Purported plunder at ZNFU challenged


Dear Editor,

It is sad that malice and spiteful falsehoods about purported looting at ZNFU are being peddled in the media through an incomplete audit document maliciously leaked to the media by its authors. The falsehoods and malice being flogged are beyond measure, and it would be appropriate to provide the other perspective, so that people are in the clear about what’s going on.

The truth is that all the malice and falsehoods being peddled are manifestations of an ugly fight between the management of ZNFU and four whites, Zambians of foreign origin, over the ownership of about 4% shares in Zambia National Commercial Bank Plc.

When Rabobank was allowed to buy 51% shares in ZANACO, the Dutch firm offered close to 4% shares in the bank to farmers of Zambia through ZNFU. At that time, ZNFU did not have US$700,000 that was required to purchase the shares. ZNFU then approached Livestock Services Cooperative Society for a US$700,000 loan to purchase the shares.

In that respect, the four directors at Livestock Services (names withheld for now) proposed a Special Purpose Vehicle (SPV) be established to protect the interests of Livestock Services. An SPV is a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.

This SPV that was created is called Lizara Investments Limited, and it would exist for as long as ZNFU owed money to Livestock Services. It would then be dissolved when full payments were made by ZNFU to Livestock Services.

ZNFU managed to liquidate the debt in record time of five years and then demanded that the SPV be subsequently dissolved so that the shares in ZANACO could be transferred to the rightful owners, the farmers of Zambia.

But the four directors insisted that, according to provisions they made, Lizara would not be dissolved and that they would remain directors of Lizara Investments until the age of 75. They even provided for an arms-length clause stating that ZNFU and Livestock Services would have nothing to do with the shares until then, and that even if one of them died, their estate would take over, which defeated the entire SPV arrangement.

Now the shares are worth US$9.1 million and the four directors are fighting to grab full control of the shares and enjoy dividends to the exclusion of the rightful owners, but the ZNFU management is not yielding to their demands, hence the fights.

The innuendos being peddled about fraud and embezzlement at ZNFU emanate from this shadowboxing in which those affected seem to be working closely with one of ZNFU’s donors, SIDA, as well as some disgruntled ZNFU employees in the finance department who were facing disciplinary measures for theft. Operations of ZNFU are funded by SIDA, the Finnish, the European Union, as well as ZNFU’s own income. Over the last two years, the share of donor money in ZNFU doesn’t even amount to K34 million purported to have been embezzled.

The payments said to have been obtained fraudulently by named senior managers at ZNFU, including travel costs, salaries and emoluments, are sanctioned by minuted meetings of the ZNFU board. They are even contained in the annual budgets approved by both the ZNFU board and the donors. Some of the money attributed to have been obtained by the managers was actually used as investment to construct an office building (which is being rented out to a US NGO next to ZNFU HQ) under ZNFU’s subsidiary called ZNFU Properties Limited.

ZNFU, like many other institution is guided by a strict set of governance rules, and its structures are open to audit and scrutiny. Indeed, there was an audit carried out in November and December 2015 after financial impropriety was discovered in one of the donor-funded in Luapula province, perpetrated by two ZNFU employees who were to face disciplinary action.

Unfortunately, the November-December 2015 audit was a smokescreen that abrogated its own terms and was actually used as a clandestine manouvre to embarrass the institution using false information being peddled.

Firstly, the document in circulation was already in the public domain even before the audit ended. Proof to this effect is available. SIDA have failed to authenticate the published report, and been mute over why and how their report found itself in the hands of the media before it was even received by ZNFU management. Correct and professional procedure is that ZNFU was supposed to receive the preliminary report first and respond to the audit queries raised, before a final document could be compiled. From the way the report was handled, it is clear to deduce the motive behind.

Secondly, SIDA employed the services of a small-time and moot auditor, who clearly worked in collusion with disgruntled ZNFU employees namely Pride Mwelwa (former finance manager who was sacked two weeks ago), Mwaka Kayula (facing disciplinary measures),  as well as Michael Mambwe (Fired a few months ago) for financial impropriety over fuel and project funds they were managing, respectively.

SIDA insisted on the backyard auditor, who is more of their private investigator than an auditor, who appears to have had no good faith in the audit and whose sole aim was to appease the client by “exposing” the perceived dirt in ZNFU and releasing the contents of the preliminary draft to the whole world, including the World Farmers’ Organisation where ZNFU hold the presidency, before the report was sent to ZNFU.  (It is the same auditor that painted the Ministry of Health black over Henry Kapoko’s issues, most of which did not hold any water) The ZNFU report is still  a preliminary draft, and ZNFU will have to respond to the queries before a final report is compiled.

SIDA knows why it has not been keen to use established and independent auditors of international repute, such as Grant Thornton, Pricewaterhouse Coopers, KPMG or Ernst & Young, as urged by ZNFU. Partners are urged to use an independent auditor if they have to have common ground.

The government, as well as all well-meaning Zambians, are called upon not to cast a blind eye, as the fights in ZNFU go deeper than thought.

ZNFU is a vibrant organisation that must not be hijacked by persons with gluttonous interests.


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