The real battle between Vedanta Resources Limited and the government of the Republic of Zambia is now in full swing.
At some point, those who were warning government to handle Vedanta with care sounded like they had been paid by foreigners to sing their agenda. When we said innocent Zambians were going to pay because of the PF’s carelessness, some people accused us of not being patriotic.
Here we are now! One move by Vedanta has already thrown our government in disarray. The ruling by the South African court against ZCCM-IH and the panic that it has caused inside government tells us that they didn’t plan and never saw it coming. In one breath they’re saying “the ruling has no bearing in Zambia” and in the next breath they are saying, “we will send the Attorney General to join proceedings in South Africa”. How?
It is now clear that PF has an insatiable appetite for liquidations and brutal takeover of private companies. This government has a tendency towards nationalisation of private businesses – via liquidation, compulsory acquisition and takeovers – without any legal backing. What they are doing to KCM is the same thing they did to Post Newspapers Limited. The difference is that The Post was boxed in Zambia and there was no international arbitration that could save it.
About a month before the August 11, 2016 general elections that ushered President Edgar Lungu into office for the second time, the Zambia Revenue Authority, on instructions from State House, closed down The Post, claiming that the newspaper was owing about K53 million in unpaid taxes. Although the tax claim was disputed, this is money which The Post could have very easily paid by selling just a couple of its fleet of brand new trucks, assuming the company had no money at the time.
Shockingly, the Zambia Revenue Authority was not interested in the payment of the owed taxes. They just wanted the newspaper shut despite being served a court order restraining them from keeping the newspaper closed. The tax tribunal judge observed that The Post could only pay its dues if ZRA opened the premises for operations, but the Revenue Authority disregarded the order and unleashed brutal police to arrest, beat or kill anyone who attempted to enter the company premises.
It was clearly not about money. Even if The Post finished paying that money, which by the way it had already started offsetting, there was no way the company would have been allowed to continue operating. It was not about unpaid taxes, it was about closing down ‘a hostile newspaper’ that had threatened the continued stay in power of those who occupied State House at the time. President Lungu denied any involvement in this but even the peacocks and monkeys at State House know that he was the man behind the scheme.
Indeed, in the end, a multi-million dollar private company was forced into liquidation on grounds that it had failed to settle not the taxes it owed ZRA, but the K800, 000 claimed by four corrupt former employees who were bribed to betray the institution. After 25 years of successful business, The Post was pronounced no more on November 2, 2016 – three months after the brutal regime of President Lungu was inaugurated.
We see The Post in what is happening to Vedanta. The same tricks used to liquidate the newspaper are the same tricks being employed to liquidate Vedanta’s KCM. This is not about Vedanta’s failure to invest. There is a bigger fight in this KCM saga which the public has been denied the privilege of knowing. President Lungu is trying to show the Indian businessman who owns Vedanta just how powerful he is in Zambia. This is what he did to the owners of The Post. It was about punishing Fred M’membe, regardless of how much revenue ZRA would lose and how many jobs would be lost.
Even if Vedanta brought the promised billions to invest in KCM, the PF government would not accept because they simply want to punish the owners of the company. It is no longer about enforcing the investment agreement, but flexing State powers and exciting the Copperbelt population ahead of the 2021 general elections.
But the danger with this approach is that laws get to be broken along the way. The sympathy that Zambia deserves from the International arbitration courts is now being given to Vedanta, whom almost the whole country despises. These are the consequences caused by a brutal government that fails to account for its power.
The PF now finds itself in a quagmire where it has assured the mining community that Vedanta will never come back, but they forgot that, unlike The Post, Vedanta is not boxed in this country. Not only has it got access to International Arbitration, it also has enough money to fight back. In the end, it is the poor Zambians who will suffer.