Government has contacted us with a complaint that our story which quoted the Attorney General saying the Industrial Development Corporation (IDC) illegally owns State Owned Enterprises is misleading. In validating their complaint, the officials from the Ministry of Information who were representing Permanent Secretary Chanda Kasolo, gave us what they are calling “the correct position of the Attorney General” on the sale of ZAFFICO shares, which apparently emanates from a latest legal opinion from the Attorney General, written on November 19, 2019.
What government has failed to tell us is if the initial legal opinion which we quoted from State Counsel Likando Kalaluka was fake. No one has accused us of publishing a story from an unauthentic document. Their issue is simply that our story has been overtaken by events because the impropriety has been corrected. We also note that in the second legal opinion, the Attorney General is not in any way withdrawing his guidance and interpretation of the law. So we don’t see where the problem is with our story.
But we can say that the genesis of the IDC problem highlighted in the Attorney General’s initial legal opinion stems from how they manipulated the composition of the board. The initial IDC Articles of Incorporation had the Attorney General as board member and legal advisor. There was no Head of State as Chairman and they also excluded the Minister of Finance, because he is the main shareholder of the parastatal mother body. What State Counsel Kalaluka is advising now wouldn’t have been an issue if a seat was reserved for the Attorney General on the IDC board. He would have guided many years ago, that there is impropriety in the takeover of the State companies. That was the essence of having the Chief government legal advisor on the IDC board.
But because of mischief, some people in government took advantage of Michael Sata’s illness and manipulated the Articles of Incorporation for their own personal benefit. They removed the Attorney General and and made the President as board chairman; and because the incumbent Head of State is a man who lacks foresight, he accepted to take the position.
Like State Counsel Kalaluka stated, the approach which the IDC took in taking over State companies and it’s plans to sale parastatal shares on the stock market without authority from the Minister of Finance will open the country to litigation. The Attorney General tells us that until this month, the takeover of State companies and subsequent sale by the IDC is not backed by law because it had no authority from the Minister of Finance and it contravened the Zambia Development Agency (ZDA) Act, and the Securities Act. What does this mean to the transactions that IDC conducted under Minister Alexander Chikwanda, Felix Mutati and Margaret Mwanakatwe?
We must warn here that although efforts have been made to downplay the Attorney General’s original opinion and guidance on the “alleged takeover” of State companies by the IDC, those who were and continue to transact with the institution are taking a huge investment risk. In a case of change of government, these transactions will be brought to the spotlight for auditing. Careless business owners who are selling companies to IDC and investors who are buying shares in State Companies must know that a time will come when the law will be visited and a lot of money will be lost.
The IDC was incorporated about five years ago, the country has changed Ministers of Finance four times, and non of the predecessors identified this problem which State Counsel Kalaluka was observing in his legal opinion. Why? Where was the Minister of Finance before the Attorney General highlighted this impropriety?
This brings us to the song we have singing about the composition of the IDC board. The Minister of Finance is the main shareholder of the IDC with about 99.9 per cent shares. The Minister of Finance Incorporation Act says the board of a State Owed Enterprise like IDC has to submit to him, so in this case, since he is the owner of the company and also on the board, the Minister of Finance is submitting to himself. Is that correct?
We are saying President Lungu is wrong to sit on the IDC board, instead the IDC board should be chaired by the Secretary to the Cabinet, so that the President can properly provide superior oversight without being involved in the operations. This is how the original IDC articles of incorporation were designed. The Secretary to the Cabinet would have been answerable, as IDC board chairman, to the Council of Ministers, chaired by the President.
This IDC and ZAFFICO saga is a very serious issue. For the Attorney General to write such an opinion, it shows that there are some people in government who are concerned when laws are not being followed. We don’t really care much about the second opinion which State Counsel Kalaluka, addressed to the interim chief executive of ZAFFICO because it was clearly tailored to suit a particular interest. A decision has been made to sell ZAFFICO shares in January 2020, and so what the Attorney General stated in his initial opinion must have caused damage to this agenda and it seems he was ordered to revise his opinion to fit into the IDC decision.
There will be consequences to this, and the Zambian people must raise a red flag on this saga because ultimately, they will be the ones to pay for any losses that will arise from this. State Counsel Kalaluka has done his part, and we are super proud of him. We may have put him in an awkward position by revealing his opinion to the public, but we mean well, just like he does.
Now, those who don’t want to listen to State Counsel Kalaluka have themselves to blame. His opinion was very clear and absolutely detailed. If he says you need to amend the Minister of Finance Incorporation Act, the ZDA Act and the Securities Act, and people decide to create shortcuts in order to make money, it will the President and the Minister of Finance to blame.
Elo ba Ng’andu, we hope you are being your own man in this government because if you are just blindly doing whatever you are ordered to do without understanding the personal consequences of your signature, you will dance pelete when time comes for accounting. Mr Lungu will be watching you sweat through his gigantic television set from his mansion in Abu Dhabi.