Zambia pays loan for Libya's Lap Green, but Zamtel case continues

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Even though the Zambian government has approved a plan to pay back a $103 million loan for Libyan operator Lap Green Networks, the legal battle over the company’s exit from the country is far from over.

Zambia says it intends to pay back the loan, which Lap Green obtained from China-based ZTE for the expansion of Zambia Telecommunication Company (Zamtel) network. In 2010, the previous Zambian government sold Zamtel to Lap Green for $257 million. Critics said the government failed recapitalize the company to make it viable and able to compete with private operators.

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 current government however, repossessed Zamtel in 2012 on grounds that the company was illegally sold by the previous administration. It accused the prior government of corruption in a range of deals, including the sale of Zamtel.

A Commission of Inquiry instituted by President Michael Sata produced a report that showed 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 Libyan company owned a 75 percent share of Zamtel while the Zambian government owned 25 percent.

Lap Green has sued the Zambian government over the repossession of Zamtel, and the case will be heard in a U.K. court. The Zambian High Court that first presided over the case ruled that it should be heard in the U.K., since it is considered neutral ground. The court’s decision came after all foreigner directors of Zamtel were deported from Zambia.

The Zambian government insists it will compensate Lap Green for its investment in Zamtel, but can not let ownership of the company be transferred back to the operator.

The repayment of the $103 million loan is considered to be the first step in compensating Lap Green over its investment in Zamtel.

Secretary to the Cabinet Rowland Msiska has instructed the treasury secretary to secure a loan from China’s Import and Export Bank (EXIM) to pay back the loan to ZTE on behalf of Lap Green.

Msiska has however, refused to discuss why the Zambian government has decided to pay back the loan, and why it has decided to do so while the case is still in court.

“Government does not discuss its plans and programs in the media,” Msiska said.

Lap Green declined to comment.

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