IDC CEO directed ZCCM-IH to transfer US$10m to Maamba Collieries without board approval – AG

11th October 2021

Local

Former Industrial Development Corporation (IDC) chief executive officer Mateyo Kaluba speaks when he appeared before the Parliamentary Committee on parastatal bodies at parliament building on January 25, 2018 - Picture by Tenson Mkhala

Local

Former Industrial Development Corporation (IDC) chief executive officer Mateyo Kaluba speaks when he appeared before the Parliamentary Committee on parastatal bodies at parliament building on January 25, 2018 - Picture by Tenson Mkhala

THE Auditor General’s report on the Accounts of Parastatal Bodies and other Statutory Institutions for the financial year ended December 31, 2019 has revealed that the Industrial Development Corporation Chief Executive Officer requested the Board Chairperson of ZCCM-IH to advance Maamba Collieries Limited US$10 million without the approval of the ZCCM-IH board of directors.

And the report has revealed that TAZAMA experienced 33 leakages along the pipelines resulting in a total loss of 631.22 metric tons of crude oil costing K4,413,029.

The report stated that Maamba Collieries failed to pay ZCCM-IH back a shareholders Loan resulting in an outstanding amount of US$32,876,090.

“Maamba Collieries Limited (MCL) is a 300MW electricity thermal powered company owned by ZCCM-IH Plc (35 percent) and of Nava Bharat Singapore Consortium (65 percent). A review of accounting and other records revealed the following: failure to pay back shareholders Loan by Maamba Collieries Limited. On 17th June 2014, ZCCM-IH and Maamba Collieries Limited (MCL) signed a Shareholder Loan Agreement in which ZCCM-IH advanced an amount of US$26,479,529 to Maamba Collieries Limited,” the report stated.

“The conditions of the loan included the following: interest of 6 percent per annum; MCL was to repay the principal amount of the facility and the interest accrued in five annual instalments commencing on 8th September 2017; and ZCCM-IH had an option of setting-off any repayment obligation of MCL under this Agreement against any payments owed by ZCCM-IH to MCL. However, as at 31st December 2019, MCL had not made any repayment towards the loan resulting in an outstanding amount of US$32,876,090 comprising principal (US$26,479,529) and interest (US$6,396,561).”

The report disclosed that on March 21, 2019, the IDC CEO requested the ZCCM-IH Board Chairperson to advance MCL US$10 million for MCL to make a payment towards its debt obligations, failure to which there would be a negative impact on ZCCM-IH, ZESCO Limited, IDC and the economy at large.

The report stated that ZCCM-IH transferred the funds to MCL but there was no Board approval by the Board of Directors of ZCCM-IH and no signed agreement between ZCCM-IH and MCL.

“On 21st March 2019, the Chief Executive Officer of IDC requested the Board Chairperson of ZCCM-IH to advance MCL an amount of US$10 million on or before 25th March 2019. The funds were meant for MCL to make payment towards its debt obligations by 29th March 2019 failure to which there would be a negative impact on ZCCM-IH, ZESCO Limited, IDC and the economy at large. In this regard, on 25th March 2019, ZCCM-IH transferred the funds to MCL. However, there was no Board approval by the Board of Directors of ZCCM-IH and no signed agreement between ZCCM-IH and MCL. As at 31st December 2020, the advance had not been repaid,” read the report.

The report also revealed that two houses owned by ZCCM-IH were occupied by Mulonga Water and Sewerage Company but there were no lease agreements for the occupied houses and no rent had been received.

“During the period under review, ZCCM-IH owned several properties which included three residential houses valued at K1,288,432 located along Funda Avenue in Mufulira district of the Copperbelt. A physical inspection conducted in October 2020 revealed that two houses on plot Nos. M6 and L6 of Lot No. 247/M were occupied by Mulonga Water and Sewerage Company. However, there were no lease agreements for the occupied houses and no rent had been received. As at 31st January 2021, there were no records availed for audit to indicate when the houses were occupied. In their response dated 19th February 2021, management stated that they were not aware and did not authorise Mulonga Water and Sewerage Company to occupy the said properties but came to be aware of their occupancy following the visits by the audit team,” the report stated.

And the report revealed that TAZAMA experienced 33 leakages along the pipelines resulting in a loss of 631.22 metric tons of crude oil costing K4,413,029.

“A review of minutes of the Operations and Engineering Committee revealed that during the period under review, TAZAMA experienced 33 leakages along the pipelines resulting into a total loss of 631.22 metric tons (MT) of crude oil costing K4,413,029 (US$454,634.42). During the period under review, the TAZAMA Pipelines Limited was owed amounts totalling K6,233,525 by the Zambia Revenue Authority (ZRA) as Value Added Tax (VAT) refunds, some of which had accrued from as far back as 2014. However, the refunds had not been recovered as at 31st December 2020,” stated the report.

“In addition, during the period under review, TAZAMA Pipelines Limited was owed amounts totalling K39.9 million (Tsh5,463,371,485.34) by the Tanzania Revenue Authority (TRA) in VAT refunds some of which had accrued from as far back as 2014. However, the refunds had not been recovered as at 31st December 2020.”