The London High Court has ordered that Zambia compensates Libya $380million for nationalizing Zamtel.
This is a matter in which the Libyan Investment Authority (LIA), the investment arm of the Libyan government dragged the Zambian government to court for abruptly reversing the sale of Zamtel without compensation.
The Libyan company owned a 75 percent share of Zamtel while the Zambian government owned 25 percent.
According to the Financial Times of London, the Libyan Investment Authority reportedly pursued similar action against Chad, Rwanda and Niger.
In the report, the LIA claims that the four countries took advantage of “Libya’s political turmoil to nationalise assets belonging to the country’s $66 billion sovereign funds” following the eight-month long conflict that brought a brutal end to Muammar Gaddafi’s 40-year rule.
At the beginning of 2011, LAP Green Networks, a subsidiary of LIA, held stakes in nine telecoms operators across sub-Saharan Africa, including Chad’s Sotel Tchad, Oricel in Côte d’Ivoire and Gemtel Telecom in South Sudan.
On 2 May, Niger’s parliament voted to nationalise telecoms asset Sonitel, pulling back from a privatisation agreement to sell a 51% stake to LAP Green for $62.16m.
In January, then President Michael Sata seized a 75% stake in telecoms company Zamtel that LAP Green had purchased for $257m during a privatisation exercise in 2010.
LAP Green challenged the government’s actions in court and was asking for $480m in compensation.
The Financial Times quoted Hassan Bouhadi, chairman of the LIA as saying the legal action related to technology assets in the four countries named.
“The LIA is determined to regain what was squandered from the Libyan people,” Bouhadi Mr. said recently.
On Friday, Finance Minister Felix Mutati told Parliament in a ministerial statement that the court had ruled that Zambia should compensate LAP Green for seizing Zamtel from the Libyan sovereign fund in 2012.
Mr. Mutati did not give details over which court made the order nor payment timeline.
The company was sold in 2010 by the Rupiah Banda administration for US$394 million on grounds that it had failed to recapitalise the business.
In 2012, the PF administration under President Michael Sata forcefully took over Zamtel’s operation from LapGreen Network claiming that the 75% shares the company owned were corruptly sold by the previous administration.
Lap Green Networks denied any wrongdoing in the manner it acquired the company and said it would challenge the country’s authorities in the courts of law.
LapGreen Network then took the matter to the Lusaka High Court, where the government failed to defend its decision to repossess the company.
Instead, officials decided to enter a consent judgement to compensate LapGreen Network its initial investment in Zamtel amounting to US$252 million plus interest, calculated at 8%, and other charges.
The total amount payable to LapGreen Network came to US$382 million.
According to the settlement agreement, the government was supposed to make an initial payment of US$114 million in November 2016, followed by biannual payments of US$35 million in February 2017 and August 2017 respectively.
The opposition, the Forum for Democracy and Development (FDD) issued a statement through its spokesperson Antonio Mwanza demanding the government inform Zambians why it has failed to pay LapGreen Network and how it plans to settle the issue.
Almost three years ago, a Zambian High Court allowed Lap Green Networks to take the matter to the London Court as it was considered neutral ground after the Libyan company expressed concern that it would not be given a fair hearing in Zambia.
The court’s decision came after all foreigner directors of Zamtel were deported from Zambia.
In 2012, President Sata constituted a commission of inquiry to investigate how Zamtel was sold to the Libyans.
The Zambian government has failed to make public a report by the Commission of inquiry into the sale of Zamtel.
However, a leaked copy of the Commission Report however shows irregularities in the manner in which Zamtel was sold, alleging that Lap Green and RP Capitals, which was appointed as financial advisor, bribed senior Zambian government officials.
The Zambian government has repeatedly said it can only compensate Lap Green Networks for its investment in Zamtel, but that it will never surrender back the company to the Libyans.
In 2014, the Zambian government agreed to repay the US$103 million loan that Lap Green Networks obtained from China’s ZTE in 2011 for the expansion of Zamtel network.
The loan was obtained by Lap Green Networks in 2011 from ZTE in order to implement Zambia’s Global System for Mobile Communication (GSM) phase IV and Universal Mobile Telecommunication System (UMTS) projects.
The repayment of the $103 million loan was considered to be the first step in compensating Lap Green over its investment in Zamtel.
Secretary to the Cabinet Rowland Msiska instructed the Secretary to the Treasury to secure a loan from China’s Import and Export Bank (EXIM) to pay back the loan to ZTE on behalf of Lap Green.
Dr. Msiska however, refused to discuss why the Zambian government decided to pay back the loan, and why it has decided to do so while the case was still in court.
“Government does not discuss its plans and programs in the media,” Msiska had said.
Source: Lusakatimes
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