Three international equity shareholders in the Development Bank of Zambia (DBZ) have raised concern on the directive by the Zambian government to write off the K14 billion that defunct Zambian Airways owes the DBZ.
The Watchdog has been informed that, the Netherlands Development Finance Company (FMO), Exim and Development Bank of Southern Africa have written to DBZ demanding an urgent explanation.
The partners also want to be informed how DBZ reached a decision to withdraw the matter from court without a management board and without consulting them as equity partners. The International partners are fearful that the loss of K14 billion will affect their investment.
Though DBZ is a public bank owned by the Zambian government but due to financial woes, in 2001, it went through a restructuring process to allow international financiers to pump in money as minority shareholders.
The law establishing the DBZ was amended in 2001 and thus the bank increased the authorised share capital from K 15 billion to Kwacha equivalent of US$700 million.
The Act which became effective in 2002 also reduced government control of the Bank by limiting shareholding by Government and public institutions to 40% and allowing Class ‘B’ shareholders comprising private investors, bilateral and multilateral financial institutions to take up the majority of 60% These changes attracted, FMO a Dutch development bank, Exim and Development Bank of South Africa to pump in money at the time when DBZ was facing cash problems.
These international partners own Class ‘B’ shares but to ensure the Bank does not under this arrangement depart from its function of providing development finance, the Government holds one (1) Golden Share to ensure the not winding up of the Bank, substantial alteration of its business or sale, transfer or assignment of substantial assets would take place without Government consent.