ZNFU resolves to close subsidiary causing chaos

 

The ZNFU council has resolved to expedite the closure of Lizara Investments Ltd, a special purpose vehicle (SPV) that is said to be at the centre of turmoil at ZNFU.

A communique issued by ZNFU president Dr Evelyn Nguleka following a Special meeting of the ZNFU Council yesterday stated that Lizara should be quickly wound up.

“On Lizara, the ZNFU Council reaffirmed its 2014 resolution to dissolve Lizara Investment Ltd and requested the ZNFU board to seek legal representation to expedite the winding up of Lizara and the transfer of Zanaco shares to ZNFU,” the communique states.

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. But ZNFU did not have the required US$750,000 to purchase the shares. ZNFU then approached Livestock Services Cooperative Society for a loan to purchase the shares.

Consequently, the SPV was established to protect the interests of Livestock Services and it would be dissolved when full payments were made by ZNFU to Livestock Services. It’s understood that initially, the repayment was supposed to take 11 years but ZNFU managed to repay in 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 have deliberately been dragging the dissolution of Lizara for two years now. They have insisted that, according to provisions they made in their constitution, Lizara would not be dissolved and that they would remain directors of Lizara Investments until the age of 75.

Their constitution 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 have been fighting to grab full control of the shares and enjoy dividends to the exclusion of the rightful owners. However, the ZNFU management led by Ndambo Ndambo is not yielding to their demands, hence the internal fights within ZNFU.

The Lizara directors, who are of foreign origin, are said to have been picketing Rabobank not to transfer the shares to ZNFU; fuelling chaos; and maligning management at ZNFU to create an impression that ZNFU has no future. As things heated up, Guy Robinson ended up resigning from the Lizara board and as trustee of ZNFU.

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