Zambian Airways debt hits K18m

THE 2013 Auditor General’s report has revealed that the defunct Zambian Airways which was owned by the Director of Public Prosecutions Mutembo Nchito and his brother Nchima and the Post Newspapers still owes the Development Bank of Zambia close to K18 million.

And the Auditor General Anna Chifungula stated in the report that millions of kwacha was abused at the institution.

According to the Auditor General’s report just released, in August 2007, three bank institutions namely Investrust, DBZ and Intermarket disbursed a five-year loan amounting to K12, 150 000 million    to Zambian Airways to enable the Airline to purchase two aircrafts.

The report stated that the repayments by Zambian Airways were to be made not later than five years from the commencement date by way of 20 quarterly instalments.

In August 2007, three financial institutions formed a syndicate agreement to disburse a five- year loan to ZA to enable the airline purchase two aircrafts. The money was raised as follows DBZ US$1.5 million, Investrust US$500,000 and Intermarket US$1,000,000. The total was US$3,000,000. The repayments by the borrower (ZA) were to be made not later than five years from the commencement date by way of 20 quarterly installments,” the report started in part.

The report further started that as at 31st August 2009, only an amount of K1 234 195 284 had been repaid as interest charges, while as of December 2014, amounts totaling K17,744,033,953 inclusive of interest were not paid.

According to the bank lending and Portfolio Monitoring Process Review report dated 18th December 2008, the issuance of the loan was in breach of the bank’s credit policy of a preferred customer as ZA did not meet the criteria.

And Dr. Chifungula has stated in her report that KIFCO Packaging still owed DBZ about K17,417,1293 as at March 2014.

She explained that Kifco was issued with a loan of about US$1.3 million for the procurement of capital equipment, working capital and refinancing a Proparco loan with Barclays Bank, adding that the loan was supposed to be repaid within a period of five years expiring in 2011.

Dr. Chifungula further explained that an additional loan of about US$2.4 million was given to Kifco to be repaid within a period of five years, bringing a total to US$3.7 million.

The report also stated that in 2013, about K41, 497 was spent on talk time by DBZ officials and board chairperson Dr. George Chabwera, an incentive which was not part of their conditions of service.

“The purchase of airtime was not provided for in their conditions of service. Further it is not clear what rationale was used to purchase airtime for the board chairperson as he was a non-executive director and was not involved in the day to day operations of the bank,” the report stated.

The report also revealed an irregular purchase of gift vouchers which was contrary to the entitlements for the board members.

Six payments totaling to K59,000 were made for the purchase of Christmas gifts worth K48 000 and cash payments totalling K11,000 for class A directors and three Government officials, adding that it was not clear the basis upon which the gifts and cash payments were made.

The report also revealed that DBZ did not remit statutory contributions amounting to K10, 479, 092 to the Zambia Revenue Authority.

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