FORMER commerce minister Bob Sichinga says Zambia is poised to lose out from the shareholding misunderstandings between Vedanta Resources Limited and government.
And Sichinga has warned that Zambia risks denting its image as an investment destination to the international community if the ongoing wrangles between Konkola Copper Mines’ (KCM’s) provisional liquidation team and Vedanta were not properly handled.
Last week, Vedanta Resources dragged KCM Provisional Liquidator Milingo Lungu to the Lusaka High Court over the move to restructure and reorganise KCM into two separate subsidiary companies.
Commenting on the development, Sichinga observed that President Edgar Lungu’s direct involvement in the wrangles between Vedanta and Milingo’s team would mean Zambia would eventually lose out in terms of tax payers’ money being spent in compensation similar the Lap GreenN fiasco after government was forced to pay the Libyan firm compensatory damages back in 2012.
“The President has been very unwise to get directly involved in the KCM saga because he knows how a company works, he has worked for KCM before. The first thing is this, when you are negotiating, the last thing you want other parties to know is the final position. So, when you make a statement that, ‘it’s a done deal and there is no going back again,’ then what is the attitude that Vedanta will take? Because you have already told them and you don’t do that. You play your cards close to your chest so that they have no clue. Don’t tell them, ‘you are never coming back!’ How can you do that? When you do that, do you know what they will do now? They will use whatever means or whatever they have. That’s why I am saying, it’s very unwise for Lungu to do what he is doing. And why is the President getting involved when there is a Minister of Mines (Richard Musukwa), there is a Minister of Finance (Dr Bwalya Ng’andu), there is a Minister of Commerce (Christopher Yaluma),” Sichinga said in an interview.
“These are the people who should negotiate. He should keep out of it and if he wants to tell his position, he should tell his Ministers. Then they should look at the law, they have an Attorney General (Likando Kalaluka); they have got advisors in the Ministry of Finance and they can advise because remember the LAP GreenN issue, the Zamtel issue…? So, when a decision is taken by an international court, you have no way of saying no. You end up paying in the final analysis. The thing you don’t want to do is expose yourself. And the President is a lawyer, he should know better than this. What I’m saying is that the President cannot issue a statement like that while negotiations are still going on. Why would he do that? I mean, I should have used a stronger term, but he is President so what can we do?”
And Sichinga warned that Zambia risked denting its image as an investment destination if the controversial issue was not properly handled.
“I have been a minister, you know, and there are certain things I can’t do and can’t say. So, what I am saying is in the interest of our country. And the only people that can buy those shares are going to be the Chinese or others who are willing to take those risks. I can tell based on my experience that government has done a raw deal with a Chinese company or whoever they want to use as a buyer. They have already done another deal, which gives them financial benefits individually as persons. So, now, it’s an issue of saying, ‘I must get that money.’ So, they are ignoring all the legal requirements and provisions that are there. So, what I am saying is that, we are going to end in the exact situation like the Zamtel and LapGreen,” said Sichinga.
“If they manage to do that, it is going to become a hostile take-over. A hostile take-over is where a minority shareholder is saying, ‘we are going to buy these shares regardless of whether you say, ‘yes or no.’ The reason that I have given you, the example of LapGreenN is exactly what I have given you, that’s exactly what is going to happen. So, now, Zambia’s standing in other countries in the diaspora, what do you make of that? I was going round the world to look for investors when I was in government, all those stock exchanges where stocks are made from; I was selling Zambia where we respect the law, we have got these in place, I was doing that. You think people are going to believe the next Commerce Minister where (he/she) calls for investment? How will they believe any other Minister of Finance coming? It’s messed up!”