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Zambian Airways shareholders given 30 days to pay back K28bn

By editor
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zambiaairwaysDevelopment Bank of Zambia (DBZ) has given two institutional shareholders of Zambian Airways 30 days in which to pay K28 billion guaranteed for loans awarded to the airline, failure to which they will be taken to court.

According to the latest issue of Executive Issues, the Post Newspaper and JCN, which is owned, by Mutembo and Nchima Nchito had failed to pay K14 billion each that they offered DBZ as guarantee for some of the airline’s loans.

The Executive Issues states that DBZ has since given the Post Newspaper and another shareholder JCN, 30 days in which they should pay K14 billion each for guaranteeing the loans, which were given to the company before it suspended operations.
DBZ is claiming K28 billion from both JCN and the Post Newspaper after they signed an undertaking to buy-back equity from DBZ in October 2008, it said.

“We, Post Newspaper Limited, further undertake to hold this undertaking valid and legally binding on ourselves until the execution of the irrevocable joint and several share buy-back guarantee by all the shareholders of the Zambian Airways,” reads part of the undertaking as quoted by the Executive Issues.

The undertaking was made on the understanding that DBZ would swap its loan exposure to Zambian Airways into equity, provided that the two key shareholders undertook to buy-back the shares at a later stage.

Following the execution of the buy-back options, DBZ proceeded to take equity in the airline and released the debentures and securities it had on Zambian Airways to Finance Bank Zambia Limited, which had made a capital injection of over US$ 5 million in the airline.
The publication said the directors of Zambian Airways decided to abruptly suspend the operation of the airline before the transactions could be concluded. This prompted DBZ to demand for the buy-back commitment made by the Post Newspaper and JCN.

The two institutions failed to honour their obligations within the 30-day period and DBZ intends to sue the two companies to claim their dues.

The Post Newspaper had also undertaken to takeover part of the Zambian Airways debts with Intermarket Banking Corporation to the tune of $1.5 million in order to facilitate for DBZ to swap its loans into equity.
The publication added that the Bank of Zambia (BOZ) had also joined in the Zambian Airways scam by questioning the decision by the DBZ management to pump money into the airline at a time when it was clear that the company’s financial position according to its books was weak.
According to correspondence from the Central Bank directorate of non-bank financial institutions supervision, the loans, which DBZ provided to Zambian Airways, were irregular as it was against the Banking and Financial Services (Large Loan Exposures) Regulations.

The publication further says key financial institutions had agreed to place the airline in receivership following protracted meetings and negotiations, which had failed to yield any meaningful survival plans.

Initially, it was conceptualised that the current shareholders of the airline should exit and carry the debt burden while new investors should be invited to literally start the airline afresh.

But some investors had shown interest in taking up the company under a new flagship, Zambian Airways 2009 Limited but the proposal was not universally accepted by other creditors who include Finance Bank Zambia Limited, Investrust Corporation Plc, Intermarket Banking Corporation, Development Bank of Zambia and NAPSA.

The publication said it also emerged that Zambian Airways directors and management had proposed to the Government in December 2008 to consider bundling all Government-connected debts in the airline into equity through DBZ.These State entities are the DBZ, National Airports Corporation (NAC), Zambia Revenue Authority and NAPSA.

Meanwhile, the forensic probe into the conduct of the Zambian Airways activities by the combined team of the Anti Corruption Commission (ACC), Drug Enforcement Commission (DEC) and the Zambia Police had, according to Executive Issues, revealed glaring instances of financial scams.
[Times of Zambia]

editor
editorhttp://www.lusakatimes.com

80 COMMENTS

    • Political pressure. Why now, where were they all along? If this cannot be raised what is DBZ going to do. Hang them until they are pronounced dead? Where is the donor community? Why are they so quiet? Will they only talk when RB and MMD are no longer GRZ?

    • Whats good for the goose. They lost the moral high ground with their biased reporting and marriage of convenience with the late president. Who can doubt they are crooks now.

      HA, vote for Magande! To keep your loss making airline going

    • DBZ is claiming K28 billion from both JCN and the Post Newspaper after they signed an undertaking to buy-back equity from DBZ in October 2008, it said……
      How far back is this? October is not a long time ago. Do not criticise just to show people that you are still alive.

    • By the time this goes to court and how slow our courts work. There is so much legal crap to this by the time the appeals are heard RB will be long gone. This case will take more than 2 yrs. MMd is out 2011., The post will survive

    • You never stops amuzing me with your illusions.You talk as if it takes a ghost to alter the balance of power in Zambia or you have suddenly filled the long void.Swallo the bitter pill,MMD is in power beyond 2011.I forewarn you now to avoid uncalled for heart attacks.

  4. Well, the BOZ is now pointing a finger at the DBZ management for lakc of banking prudence. But the other four fingers are pointing back at BOZ for incompetence and lack of supervision. This entails that heads must roll at both institutions as they contributed to this indebtedness knowing very well that the airline was insolvent. Can the investigative wings move into these two institutions as well and not forgetting Rajan Mahtani and Finance Bank.
    Remember this man was also involved in scams under KK and FJT’s rule.

  6. Yes the post and nchito brothers should honour the contract by guarantee these guys are lawyers and we expect them to understand the consequesnces of quarantee let them pay back the money ala who are they?

    • Mwana whatever is happening concerning The Post and Nchito brothers is politically motivated. This is why we have a lot of our brothers and sisters live in povert in our Mother Zambia. Do you realise how many people have lost jobs and its all because of our politicians failing to help Zam Airways like what other states do.

  8. This is just another side of the story.The post also have another version.Which version should we follow?

  9. this whole scenario is political.why did they give them the loan in the beginning?just coz Dora is going under,they want to start diverting our attention.why cant they explain the truth about Magande’s letter?

    • YES I AGREE. IT WAS POLITICALLY MOTIVATED TO GIVE THEM MONEY IN THE FIRST PLACE. NOW POLITICS CAN HELP GET MY PENSION MONEY BACK

    • WHICH ONE IS CHEAP POLITICS, THE BORROWING OR THE PAYING BACK. i ADVISE ZAMBIANS ALWAYS TO RESIST BEING PARROTS OF ANY NEWSPAPER. gATHER YOUR FACTS FROM AS MANY SOURCES AS POSSIBLE AND MAKE YOUR OWN OPINION. MUMEMBE MADE A VERY SERIOUS BUSINESS MISTAKE WHICH MAY LEAD HIM TO SELL HIS PAPER. THE PROPBEM IS THAT HE WANTS TO BLAME OTHERS FOR HIS MISTAKE..

    • As I do not support the ZA indebtedness I as well do not support these political investigations of ZA. Mr Nkole, why did you as GRZ give loan to ZA knowing very well that ZA was Insolvent? The other question is, Is ZA the only company which has gone insolvent? RB’s Bank fell and poor people in Zambia up to this day have not been given money, why was RB’s bank not investigated? Please let us apply the law fairly. ZA is not different from all other companies that have gone insolvent and have not paid back the loans. In fact if we were serious, we should arrest Bank of Zambia Boss, DBZ boss, all cabinet ministers including RB as he knew what was going on.

    • U r over estimating the powers of Fred and Mutembo. Thats a lot of money they are owing by any standards. Peoples monies which was being held in public instituitions like NAPSA is now not likely to be recovered under the guise of ‘ it was purely a commercial transaction’. Obtaining goods with no intention or capacity of returning it is theft!

    • Keep on dreaming, it’s a wrap! Mmembe and Nchito’s balls are in a vice. Nchito’s biggest mistake was to link up with loud mouth Fred Mmembe. Baliffs, pls swing into action.

    • Sheikh Banda ulicipumbu. I guess u just comment for the sake of commenting. Please post comments that will add value to the mother zambia

  12. we in ireland have a saying that says ‘cover your ase’ this is simply taking precaution in a situation where responsibility will fall and who will take a hit or line of fire when the sheet hits the fan. in this case there is some legal procedures that where not followed,unless the banks can prove they practised above board and within ethics. the banks are to blame and where not coerced into giving large amounts to a failing institution. DBZ,IBC,NAPSA etc will all get stick for carrying out their duties unethically.

  14. their indebteness has got nothing to do with Dora.they got the loans because somehow they were being backed by a powerful hand.the priviledge which other honest and hardworking business men and women didn’t have.so to them let them carry their own cross and Dora will also carry hers. It’s pay back time.

    • Well spoken Akapondo. Most Zambian politicians are crooks. Lets not confuse the two issues of Dora and ZA. When these guys borrowed all the responsible big instituttions like BOZ, MOF etc were very much aware. Thats why l strong believe even the late LPM and the wife had some influence on this matter. We shouldnt confuse ourselves by comparing these issues with our friends in developed countries were institutions are very independent from politics. Those guys had a good backing from the govnt at that time and when Dora did her job she was also supported by the current leaders. Hope justice will prevail………………

    • very right, this is what was going on and going on even now. Thats why the fight agaist corruption is a very good joke.

  17. elyo nomba pawama pa ZED!…..everyone pointing a finger @ sam1…..sam1 also is pointing @ sam1 else….circle…..circle …….circle…..circle…….circle…….circle……..round and round and round

  18. This is interesting, we shall follow this story to the end until we know the truth and the right thing is done in order to avoid such notorious cases in future. I blame those that didnt look into the issue of African Commercial Bank, we would have learnt a lesson which would have helped us avoid the ZA case.

    • WHEN AFRICAN COMMERCIAL BANK WENT DOWN, SATA WAS VIRTUALLY NUMBER 3 IN ZAMBIA. HE DID NOT DO ANY THING THEN. WHAT DOES HE WANT NOW AFTER ALL THE RECORDS HAVE BEEN EATEN BY RATS AT RUPIAH’S CHIPATA FARM.

  21. RB , Mmembe and Nchito should reconcile. Fighting will not help the country.

    Why was government silent all this time over the US$30million debt. Let government learn to support local private investors, look at what is hapening on the copperbelt province where people have lost jobs. Instead of fighting the two individuals , government should concentrate on finding solutions to the massive unemployment in the country.We are tired with this issue of Zambian Airways. Please RB learn to reason.

    • Why support crooks. They decided to hide in the sheep’s skin yet they are wolves. Whoever supports crooked means of acquiring wealth should be condemned

    • The Star, dont get tired yet. We should start from somewere. If the owners of ZA did wrong by borrowing monies thru dubious means they need to be punished so that all crooks should learn from them. How can the govnt assist local private investors if they cant follow proper channels in doing the business? Lets not just condemn the govnt always. We should also change as a society. We have come to accept corruption as part of us. Look at local mine suppliers,they were given an opportunity to participate in the mining business…but started manipulating the system by duplicating supplies. Lets learn to do honest business!

  22. as i have been saying all along the post has deliberately tried to mislead us, they are not ZA, nor are the nchito brothers, they are mere shareholders. they should have taken time to discuss this issue with dora and RB who could have been the actual pipo to help them. what do they do instead, they paint them black, meanwhile they forget that the company they have shares in, is in the red. the tribunal so far shows that dora does not understand the communication within her ministry, but lawyers new very well the commitments they were undertaking, let us see what the post will say without insulting anybody else.

  23. You guys talking about Sata dont you remember what he said last time or you never heard that was 8 years ago, he said at that time he was just a passenger and not the driver the passenger goes wherever the driver talks him/her. Thats why he wants to be president so he can be the driver.To direct things

  24. If only govt was in the habit of pursuing all the investors both local & International who try to rip off the Zed people like they are doing to ZA then life would be nice in Zed .RB is on record as having said that his going to close the Post,so all this is just a way of getting even with the Post.But how many companies have borrowed money and have not payed back ? The money that they are talking about was given to them with govt’s approval in a meeting chaired by then acting president RB when Levy was sick.How come it’s only Magande who has been pointed out ?We must be serious with the things we do and not forget that we won’t be in office forever .

    • correction, RB said the money that the post owes through ZA will close them, not that he would close the post, if they prove they don’t owe anybody, they have nothing to worry about. if they are equally able to pay its okay, or if they can explain where the money went even better. the post deliberately misrepresents facts for their own benefit. let them fully explain what has been going on all along instead of producing half truths to try and blackmail everybody. all are equal in the eyes of the law, they will equally have their day in court, same like they have advocating for chiluba and dora.

    • My bro’-on which frequency was your tele when RB was threatening to close the post?i thought he said what was going to close the post were the debts they incured through ZA.don’t let your mind be duped into seeing something black as white

  25. # 23 you are very very right when you say that Sata said” at that time he was a passenger and not a driver now he wants to be the driver”. The problem with such people is that they wouldnt like to work with people with an independent analysis of issues he would rather work with people who would like to passengers without questioning his decisions even when they are wrong thus the major problem with PF at the moment . No one would like to be seen to have a difference opinion other than that of their president Sata. Zambians be reminded that Dictators do not in most cases start from the top but even in our offices you can tell dictatorial behavior from our suppervisors that is a clear…

  26. There is everything wrong with the letter. Firstly why would Magande single out ZA when there are other local players in the market like Zambezi airline and Pro flight? Was this meant to suffocate other airlines while ZA prospers? Secondly why would Magande decide to sacrifice a parastatal org for a private company? Mind you NACL also needs money to operate just like ZA. It’s this mentality which has killed Zambian parastatals. Look at Zamtel why is it failing to compete against Zain and MTN. It’s due to cash flow problems as those with Govt connections are not paying bills due interference like Magande’s. For your own information ZA is a cash trader their services are on cash basis.

  27. #26 cont. So why would they collect cash charges on behalf of NACL and fail to remit? In some instances they have been renting premises from NACL incurring electricity and water bills but all these have not been paid.The point is that this arrangement is equivalent to NACL or Govt giving ZA a loan or if you like a Grant. Since when did the Zambian Govt start giving such financial favours to private companies? If this arrangement was done with any other business the The post could have today been screaming CORRUPTION, THIEVES! Because it’s them they are calling victimization.

  28. #27cont. Mind you the shareholders and directors of this airline are so powerful that politicians like Magande would dance to their tune.Don’t listen to the crap Magande is telling in the letter. He is merely spreading sweet jam to a piece of rotten bread. Which economy has been affected since ZA stopped operating?

    • Donor confidence is at its lowest level at the moment. Magande is not saying any crap if anything it your biased thinking that makes you believe Magande was saying crap. When did the Kwacha start losing value to other currencies? Do not mislead people please. Why is the so called DBZ wait until the investigation on the ZA directors is completed? It is RB who is pushing them to give such an ultimatum? Nchito brothers and Membe can lose their money in their respective companies or the companies can close but DBZ will not get a ngwee. Nchito brothers and Membe are employable and can get jobs someb where else.

  29. Some jokers on this blog want to sink their heads in the sand and pretend Nchito and Mmembe are innocent victims. These chaps are sophisticated white collar conmen! The only difference between them and FJT is that they used the corporate veil for their shady dealings. But alas, $hit has now hit the fan and their BALLS will be SQUEEZED. LPM was their backer but is now no more?! ain’t life a biyatch…LT, pls keep us up to date as the drama unfolds!!!

  30. I understand the role, the Post has played in Zambia since 1991. I have no problem with whatever they write. But should we turn a blind eye on tax payers money? Why do we want Chiluba to face the law and not Nchito and Mmembe. If they have nothing to hide, let them simply face the law. The Zambian judiciary is fair.

    • Feeling mutual. There is definitely more to this dealing than meets the eye. My imagination at liberty tells me that this was not exactly a business arrangemet. To get rescuers to a boat that has huge holes in it, doesn’t indicate wisdom. In this case I do not see business sense but an attempt to misuse funds that would otherwise be beneficial to a majority. If you understand anything about the operations of DBZ you will agree that Levy was party to this.Magande should own up.Though the post wants to portray that later as innocent, that thing raises more questions than answers. Sata should learn to keep quiet sometimes on issues that are above him.I smell a rotten rat!!!!

  32. I want to urge Bwezani and his team not to politisise the investigations.I am certain these dealings were not above board. The passing of Levy(MHSRIP) spelt DOOM for the arrangement. Of course you should not be a brain surgeon to see that!!!!!. An arrangement that is above board and based on business principles,would not be discontinued on the demise of one individual save that arrangement not having been based on business principle which those who come after one has left wont be able to see. MISUSE OF PUBLIC FUNDS IS CORRUPTION . I hope the presidence of Levy will not be brought to stand trial .I firmly stand for a goverment of laws not of up right or strong individuals.Magande shld own up

    • He said the report was purely out of sheer negligence on the part of the Journalist who was tasked to monitor the programme.

      Mr Malupenga also said the newspaper has taken action against the Journalist who wrote the story.

      And both Mr. Kopulande and Mr. Mpondela have confirmed receiving the apology letters.

      Mr. Kopulande said he is satisfied with the apology in which the tabloid admitts a wrong and has taken action to avoid a repeat of the same.

      Mr. Mpondela described the apology as genuine because the paper corrected the mix-up in its Sunday edition.

  35. Suddenly the RB govt and its cohort of supporters ,want to portray the post editor and Nchito as “The Enemy of the People” I am waiting for unbiased report from the people that are investigating the ZA saga. I have no doubt that the natural law of justice indicates that the truth will always be triumphant . Zambians deserve to know the truth,nothing but the truth not from Dickson Jere please.

  36. hello!!!! where is everyone today. You are all defleted now to see the real information beginning to unfold. It would be great to hear from membe now.

  37. Post Newspaper says sorry
    The Post Newspaper has apologised to two MMD senior officials for misrespresentation of facts in a story attributed to them in a Saturday edition of the paper.

    This is according to a letter by Post Newspapers Managing Editor, Amos Malupenga to MMD Chairman for Trade and Commerce Sebastian Kopulande and Lusaka Central Constituency Chairman Elias Mpondela.
    In the letter obtained by ZNBC, Mr. Malupenga says there was no malice intended on the part of the newspaper

    YOU SEE NOW WHY WE SAY DONT BE BLINDED BY THE POST. THEY ARE LIARS

    • The post and its team are not infallible ,the fact that they make mistakes like any other paper elsewhere does not make them less credible . Actually, its the most credible paper in Zambia . And for them to have apologized ,what great level of maturity they have displayed , bravo the post.My position .

    • But they have admitted they had made a mistake and have asked for forgiveness. This is the the way a God fearing man must behave; not denying all the time like Shikapwasha

  39. Fred Membe is a good journalist but he made a risky business decision by allowing the post to invest in Zambian airways.We all know that Fred is the principal shareholder in the Post.
    Fred is also big player on the Zambian political scene as he can influence peoples political opinions with his newspaper.He thus has a lot of enemys who want to see him fall.
    The collapse of Zambian airways and the huge debt that the post newspapers has incurred as a result of this has given his enemies the opportunity to get back at him.I would really like see how Fred and the Post will get out of this one.

  40. Taking hierarchy into consideration RB was vice president, Magande was minister of finance, RB is simply covering whatever his role was in this(even though it were turning a blind eye, it would still be obstruction of justice) If he were as honorable as he wants us to believe, he could have resigned as vice president therefore RB is just as guilty a party in this whole mess thats why he is soooo sure magande is going to go down, because he has known from the strart, but its just a matter of manipulating the situation for his benefit, RB, Magande, are all in this but RB is playing innocent by pointing a finger at another guilty party who doesnt have the power the he himself does

  41. Windhoek guy, what do you mean the law? There’s no law in Zambia. The people who bought the mines from Kasonde and them are doing the same. They break even and close, so why nchito brothers? because it’s easy to follow Zambians? BA Chiluba nabo will only go to jail for a short period of time, remeber despite the gross mismanagement of public funds, his wife only goes to jail for a year. Mmembe stopped being a positive journalist and became a puppet of Mwanawasa’s so let this thing just play, we have nothing to be excited about because RB is a product of the extreme corruption and nothing will happen to the Nchito brothers and no money will be paid. Just remeber those retirees who havent received their penisons or death benefits for their loved one’s. Zambia is corrupt and it…

  42. K28billion? Big deal. what about the money that they said they questioned Mwelwa Chibesakunda for? and all the missing Visa books and on and on. what about all the other things huh?

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