Zambia’s largest state-owned copper mining interest ZCCM-IH has been accused of poor governance and ineffective management by the Patriotic Front (PF) government by minority shareholders, including the failure to recover more than $1 billion the company is owed.
In an open letter written to Zambia’s Vice President Guy Scott, submitted to the Government of Zambia via its Embassy in Paris,France last April, thirteen French and UK minority shareholders in ZCCM Investments Holdings are accusing the PF of refusing to allow minority shareholders to exercise their voting rights or attend meetings.
ZCCM-IH is 87,6% owned by the State, and 12,4% owned by private shareholders.
The minority shareholders say that they still have not received any response from Vice President Scott, describing the ZCCM-IH matter as a “scandal” that is “probably too embarrassing.”
“We do not know exactly why the chairman and the board fear from the nomination of a representative of minority shareholders to sit on the Board, but we are sure there are bad tricks and deals,” the open letter reads.
Among the chief complaints raised in the letter are that the chairman and directors’ remuneration are hidden, that there has been no legal procedure brought against looters for fraud (eg Mopani/Glencore), and that management neglects to pressure First Quantum Metals to pay its $570 million minority interest from Kansanshi.
The French and British shareholders emphasize their fears that ZCCM’s Executive Chairman Wila Mung’Omba may be attempting to undervalue the company’s assets by not taking in FQM interest payments in order to convert debt into equity to be passed to a “crony investor.”
As FQM’s payments to ZCCM-IH account for 81% of earnings, the minority shareholders alleged that Mung’Omba and the management are destroying shareholder value at the company.
“The minority shareholders have exactly the same interests as the majority shareholder, the GRZ: that ZCCM-IH becomes one of the leading companies in Africa. It has the means to achieve this, but so far, as a result of weak direction, it has lacked the will to make significant progress,” the letter reads.
“Your honour Mr Vice President, on several occasions you have stated your intention to fight corruption, underhand deals and bad practices. We therefore humbly ask you to consider taking an active part to ensure that the corporate governance and management of ZCCM-IH are of the highest order and above suspicion so that the Zambian people can once again be proud of this flagship company and reap the benefits that should be theirs. You can be sure to count on the minority shareholders and their future representative to do all they can to assist you in this endeavour.”