The Zambian Government has defaulted on its commitment to pay LapGreen in excess of 382 Million US Dollars in compensation following a Consent Judgement Order entered into between LapGreen and the Government of the Republic of Zambia.
This is in the case were the Zambian Government was sued by LapGreen following the illegal take over of LapGreen shares in Zamtel by the PF Government in 2012. Facts are that LapGreen bought 75% shareholding in Zamtel amounting to a total of 252 Million US Dollars in and following the illegal take over of Zamtel by the State, LapGreen sued the Zambian Government in the Lusaka High Court.
The State failed to defend itself and instead entered a Consent settlement to compesate LapGreen it’s initial investiment of 252 million US Dollars plus interest, calculated at 8%.
Government was supposed to make an initial payment of 114 Million US Dollars in November, 2016 followed by biannual payments of 35 Million US Dollars in February, 2017 and August, 2017 respectively but the Government has defaulted and LapGreen is now threatening to take all measures possible to recover their money including taking the issue to the international financial institutions and seize Zambia’s assets abroad.
This issue raises serious questions with regards to Zambia’s capacity to repay the ballooning debt that our country finds itself in and the claims by Government that Zambia’s economy is recovering. How can one claim that Zambia’s economy is recovering when Government is failing to meet its statutory financial obligations?
The implications of the actions that LapGreen is about to undertake have far reaching consequences with regards to Zambia’s standing on the global financial market especially now that the country is negotiating to get a loan of $1.6billion dollars from the IMF and that the Eurobonds and other debts are approaching their maturity repayment dates coupled with the widening fiscal deficits the country is facing.
Does Zambia have the capacity to service the ever increasing public debt if it is failing to pay such financial obligations as compensation like the LapGreen one?
What will be the reactions of Lending and Credit Rating Agencies and how will that affect our fiscal outlook and standing on the global market once LapGreen takes the Government to international financial institutions?
Can Government explain to the Zambian people what the status of this matter is. What happened to the initial 252 million US Dollars that LapGreen paid the Zambian Government?
Can the Minister of Finance confirm that the LapGreen debt was added to Zambia’s total public debt which he stated in Parliament? How much debt has Zamtel accrued from the time Government took over its operations? And how much of this debt has been granted by Government?
Can the Minister in charge of Transport and Communication explain to the Zambian people how Zamtel is performing since the Goverment’s take over. We demand an honesty and comprehensive response from Government. Can the Ministry of Finance and The Ministry of Justice explain to the Zambian people what is really going on here.
The public needs to know the truth about this LapGreen saga because it’s the taxpayers who will foot the bill. It is common knowledge that Zamtel in its current state is moribund and it is only surviving through Government borrowings and guarantees.
The questions that needs serious answers is why did the PF Government illegally grab Zamtel when it knows all well that it has no capacity to efficiently run the entity? What happened to the initial 252 Million US Dollars that LapGreen injected in Zamtel because the company is limping and it is only surviving on Government guarantees?
The consequences that we as a country is likely to suffer if this matter and the general public debt management problems escalates are too ghastly to contemplate.
As punishment for default, capital markets will either impose punitive borrowing rates or refuse to lend at all. And credit-rating agencies will no doubt warn against investing in the country.
This issue may appear minute but it is a serious time bomb that if left unresolved will have serious rumifications on the country’s international standing on the global financial market hence let Government explain to the public how it plans to settle this issue before it gets out of hand.
Issued by Antonio Mwanza, FDD Deputy National Secretary and Party Spokesperson.