leadership. 2021, Zambians have a rare opportunity to change leadership. We should unite, we should work together as we did to deliver independence, otherwise tizasila tonse.”