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ZANACO evaluation fraudulent

By editor
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The evaluation of ZANACO is said to have been fraudulent, irregular and massively undervalued.

And the Net Asset Value methodology used to evaluate ZANACO was problematic and unprofessionally done.

These are the findings established by the Technical Committee on the privatization of ZANACO.

Technical Committee Advisor to the Commission of Inquiry Michael Musonda said the Net Asset Value could only have been used if the bank was on the brink of liquidation.

Mr. Musonda submitted to the Sebastian Zulu chaired committee of inquiry that ZANACO had never been known to be on the brink of liquidation.

He told the committee that the method used by the evaluator, Price Waters Coopers, was illegal and unwarranted.

Mr. Musonda submitted that the most ideal value method which was the market valuation price of the 49 per cent stake in the bank could have been in the range of between US$18.4 million and US$23.4 million .

He said this was in contrast of the between US$8.1million and US$8.8 million established by the evaluator to be the market price.

Mr. Musonda submitted that the then ZAMBIA Privatization Agency-ZPA abrogated its mandate by allowing DFID to engage an evaluator of ZANACO assets.

He said that responsibility should have been solely handled by ZPA.

[ZNBC]

editor
editorhttp://www.lusakatimes.com

108 COMMENTS

  3. A recent book I read described President Kenneth Kaunda as “having no sense of humour …” and coming to think of it, this is a fair analysis. Now, when President Micheal Sata leaves office, what will historians write about him not having?

    • You seem to have a very GSOH (“good Sense of Humour”) , in that you seem to be the only one to have read that book & thus keeping the title close to your heart!!!

    • The book you read was authored by an individual who has a bone to chew with KK.That’s subjectivity at play….nothing fair there…….We all know of many objective commentaries about KK and the same will be done for Sata after his time is done.Unless, of course, you will read a book authored by George Kunda or Dora Siliya

  4. Yabaaaaaaaaaaaaaaaaah. Selling 49% at 8.8 million, a financial institution which has branches all over the country. A good number of Zambian business men have more than that kind of money, they could have bought these free shares.

  5. We grab ZANACO back aswell..MMD what were they upto am beginning to think they are not Zambians.They could have sold Zambia pa last

    • Any action necessary should be taken to make sure Zambian people benefit from companies like ZANACO even if the whole world is watching (Even though i think ZANACO is the last thing the world is worried about)

    • Look at the submission, before trying to cower to the international audience!! Lets call spades, spades; IF INDEED A WRONG VALUATION METHODOLOGY WAS USED, so be it, LET THEM PAY – IT IS CALLED CAPITALISM, THEY IN IT FOR PROFIT, & NOT CHARITY – lots of people will cry wolf just as LAP GREEN is doing – someone got kickbacks for pulling wool over our eyes!
      THERE IS NO ROOM FOR NAIVE HUMBLENESS – THERE ARE HUGE SUMS OF MONEY INVOLVED – just becoz the money involved(i.e. ZANACO value) doesn’t seem to becoming from your pocket, DOESN’T MEAN AS TAXPAYERS WE DIDN’T LOSE OUT!!!!

  14. This is interesting. I totally agree with Mr. Musonda’s point. There is no way the asset valuation model should have been used for a going concern. Price Water House who are professionals in this field should have known better than Mr. Musonda who is a lawyer..Further we also know that there might be a conflict of interest on the part of Price Water House who were purpordly the liquidator of ZNOC. It would be interesting to know how the false ZNOC figures in ZANACO books were handled by Price Water House and Mwanawasa government both before and after the sale of ZANACO.

  15. This is a fair and professional point that Mr. Mumba has raised. Let Price Water House answer. I am disappointed that institutions like ZICA which should have know better did not raise this point. Hats off Micheal Musonda. I feel good that there are Zambians ready to stand up for what is good for the country.

  19. MICHAEL MUSONDA is a daft chap whoi doesn’t even know what he is talking about. He learnt his business expertise through long-distance courses which I doubt he passed. The fact is that the value of ZANACO = present value – liabilities. It is the same stiry with ZAMTEL. ZANACO had liabilities which needed to eb sorted out by whoever was buying the company. If you buy a company, the cash finally received by the seller of the company will depend on how much debt and other liabiulities you are taking over. THe reason why ZANACO was being sold was exactly because it could have gone under if we had waited for too long and everybody would have lost. For Musonda to use JUST ONE erroneous argument to then judge that therefore the whole transaction was fraudulent is id.i.o.tic of him…

  22. All those saying “they need Zanaco back, Zanano is ours” do not understand that the bank was going to close due to being owed debts. It is like someone begging for a rotten orange, none of you were going to benefit anything. It is in a much better situation now that it ever was. Why destroy it again to create unemployment. Also the privitization was started under Chiluba with Kasonde as Finance Minister.
    Zanaco made a net loss of just over 65bn kwacha (£10.7m) in 2001, due to its bad debts.
    It is owed £31.4m by the Zambia National Oil Company (ZNOC), which Finance Minister Emmanuel Kasonde said had been wound up and dissolved.
    The bank is also owned millions of dollars by the copper and cobalt mining firm Roan Antelope Mining Corporation which it put under receivership in 2000. 

    • Cristal, you have raised a point resulting from a domino effect. Read a submission by the then Executive Director of ZNOC Mr. Mumba and see how scandalous the winding up of ZNOC was. That winding up was what knocked ZANACO off-kilter. The MMD privatization at that time (1994 – 1996) was very personally driven by vendettas and strictly flawed. We may have to rope in departed leaders, too!

  23. As a Financial expert I would request bloggers not to interpret numbers they see literally. The price of a company is determined by a number of factors e.g net assets, net future cash flows etc. It is not as straightforward as you may think.

  24. Congratulations on the nationalisation of Zanaco! But it should be noted that the repurcussions of this decision are likely to be wider than those of the nationalisation of Zamtel. Zanaco is a BANK and one of, if not the largest in Zambia. Bank’s survive on the reputation and goodwill of their depositers. This nationalisation may create uncertainty that will induce a run on the bank. A run on your largest bank would not bode well for the economy. I wish PF well as they navigate the repurcussions of this monumental decision……

  25. This is what happens when you have a president who does not understand economics or is uneducated. All they see is numbers and think something is fraudulent. And unfortunately behind him are people/bloggers who think they know how banks work pushing him on to just in the end embarrass him. It is time we started electing educated people this is the only way we will not waste money on unnecessary probes when money spent and time should be invested in building schools, hospitals etc.  

  26. But Pa ZED paliba ifipuba! You sale your assets cheaply and the buyers start benefiting by growing their GNI while you languish?

  27. We had higher hopes of having a small and effective gov’t from PF. But from the onset, they seem to be in a hurry expanding the gov’t by embarking on a nationalization spree of businesses they have no clue managing.
    Zambians as customers of ZANACO today are better off than when it was run by the Gov’t. The private owners are bringing in not only capital in form of financing (FDI), but also technology, expertise etc. 
    Public company ownership by the citizen is an illusion. Think about it. Did people really own the bank when it was run by politicians? Did ordinary people benefit more than today from the bank? 
    The world is watching while PF takes our country down.

    • Spot on a number of Zambians have actually benefited from Zanaco now than when it was in private hands through dividends. Zanaco pays much better than Stanchart for instance from the banks listed on Luse.

  29. Educated persons such as HH has failed lamentably to become the president, how can he run the country. He has everything he needs, money, education, educated followers(as they claim), but has failed to convince Zambians that he can rule them.Our history speaks mountains about educated folks, they can become big time thieves.

  30. The rate at which this govt is going is scary.I really feel sorry for zambia.But after the disaster these people from the older generation will bring I hope we will have young vibrant leadership to steer the country forward.Not young kaponyas but the intelligentsia of the nation.Its no good watching on the sidelines….your country will need you.

  32. What is needed now is constitution of our best accountants, economists, and lawyers to properly look into the valuation of ZANACO at the time it was sold. Clearly what has to be further analyzed is the net future value that was used to determine the ultimate value of ZANACO at the time. The same goes for liabilities. If indeed figures were unjustifiably arrived at, then the sale must be reversed. One Zambia One Nation.

  33. I have an MBA in Finance and its the first time i have ever heard of a Financial Valuation Method being Illegal.

    Zambia has indeed becomes a joke

  34. Zanaco is one of the worst banks ever! that is all i can say and the people saying that it is ours are crazy. Kaunda ruined this country with his crazy ideals such as humanisam parastatals and created laziness that is now inherent in us zambians who don’t want to work but just get paid for doing nothing.

  35. HAHA…what happens nomba? It seems that this was a very quick investigation compared to the previous one on Zamtel. It seems to me that the blame here lies with ZPA and price water house coopers. If that proves to be the case then GRZ should seek compensation of sorts instead of trying to nationalise the bank. When are we going to learn kanshi? GRZ should not be in the business of running companies they should just concentrate on developing the country O atleast creating conditions that will develop the country.

  37. What ever basis of evaluation that is used must be justified. Mr. Musonda is right that you can not use net asset values as a valuation model for a going concern company. Any one who knows anything on valuation knows this simple basic fact. Price Water House should answer this question, together with ZICA who have been silent all along. Let Price Water House advise the facts that in their opinion indicated that ZANACO was in liquidation to warrant the valuation model they used. Once again this is a fair and professional question which Price Water House should answer. This is pure business, no politics.

  38. “Mr. Musonda submitted that the then ZAMBIA Privatization Agency-ZPA abrogated its mandate by allowing DFID to engage an evaluator of ZANACO assets”. Guys, do you know who is DFID? It’s the British government’s equivalent of USAID. No wonder Guy Scott has never acted as president. The PF “corruption” battle has now sucked in three foreign governments of Libya, the Netherlands and the UK. The South African government missed the train by a whisker over their FNB’s purchase of Finance Bank. Next COI please!

  39. The west will start crying foul now, they were okey with Zamtel because it was Libya being hit, now this is them.

  40. At some point we need to cut off you can not spend an eternity going back into history. The past is sometimes for glancing at not staring at otherwise you will bump into a wall coz you cant see where you are going.

  41. PF is on the nationalization path.  Let’s get ready for ques again, for shortages again and for no forex again…Kaunda policies are back

    • Adwika, you can afford to say that cause you never stood in a queue for 10 hours to buy mealie meal and when you get to the front, the stuff is finished. Meantime, your wife is standing in another queue for 6 hours to buy cooking oil which also finishes before she’s even half-way down the line. You’ll never know how bad it was unless you experienced it yourself. Or maybe you don’t think it’s necessary to learn from the mistakes of others?!

  43. High tax, corruption and thievery are the three main factors deterring credible investors from doing business in Zambia, according to the Wall Street Journal. The other problem is the rule of law doesn’t exist. Basically, the environment is not conducive for foreign direct investment. The re-nationalization of state enterprises is not helping. The world is watching. The previous government was almost issuing bonds worth 500m euros. That money would have helped to develop infrastructure in Zambia. As it turns out now, I don’t think anyone would purchase Zambian bonds unless the interest is 100 percent.

  45. Satas hero is Kaunda! Very soon we shall all be down some tunnel looking for some elusive light! Remember what Barack Obama said in June 2009 in Ghana……….the problem with Africans is your tendency to go back to the people who caused your problems in the first place. Sata’s economic policies are based on a simple philosophy: Whatever the Mwanawasa and RB administrations did was bad and I Sata will reverse everything. KK was the same. Whatever he inherited from the colonialists was bad and he had to reverse everything. We know what happened. Zambians you are cursed!

  46. This is all cheap politics. Who was not there to see that ZANACO was a sinking Titanic? Who does not remember how ZANACO was being abused by politicians and Serpent Cobra Sata can not come today that the bank was sound, thats is cheap reasoning. What some bloggers are not seeing is that PF believe in socialism and nationalisation fits there agenda. But that is ancient thinking that nationalisation works today. Government are known not to be a good business operator and if thats the idea, it cheap reasoning. Who can say that ZANACO is not one of the best bank in Zambia because of the privatisation? What president Serpent Cobra Sata should do is to remain focussed and deliver his weird promises to Zambia. If we claim that we all own ZANACO then it has no owner.

  47. Yes we are surely on the path into NATIONALISATION, buying back private equity of the Mines so that you own 35%!! If you zambians are so lazy not to know your economic History, then dont be surprised when you go full speed backwards!! as the direction is right now. This is all UNIP philosophy PF is promoting which brought the Country down in the 1980’s. Didnt GRZ own the mines?? What happened?? GRZ ofcourse just run them down; All the useless parastatals which never paid any taxes to the treasury, but Taxpayers funds were keeping them afloat. Characters like Malimba masheke and others benefitted from cronysm created by State ownership. Zambians on avarage are surely shallow, that is why they deserve the Government them put in (also clueless).

    • Lol! Of all the people you pick on Malimba Masheke. Former Army commnder who was only Prime Minister for 2 years. How about Francis Kaunda Chairman and CEO of ZCCM from its inception in 1982 until 1992. He destroyed Zambia’s biggest company. James Mapoma ZIMCO Chairman and Dixie Zulu Indeco MD. So how exactly did poor Masheke benefit from cronyism? Masheke was never involved with parastatals. Did you just want to throw in a Lozi name? Shame on you!

  48. what should be done is to ask Rabo Bank to reduce their share in ZANACO to say 49%
    are these guys communsit? they want to nationalise everything thats the problem of electing grannies.kekeke

  49. I saw this one coming….Socialism in full gear.
    If you are Zambian and live in Zambia you have to watch your back…watch your front because Kaunda´s days are around the bend….Remember UBZ days…when cornmeal,soap, were missing?
    Muzanya!

  50. I suggest GRZ start from appointing a commission of inquiry into the Nationalisation of private companies in 1968??!! Under the Mulungushi Reforms?? Did Zambians gain from this or just top leaders like Kaunda and his henchmen like Sardanis who was in charge of Nationalisation with all the foreign exchange leftover by the British?? What method did he use in arriving at a sale price for 51% of the shares since Zambia did not have a stock exchange those days??Now do we really have “Angels” in Zambia?? or defrauding the state is not exactly new in dear zambia??

  53. So Zambian Government is suddenly rich to be able to buy out foreign capital?? If they have become so rich then maybe they should reduce PAYE from 35% to 30%. Penza did reduce PAYE to 30% but our dear Great Minister of Finance Magande, saw it fit to move PAYE to 40% now 35%. PF should reduce PAYE to levels below 30% (before Magande hiked it) This will then surely be reducing PAYE since GRZ is suddenly so rich!!

  56. Zambia is a failed State. It is high time we gave each province its independence. If certain provinces want to join together and form a union or a state that is upto them. We cannot be going through the same nonsense over and over. We have been through this before and it is just stu.pid! The so called evidence from this Musonda chap is just a heap of crap. When Valentine Chitalu was Director of ZPA in the 1990s, ZPA was been supported by USAID. It seems this was fine then. The problem arises when ZPA is been headed by someone other than the Superior tribe and allows DFID to give support to the organisation. Wasnt this is the same bank that was used for money laundering by the same cabal under Chiluba! And for some reason these muppets want to tell us that they can run it for ‘Zambians’

  57. If you thought rupiah brought back unip, you were clearly mistaken. Sata has revived it. You zambians will miss rupiah. Zambia is headed for a catastrophic disaster. Mukamwibukisha bwezani! We were moving forward as a nation til we had this gvt take us back to 1964. God wont allow this man to destroy what people have worked hard to build. God will answer our prayers one day. 

  59. this is finally the end of the good days of having a stable economy………..this is a fire
    pf have no capabilty of handling

  61. WE NEED ANOTHER COMMISSION OF INQUIRY INTO THE SALE OF RAMCOZ, ZCCM BECAUSE ALL THESE WERE UNDERVALUED????????????????????????????????

  62. pf and lies= fish and water. “the method used to evaluate was illegal,”. first go back to the english dictionary and have a critical look at the meaning of the word ILLEGAL.

  63. But people voted and celebrated all night for this nightmare from which people do not know how to wake up from. WELCOME TO HELL Zambians.

  65. This is some bullshit. The govt is taking this country to the gutter, welcome back UNIP and goodbye stable economy, kaponyas n illiterates mwanya things are about to go from bad to worse, you chaps are going to regret voting the way you did.

  66. You are all mistaken. Sata is cleaning house. In future, transactions will be less murky, more transparent, carefully and professionally carried out. In the meantime shady deals that shouldn’t have gone through in the first place have to be reversed, taken back to square 1. Once we safely land back to where we were before, then we can consider selling the bank to private capital, only this time we will carefully consider all known factors involved in the sale of this magnitude. I for one don’t think PF is that stupid to reckon that GVT can run a commercial enterprise profitably. It would be completely foolhardy of the PF to think this way because it just does not work.

    • I understand how you feel — you are still hopeful that things will change for the better, but the sad truth is that things will get much worse before they get better.
      Your line of thinking that we need to get back to basics and start from there is a rational one that I share with you, but GRZ most likely does not. This is evidenced in the fact that they have not said this, they are not doing it, they are not showing it.
      It is all an assumption that we make up to keep our hopes up, to help us sleep at night. To make us feel that we voted for the right person.
      This nightmare is yet to get worse.

  67. NPV can be used for a going concern. It helps determine whether the business itself is a going concern in the future. It was determined then, in view of anticipated negative cash flows that Zanaco was not viable. PWH were perfectly correct for using this method in the case of Zanaco.

  68. hahaha

    Thank God i never returned to this unless country….  you got what you wanted. A failed state. Lets see who is going to buy the State Bond you are about to issue.

    Good luck we will be watching you from a far.

  70. Since when did Net Asset Value Methodology become illegal? Zanaco was just a conduit for money laundering by politicians.This nonsense of givivg it back to Zambians is old school and cheap self importance.How many people benefited from Zanaco apart from politicians giving themselves unsecured loans and financing their campaigns…….You Zambian intellectuals please wake up and defend the 5 years spent at Varsities.

  71. If the Transaction was fraudulent then Robo Bank should pay up for the correct value of shares they bought.If Robo does not agree then the two parties must go to court in order to settle the matter.There is no tribalism here nothing of that jargon please!!!!!!!!!!!! If some one did not pay the correct amount for a certain Asset then they must add some more in order to balance the equation. PF government and Sata are using Lawyers and independent consultants to check whether the MMD sale transactions were done properly or not.

    Is anything wrong with that? You Engineer in Australia just shut up!!!!!!!! and continue cleaning toilets there in Melbourne and Sydney.You not needed here in Zambia so just stay there where you are not respected.you must be abused psychologically.

  72. Why have people forgotten that PF is a communist party? Read their Constitution then you will understand. They are not implementing their manifesto but their constitution. some of us so this from beginning and warned people about PF but non listened.

  73. who cares who owns what even when ZCCM was government owned I as an individual had no direct benefit, even if ZAMTEl has been grabbed back those who will benefit from appointments will see sense. I couldnot get a landphone during the govt owned ZAMTEL due to coruption as a result these take over will only benefit a few. please stop making news out of this useless topic

  76. The current rate at which we are going, one remains certain that after the PF regime, we shall see more of the same except and unless we strengthen our institutions to international standards.

    Why is corruption so entrenched? Why do we fail to stop it before it bears fruits? How long are we going to have this vice ravage our economy to such proportions?

  77. Is Michael Musonda a lawyer or an accountant/financial adviser?  How is he qualified to comment like that?  Didn’t the same people, these Bembas, say that the Net Asset Value was not a valid way to value Zamtel which was bankrupt to the tune of K361 BILLION as at 31 March 2010?  What do they know about valuations or is it that like their President they know all things under the sun? Can they then put into their new Constitution the valuation method for parastatals?  There is too much picking-and-choosing.

  79. the pf campain went like, more jobs, lower taxes, more money in the pockets. i dont remember anything about ‘back to UNIP DAYS’.

    @ Australian engineer, if you are happy there, i wonder why you waste your time blogging here. come-on Bruce, get a life by finding yourself a platform that deals with ‘down-under’ matters.

  80. I do not understand why people are insulting Micheal. What is wrong in trying to get a fair deal for the peoples’ companies – Zanaco, Zamtel and the mines??? Zambians are stupid, thats why they own nothing in their own country. Go to the midle east – Qatar, UAE, Saudi etc the locals own the wealth. Dull Zambians YOU will be poverty riden for the rest of your lives.

  81. Our government better be very careful. Before we know it, our country will be sinking like the titanic. So wats next..we investigate zambia airways?or houses in kabulonga?

  82. WERE IS THE VALUATION SURVERYORS INSTITUTE OF ZAMBIA (SIZ) GUIDELINES THAT DETERMINE WHAT METHODOLOGY IS TO BE APPLIED WHEN VALUING A PROPERTY AND HENCE AVOID THESE IN FUTURE?

    WHY DID WATERPRICE IGNORE THESE OR THEY DONT HAVE REGARD FOR THEM?

    I GUESS THESE ARE THE ONES CRYING IN THE BACK NOW BECAUSE THEY HAVE ALWAYS BEEN SIDELINED.

  83. I honestly appeal to all loving Zambian to be calm and allow the government to access all which need to be looked at. It is normal for any government to valuate their day to day business by looking at what went wrong in the past and lessons that can be learnt. This is a normal process. At the end of the day, the poor should be able to benefit from the assets and minerals of Zambia. Stop insulting each other. There can be only one Zambia for all Zambians. God bless

  84. what is the use of getting back zamtel, zanco etc without re investment. look at zesco, we are having load shedding beacause from the time a white man left we’ve never invested in generation

  85. #78. “the pf campain went like, more jobs, lower taxes, more money in the pockets. i dont remember anything about ‘back to UNIP DAYS’”. You dumb fool, of course PF will not tell you that, its in line with donchi kubeba. But the PF manifesto does mention returning to UNIPist one party state structures and policies. Read man, read, otherwise you will be feedstock for donchi kubeba.

  87. The sad thing in life is that being right if not well handled can turn out to be wrong. In this case what PF has found as a solid economy for the to even think or implement rebasing of kwacha is based on a number of things. some of these things has do to with the transactions which took place like the sale of ZANACO, ZCCM and others as much as a lot was not right, we may want to just move on and stop correcting everything. Zambian withthis exictment of being right going on careful with what may come next. Kwacha is losing on a daily basis which is not a good sign at all. And please it is not in order that only bembas are taking the lead in all committee. What is going on Sata, are you questioning God for creating others?

  89. welcome to the UNIP days where the people of zambia own their property through Gov. it maybe in order to repossess the housing units as well so that they are all owned by the people via Gov. repossess the kapiri glass, kawambwa tea company and the pineaple thing in N.western province. thanks PF

  90. We do not need to ‘take back’ ZANACO because it is already ours. we own 51% and thats OK. If PriceWaterHouse Coopers misconducted itself in the way they valued the company, Gvt must sue them for the difference between the ‘FAKE’ value and the correct value. The buyers are not at fault unless gvt can prove that they conived with others to buy it cheaply.

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