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Zambia: Anti-Corruption or Political Witch Hunt?

President Michael Sata's anti-corruption campaign is running into criticisms that it is politically motivated.
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Lusaka, Zambia:

The surprising victory of Zambia’s national football team, the Chipolopolo, in the 2012 Africa Cup of Nations has prompted weeks of celebrations and confident swagger across the capital city of Lusaka. Amidst the celebrations, citizens and commentators reflect on how far Zambia has come as a footballing nation since the tragic 1993 airplane crash in Gabon that killed the majority of the national team.

Typically when sports and nationalism collide, politics is sure to follow, and Zambia has been no exception. Following each goal the Chipolopolo performed a celebratory dance mimicking the hush gesture from President Michael Sata’s “Don’t Kubeba” slogan during last September’s election. During Sata’s eccentric campaign rallies, he would instruct his supporters that if the other parties offered them anything, from bicycles to t-shirts, they should just take it but not vote for them: “Don’t Kubeba” – in other words, “don’t tell”, it will be our little secret.

A man of questionable action

With the team insisting their celebrations were not political, the brief moments of national unity their success brought may only have obscured what some see as a deepening polarisation. Since coming into power by a narrow margin five months ago, Sata’s Patriotic Front party has brazenly implemented its agenda. Companies and banks have been re-nationalised, anti-corruption probes have proliferated, and new districts and ministries have been created at a surprising pace.

While Sata’s supporters applaud this “man-of-action” approach, his opponents and critics decry a campaign of persecution under the cover of Patriotic Front’s anti-corruption drive. They warn of a “political witch hunt” that threatens to drag Zambia back to the days of a one-party state – a development that has foreign investors alarmed.

Opposition frustration

Frustration culminated on February 22, as the opposition staged a walk out of parliament, just days before a visit by the UN Secretary-General. They alleged that the president was abusing due process by establishing districts and ministries without the consent of the legislature.

“As members of parliament, we pledged to uphold the constitution of the Republic of Zambia and we feel that this government has been breaching the constitution,” Felix Mutati, a former minister of commerce of the opposition Movement for Multiparty Democracy (MMD), told AFP. “They have been creating ministries and transferring some responsibilities from some ministries to another.”

And furthermore, Sata has also come under fire for the controversial nationalisation of several privatised assets. Among his campaign promises, Sata pledged that he would crack down on the alleged corruption of past privatisations and reverse deals that disadvantaged the state.  He didn’t wait long to act.

Impartial reports?

Several Commissions of Inquiry, handpicked by the ruling party, delivered their reports within a month of Sata taking power. The new government moved swiftly to reverse the sales of First National Bank and the telecommunications firm Zamtel, and now have their eyes on Zanaco Bank as well as the cancellation of a tax deferment deal with a Pepsi distributer, Varun Beverages. The Sata government has also issued a slew of corruption accusations, investigations, and search warrants targeting mainly MMD members and their families - the opposition alleges political persecution.

Some of the government’s accusations have bordered on the absurd. Maxwell Mwale, the former MMD Minister of Mining, was arrested in early February and accused of stealing 20 bicycles. Former Finance Minister Situmbeko Musokotwane is the target of a probe related to the Pepsi tax deferment as well as Zamtel. The home village of former Vice President George Kunda was raided by police who were looking for suspected stolen government property. Instead they came away with seizures of 46 bags of maize, 15 bicycles, two sewing machines, two oxen ploughs, two mills, and clothing fabric left over from the last campaign that would have been used in the next by-election campaign. Former Energy Minister Kenneth Konga has had numerous properties seized by the police, including a multi-million dollar hotel investment, and was accused, but later cleared of, having circulated counterfeit currency.

Properties seizures and warrants based solely on suspicion appears to be the new reality in Zambia:

“My case highlights the whole issue of the breakdown of the rule of law here,” Mr Konga said in an interview. “I have only been warned and cautioned, and yet my property has been seized while they carry on the investigation, instead of the other way around.  I am confident my property will be returned because I have not violated any law.”

Many of the corruption allegations against the opposition stem from the conclusions of the Commission of Inquiry reports on Zamtel and the Zambia Revenue Authority (ZRA), which are available online.  But the opposition claims disputes the objectivity of the Commission’s reports, not least because they are chaired by Patriotic Front party members.

The Zamtel report, for example, recommended that the government immediately reverse the $257 million sale to LAP Green, because the buyer supposedly failed to meet pre-qualification criteria, that the asset was undervalued, and that the negotiations were riddled with irregularities.  In particularly aggressive language, the report stated that the sale of Zamtel by the previous government was “a clear case of economic sabotage which pervaded and compromised key GRZ institutions to the extent that GRZ decisions and policy were being managed by a foreign consultant.”

In a recent interview, however, Former Finance Minister Musokotwane scoffed at the conclusions of the report. Musokotwane claims that not only did LAP Green fulfil all requirements and present the highest bid, the Commission report ignored the fact that Zamtel was audited and evaluated by Ernst & Young, which found the company to be insolvent with a negative net worth. What the Commission did, says Musokotwane, was to take the asset valuation but ignore the liabilities, such as tax liability, debts to suppliers, and an unfunded pension liability.

“They have used massive propaganda in newspapers such as The Post to give the Zambian people the impression that there was fraud or corruption in relation to these companies, and now they have used that as an excuse to nationalise the assets,” said Musokotwane. “And for investors, both in Zambia and from abroad, they read beyond propaganda and see the details contained in the report, and now they are legitimately worried that anyone’s investment can be taken by this government without the protection of the law.”

There have been similar complaints over Sata’s reversal of the sale of First National Bank, which had been purchased by South Africa’s FirstRand for $5.5 million last year. After taking back the bank in early October 2011, Sata handed it back over to the former owner Rajan Mahtani, believed to be one of the president’s largest financial supporters. And now, with another Commission of Inquiry due to present its report soon on Zanaco, which was sold by President Levy Mwanawasa in 2007 to the Dutch entity Rabobank for $8.25 million, the opposition is expecting a similar outcome.

Government stands firm

Government officials strongly deny any suggestion that President Sata’s anti-corruption drive is aimed at punishing his opponents. “If you look at the privatisation programmes of the last few years by the former government, you will see that they are riddled with irregularities and improprieties,” said Commerce Minister Bob Sichinga. “We have zero tolerance for corruption.  We said it before the election, and now we are doing it after the election.  There was a huge outcry on behalf of Zambian people against the privatisations, and the only people who are complaining are the ones who want to protect wrongdoing.”

The Commission of Inquiry claims to have uncovered underhand methods and ulterior motives in the sale of Zamtel and no receipt of funds for First National, said Given Lubinda, the PF’s Foreign Affairs and Tourism Minister. “I want to deny all these allegations that there is a witch hunt,” Lubinda said. “Has anybody been charged, put on trial, or imprisoned? No – and if someone were to be found in violation of the law, they would be given a trial and presumed innocent until proven guilty.”

Accommodating wider dissent

Nevertheless, there are public figures outside of the MMD who retain some doubts that Sata’s anti-corruption drive can be taken at face value. 

“There is no doubt that there is a need to fight corruption, nobody questions that,” said Hakainde Hichilema, head of the United Party for National Development (UPND), another opposition party which formerly held a pact with Patriotic Front.  “But what we want is a professional and transparent fight against corruption; a fight that will ensure that there is no selectiveness, and no vindictiveness. Unfortunately, at the moment it is very clear that the fight against corruption is being used to settle political scores.”

When UPND and PF were joined in their pact, Hichilema says that Sata wanted to gain the trust of moderate voters and the support of the investment community, but ultimately his plan was move the country toward nationalisation. Hicilema, who has become a vocal critic of the Sata government, suffered an attack on his house two weeks ago by an organised cadre allegedly sent by the ruling party. The police failed to intervene and protect the house, says Hichilema, because they are afraid they would be dismissed by the government.

Protecting foreign investment

All across Zambia’s political spectrum, investment is recognised as the key to economic development and employment. How the new government handles the review of privatisations and its anti-corruption drive will depend upon the impact on foreign investment. Both Sichinga and Lubinda are keen to emphasize that Patriotic Front is open to working with any and all foreign investors, despite past statements by the president - on the campaign trail in 2006, Sata denounced Chinese labour standards, and describing foreign investors as “foreign infestors”. He substantially toned down his criticism in the 2011 campaign and held his first public meeting after winning the election with China's ambassador, Zhou Yuxiao, where he stressed the importance of China’s investment to the country and also the sanctity of Zambian labour and investment regulations.

“Our government is not one that is going to be selective in the manner that it treats foreign investors or foreign governments,” said Lubinda. “We do not look North, South, East, West, up or down. For us, we treat investors equally irrespective of their origins, and we consider ourselves to be a neutral player in the global economy and in global politics.”

Yet the opposition insists that by pursuing these expropriations without adhering to constitutional norms, President Sata risks losing the trust of the investment community, the stability of the Kwacha, and all the progress made over the past 20 years. “Sata has promised civil servants in the health sector a 100% salary increment, and of course, soon all other public sector workers will demand similar treatment, creating unprecedented inflation in Zambia,” said Mr Musokotwane. “It is difficult to see the new direction the government is taking; no one knows what their policy is.  They say ‘more money in people’s pockets,’ but that can only happen when you create business opportunities and employment opportunities.”

The political challenge Zambia is facing is familiar to many developing countries that are dependent on resource exports.  Under former President Rupiah Banda, Zambia’s GDP growth surged from 5.68% in 2008 to 7.61% in 2010 while inflation dropped to a single digit number. Yet despite a growing job market, many young citizens have yet to be incorporated into the economy.  More than half of Zambia’s 13 million people are under the age of 20, and most of them graduate from school with little hope of finding work.  In such an environment, Mr Sata’s campaign promises to transform the country in 90 days and put more money in people’s pockets finds a very receptive audience, especially among the youth. And if the Zambian people run out of patience, the “Don’t Kubeba” slogan could take on a whole new meaning.

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Comments

Very thorough article, I appreciate the full political context it provided.