FORMER Transport and Communications permanent secretary Misheck Lungu says government spent nothing on Zambia Airways during the time he was handling the project.
In an interview, Lungu said Zambia Airways was owned by the Industrial Development Corporation (IDC) and if they spent money, he was not aware.
“From the time that I handled the issue of Zambian Airways, there was no exchange of money. There was just a shareholding ownership agreement between IDC and Ethiopian Airlines. During my time in office, when I was handling Zambian Airways, Zambian government spent nothing. If IDC spent some money that is IDC. My books are there you can go and verify that yes from the treasury I did not draw any money to contribute to Zambian Airways. But if IDC and Zambia Airlines spent some money, I don’t know. I am not privy to that. Zambia Airways is an independent company owned by IDC and Ethiopian Airlines. At the time of establishing Zambia Airways, government spent nothing because there was no need for expenditure,” Lungu said.
He said Zambian people made it clear that the airline should not be run by the government.
“The parties to Zambia Airways are IDC and Ethiopian Airlines. Do you understand that government should not come into the equation? At the inception of Zambia Airways, there were a number of meetings that we were holding to sensitize the public and it was loud and very clear that the Zambian people said ‘we don’t want Zambian Airways to be established because government does not have resources to run an airline. We don’t want to establish an airline because of government’s interference, the airline will not run successfully.’ And we said as government, we are not going to be the ones running this company. Let the business people run the company which are Ethiopian Airlines and IDC,” said Lungu.
“The reason of that governance structure was to insulate government from taking liability on the company. So, the parties took it up. So, government is nowhere in the picture of governance because government has got an institution called IDC and that institution can create any company that it wants to create without any interference of a PS or a minister. The only thing that is very peculiar about this company is that it is domiciled in Zambia. You don’t need to bring the government to Zambia Airways now. So you don’t expect the government to spend a penny, IDC and Ethiopian Airlines will spend.”
A News Diggers investigation has revealed that the Zambian government has so far spent more than US$4.5 million (about K80 million) on Zambia Airways, before the national airline takes off, while Ethiopian Airlines has yet to make its capital contribution through the lease of aircraft.
The investigation further revealed that Zambia Airways had never been audited, which was contrary to Article 20 of the shareholders agreement between the IDC and Ethiopian Airlines.
Meanwhile, the investigation revealed that while the Ethiopian Airlines-appointed Chief Executive Officer of Zambia Airways is getting paid, the Cabin Crew members who underwent training in Addis Ababa are not yet employed, and are awaiting the launch of the airline.
But, responding to a press query, the IDC insisted that the partnership with Ethiopian Airlines is mutually beneficial, saying the national airline will take to the skies in the fourth quarter of this year.
The IDC however confirmed that the company has not been audited, saying this is so because at the moment, it is operating as a project under IDC.
According to the shareholders agreement with the IDC, Article 5(b), Ethiopian Airlines was supposed to make capital contribution by making payments amounting to US$13.5 million towards the leasing of aircraft to be used by Zambia Airways, but this has not been done.
Ethiopian Airlines is mandated under the commercial contract with Zambia Airways to provide consultancy services, including marketing, branding and staff training, but the Zambian government has instead spent amounts exceeding US$1 million on the undertaking.
Despite being a minority shareholder, Ethiopian Airlines has been appointed as Ground Sales Agents for Zambia Airways in Harare, Johannesburg and other cities. Further, Ethiopian Airlines was mandated to appoint a Chief Executive Officer for Zambia Airways who has continued to get paid while the Zambian employees in Lusaka are working without any written conditions of service.
According to Article 20 of the agreement, Zambia Airways is supposed to prepare and present audited financial statements to the members of the Board of Directors and to the Shareholders within 40 working days of the close of the Financial Year, but this has not been done since 2019.