Post date: Aug 12, 2011 12:29:45 AM
New Zambian President Michael Sata reverses the 5.4 million US dollar sale of the nation's Finance Bank to South Africa's second-biggest lender, FirstRand.
LUSAKA, ZAMBIA (OCTOBER 03, 2011) REUTERS - Newly elected Zambian President Michael Sata has reversed a 5.4 million US dollar sale of unlisted Finance Bank to South Africa's FirstRand Ltd, in his latest push against the policies of the previous administration.
"There is so much dirt including this office where I am. There is so much corruption, so much corruption that this country stinks," Sata said at a swearing-in ceremony of police in Lusaka.
The Zambian central bank said last month FirstRand would pay 5.4 million for the bank, which it seized from its shareholders in 2010 for violating the law through unsound practices, including insider borrowing.
Although only a week in the job, Sata has wasted no time in kicking out all vestiges of the previous administration of Rupiah Banda, whose Movement for Multi-party Democracy (MMD) had been in charge of the southern African nation for 20 years.
Sata has appointed a new head of the country's anti-corruption agency and fired out respected central bank governor Caleb Funadanga.
FirstRand, South Africa's second-largest bank, said it had yet to receive formal notification of the new government's decision.
"We continue to liaise with the Bank of Zambia, which was the counterparty responsible for the transaction, when we have clarity we will comment further," Chief Executive Sizwe Nxasana said in an e-mailed statement to Reuters.
Finance Bank's chairman welcomed the move, saying the original decision to seize the bank's assets had been based on politics.
"I believe the truth has finally prevailed and am very glad that the Zambian investment has been restored to Zambians for the benefit of Zambia and at least it safe guards a thousand employees that were threatened of losing their jobs," said Rajan Mahtani.
Zambia's central bank said last month it had accepted FirstRand's offer because the South African lender has a track record in managing weak banking institutions.
It said FirstRand would run all Finance Bank's 34 branches and 16 agencies, while the Bank of Zambia would keep operating the problem assets.
The 74-year-old Sata swept to power two weeks ago on the back of voters looking for change in a country that has seen its economy grow but who felt the riches from its mines had not made their way to the people or created enough jobs.
Sata has said he would look at last year's sale of state-owned fixed-line operator Zamtel to Libya's LAP Green Networks for 257 million US dollars, and investigate state fuel purchasing deals in Africa's biggest copper producer.
Last week the new government asked banks to cut interest rates and copper exporters to route all payments via the central bank.