The $103 million the outgoing PF cabinet approved from the Chinese government is meant for PF campaigns and putting in the pockets of out-going politicians, government sources have revealed.
In a deft manoeuvre by Finance Minister Alexander Chikwanda, Cabinet was manipulated into approving the loan, purportedly to settle a debt to a Chinese company on behalf of a foreign investor.
In a move that has further undermined the interim government’s credibility, the Finance Minister pushed the loan approval through Cabinet with unseemly haste on November 17 according to The Post, less than a week after Michael Sata’s funeral.
The move was in direct contravention of President Sata’s express instructions to reject the proposal, and is being interpreted as disrespect of the late leader.
Chikwanda persuaded Cabinet to approve the loan in order to settle a debt to Chinese firm ZTE for work undertaken for Zamtel while it was controlled by Libyan telecom company LAP GreenN in 2011.
Now the loan has been made public, there are increasing calls for the loan from the Export-Import Bank of China to be halted on the grounds that incurring such a large debt on behalf of the nation would be fool-hardy, especially given that any agreement signed in the current uncertain political climate is likely to be ruled invalid by a subsequent government and the courts of law.
“The Finance Minister’s attempts to push this deal through Cabinet are dubious to say the least,” said an experienced legal observer, who requested anonymity and questioned: “What right does the Zambian government have to saddle taxpayers with this enormous debt burden in order to settle a debt incurred by a foreign investor whose original attempt to take over Zamtel was cancelled?”
In addition to the dubious principle of such a sovereign debt, the observer questioned the lack of transparency surrounding the deal, especially in the context of a court case in the UK in which LAP GreenN has been seeking $480 million of compensation from Zamtel in recompense for its investment in Zambia, which was agreed in 2010 and rescinded when the PF government came to power in 2011.
The outcome of that case has not been made public.
The outcome of those legal negotiations and the current disquiet over the proposed loan from China have profound implications for Zambia’s image on the international stage, risking long-lasting damage to its carefully built image as an investor-friendly destination.