State House and FQM’s US $2.3 billion fraud

State House and FQM’s US $2.3 billion fraud

State House (Edgar Lungu and all his special assistants) , which usually claims not to interfere in legal matters involving parastatal organisations and other state agencies, is today giving ZCCM-IH orders to discontinue the fraud case in which it claims FQM swindled it out of US $2.3 billion. Why?

Last November, ZCCM-IH, which holds shares on behalf of the Zambian government in the privatized and now foreign-owned mines, sued First Quantum Minerals (FQM) in the Lusaka High Court for fraud, and simultaneously commenced arbitration processes in London in an attempt to recover the money.
Arbitration is mandatory as part of initial agreements between the two parties. The matter came up before Lusaka High Court judge Winnie Mwenda last Thursday.

ZCCM-IH says FQM defrauded it repeatedly from 2006 to 2012 by hiding profits from Kansanshi Mining Plc and using proceeds from that period of high copper prices to build other mines without its consent as a shareholder.

ZCCM-IH contended that FQM had grown its investment by using money they jointly realized from strong performance of Kansanshi Mining Plc but disguised the new investments and also prevented it from owning shares or benefitting. Today, FQM is the biggest copper producer in Africa.
Among the mines allegedly built by FQM using money from Kansanshi Mines without the consent of ZCCM-IH included the Kalumbila and Cobre open-pit copper mine in Panama in which ZCCM-IH was not an investor.

ZCCM-IH has accused FQM of cheating it out of US$2.3 billion from Kansanshi copper and gold mine using those proceeds as cheap financing for its other operations without the state investment company’s consent.

According to the claim before the Lusaka High Court, between 2007 and 2014, FQM directors ordered over $2.3 billion of Kansanshi profits to be transferred to FQM Finance Limited, which performs treasury functions for the group. FQM Finance then started investing money of Kansanshi to grow the group without ZCCM-IH’s consent. ZCCM-IH’s claim included US $228 million in interest on the US $2.3 billion as well as a further 20 per cent of the principal amount (US $570 million), according to sources close to ZCCM-IH.
The company was also seeking US $260 million as part of a tax liability the Zambia Revenue Authority levied on Kansanshi. Since November when the legal suit commenced, the executives had been apprehensive about coming to Zambia for fear of being arrested for fraud. The FQM executives sued by ZCCM-IH included chairman and chief executive officer Philip Pascall and directors Arthur Mathias Pascall, Clive Newall and Martin Rowley. On April 21, 2017, Arthur, the FQM director of operations, wrote to Zambia’s Attorney General, Likando Kalaluka, requesting him to force ZCCM-IH to drop the matter actively before the courts of law.

The FQM directors also asked Kalaluka to protect them from prosecution.
As the matter continued being battled in Lusaka High Court, State House spokesperson Amos Chanda announced on May 10 that President Lungu would interfere in the ongoing legal dispute between ZCCM-IH and FQM and direct the matter to be settled outside the courts of law.
And on Thursday, as the case between ZCCM-IH and FQM was being battled in the courts of law, the Ministry of Finance announced that the first round of the dialogue between FQM and ZCCM-IH had taken place, facilitated by the government. The talks were chaired by Secretary to the Treasury Fredson Yamba while other officials in the government delegation included Deputy Secretary to the Cabinet in charge of finance Christopher Mvunga, finance permanent secretary for Economic Management Mukuli Chikuba, national development and planning permanent secretary Chola Chabala, Bank of Zambia deputy governor in charge of operations Dr Bwalya Ng’andu and ZCCM-IH chief executive officer Dr Pius Kasolo.

“The dialogue was amicable and I am optimistic that under our guidance, sufficient common ground was established which would form the basis for a lasting resolution,” Yamba was quoted in a statement issued by Ministry of Finance public relations officer Chileshe Kandeta. “It is now incumbent upon each side to examine the technical proposals set out in the road map in order to reach a final resolution of the issues when the parties reconvene.”
FQM were represented by director for government affairs John Gladstone who said the dialogue held between Wednesday and Thursday “were enormously helpful”.
Why are we going to such length to explain what’s going? It’s to try and show the dishonesty of these people.
Contrast this and their utterances and conduct in the destruction, or rather assassination, of The Post! They pretended to be Pontius Pilates when in fact they were the crucifiers! As can still been seen by their very close working together with those involved in the finishing off of every breath of The Post, this was their project, their scheme. They made sure every state agency – the Zambia Revenue Authority, the police, intelligence and the country’s entire adjudication system – was mobilised to achieve this end.

In public, they were claiming they had nothing to do with it, yet everything was clearly being commanded by them. Which private, or even public, liquidation of a company has ever received so much police, intelligence support and participation like that of The Post? Since February, police officers have been stationed at Dr Fred M’membe’s house to guard a small printing press he personally owns which, without any proof whatsoever, they seized claiming it belongs to The Post. The police and the courts are at their beck and call in all this scheme. Attempts by The Post and those who held shares in it to be heard have over the last one year been frustrated in every way while they are being granted ex parte orders at will. The proceedings which were commenced by The Post at the Tax Appeals Tribunal last year in June challenging the Zambia Revenue Authority claim are still not concluded and its order to have the newspaper reopened were ignored on State House orders.
And the on-going liquidation of The Post is being carried out on ex parte orders granted by judge Sunday Nkonde without, in any meaningful way, hearing The Post. In a word, in all this, The Post has been crucified without being heard at all. The matters before judge Nkonde, if ever they will be heard, will simply be academic. Their scheme would have been irreversibly fulfilled as per plan. Even the Judicial Complaints Commission could not respond to the complaint against judge Nkonde’s clear misconduct. This is how wide and thorough the conspiracy to kill The Post has been. The Post is being liquidated without any court or tribunal judgment or ruling as to what it really owes the claimants.

This is a matter in which even the person who is appointed provisional liquidator, Lewis Mosho, does not, by law, qualify to be appointed liquidator of any company in Zambia. And judge Nkonde is aware of the fact that Mosho is barred from appointment as liquidator because he was removed by justice Nigel Mutuna from being receiver in Platinum Gold Equity Limited for dishonesty in an office of trust. So The Post is being liquidated by an illegal liquidator with the full connivance of the judiciary.
In addition to this, judge Nkonde himself, in the interest of justice, is not suitable to hear the matter. As an advocate in private practice, judge Nkonde brought an action against The Post allegedly on behalf of Finance Bank just before the 2011 elections. The action which related to Zambian Airways had all the hallmarks of being politically motivated. In that action, judge Nkonde was acting without instructions from Finance Bank. Clearly, this action calculated to destroy The Post and lead to its liquidation is part of a political scheme to silence a critical media. And to this day, judge Nkonde has failed to disclose who instructed him to sue The Post. What was his motive?
And at this same time, judge Nkonde was prosecuting The Post and Dr M’membe for libel and contempt of court on behalf of then president of the Republic Rupiah Banda! Judge Nkonde has been asked to recuse himself but he doesn’t seem to be ready to leave the case until the total and irreversible destruction of The Post, which he failed to achieve as an advocate in private practice, is achieved now that he is a judge.
If this is not a fraud, what is it? All institutions of the state – the Zambia Revenue Authority, police, intelligence, the courts – have been mobilised to finish off The Post. But look at the efforts they are exerting to save FQM from very legitimate fraud charges! The entire government system has been mobilised to save FQM from fraud charges! Why? Many lies have been told. But the truth will be impossible to bury. They say the truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is!

The Mast

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