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Saturday, 10 July 2010

Politics of compensation

A potentially interesting revelation by the Zambian Watchdog leaves more questions than answers :

The government of Zambia has in the past few years paid more than K11 billion to citizens it has either tortured or wrongfully detained. Payment records seen by the Watchdog show that President Rupiah Bwezani Banda received the biggest chunk of the compensation amounting to more than K3 billion. The compensations were paid starting from the tenure of late president Levy Mwanawasa but people compensated include those whose rights were violated as far back as 1965 to people detained during the reign of Fredrick Chiluba

One list shows that 211 citizens were compensated a total of K11, 774, 071, 575.36 under the preservation of public security regulations. Among these is president Rupiah Banda who received eight (8) cheques on different dates but whose total amount is Three Billion, three hundred million and seven hundred and twelve thousand Zambian Kwacha. President Rupiah Banda was arrested during the ‘Zero option’ episode when Chiluba was president.
Assuming the above information is accurate, which I very much doubt, this may suggest two potential scenarios at face value [at the very least the Watchdog could have produced the original document - but also see the technical addendum below].

Scenario 1. The former President conspired to give his then deputy [Rupiah Banda] huge sums of compensation which has now been enforced by the latter as President. Under this scenario nothing wrong has been done by the current President except receiving what was rightly due, unless such payments have been inequitably distributed - not in award but in distribution of a limited pot. That is to say the President was only able to get a larger share because he is the President. A bit like how many Zambians are not able to get pensions rightly due to them, but others are able to because of "connections". In both instances there's nothing improper, but it is the "influence" that  makes it more efficient for some.

Scenario 2. The other scenario is that the compensations are equitably distributed and the President simply happens to gain a larger sum because he suffered worse than the others. This is difficult to explain because there many others who aren't even awarded compensations. But assuming it is all legitimate and there are no institutional restraints, the President has done nothing wrong.  The only question here is whether the President has acted morally sound. Is it morally acceptable that the President can accept such large competition for the wrongs he rightly suffered ages ago when such money could be better spent on other things the poorest? The answer of course, partly depends on whether that is a legitimate counter-factual! There's nothing to say if the money was not given to President Banda it would have been spent better on the poor.

My guess is that there's nothing improper here, but it would be interesting to see which of the two narratives emerge as the debate unfolds.

A technical addendum :  It wont be lost on our more eagle eyed readers that the comparison provided by Zambian Watchdog appears to be in nominal Kwacha prices. To really get a handle on the appropriate shares we must account for both the erosion of money over time (inflation) and the pure time preference issues - people prefer money now than tomorrow (discounting). In short RB may have got the lowest share  in real terms (ignoring discounting issues) - but it appears larger than others due to the lack of adjustment for inflationary effects.

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