As a brewing war is taking shape between the Post Newspaper and the ruling Patriotic Front (PF) government, new disclosures are coming to light regarding statements made by Finance Minister Alexander Chikwanda captured by an wiretap with regard to the controversial millionaire Rajan Mahtani, the chairman of Finance Bank.
According to a transcript of a recording submitted before the Lusaka High Court by the Post obtained by lawyers Nchito and Nchito, Finance Minister Chikwanda is heard discussing the matter of Mahtani’s long-disputed status as the majority shareholder of Finance Bank, which is illegal under Zambian law.
“There are two things, his bank has continually and persistently and consistently breached the conditions of the Banking and Financial Services Act,” Chikwanda said in the recording, referring to Mahtani’s Finance Bank. “It can put me in a moral conflict to allow other banks to conform to the provisions of the Banking and Financial Services Act while Mahtani gets out. So he will have to comply. Two, at that time, his Bank paid Zambians poorest…”
Chikwanda goes on to say in Bemba that the cartel members are all “morally compromised beyond redemption,” ominously declaring that M’membe, Nchito, and Mahtani “would have their day.”
The Finance Minister’s official acknowledgement that Mr. Mahtani is operating Finance Bank outside of the law comes as a bombshell, answering questions dating back to December 31, 2010, when the Bank of Zambia (BOZ) moved to suspend shareholder interest in the institution after a forensic audit by the consulting firm Edward Nathan Sonneberg discovered that Mahtani actually owned more than 56% of the bank through transparent intermediaries, while the supposed “strategic stake” by Credit Suisse was actually a disguised loan rather than a shareholding.
Earlier in the recording, Chikwanda commented that Mahtani had been badgering him for a meeting because he was “feeling frantic” over the situation with Zambezi Portland Cement (ZPC), an Ndola-based cement producer whose original owners accuse him of illegally stealing control of the company. The Chikwanda transcript reveals that Mahtani was seeking government influence to protect his business from the new cement plant being built by Nigerian billionaire Aliko Dangote.
Mahtani, who had been one of the primary financial supporters of Michael Sata’s presidential campaigns, was restored ownership of Finance Bank within three weeks of the election date. A Commission of Inquiry as initially formed to investigate the government’s seizure of the bank and subsequent sale to First Rand, however, President Sata decided to act and return the bank to Mahtani before the commission could begin its work.
This disclosure from the Finance Minister will place new pressure on the Bank of Zambia to act and enforce the BFSA, and may scupper ambitious plans announced by Mahtani to launch an initial public offering (IPO) on the Lusaka Stock Exchange, as well as floating shares in Nairobi, Johannesburg, and London.
The release of Chikwanda’s recording by the Post newspaper owner Fred M’membe is related to a wider struggle among members of a so-called “cartel” against the PF government, which has intensified since the firing of Justice Minister Wynter Kabimba.
Mahtani has played an outsized role in supporting the cartel, including sending his employee who sits on the board of Zambezi Portland Cement, Bishop John Mambo, as one of the primary attack dogs criticising Chikwanda.
On Tuesday, the police along with officers of the Zambian Revenue Authority (ZRA) raided the headquarters of the Post Newspaper over unpaid back taxes dating back several years. M’membe, who is represented by the Director of Public Prosecutions Mutembo Nchito as his defence counsel, was able to achieve an injunction to prevent the seizure of his property for the time being.