Board of Directors
ZAMBIA RAILWAYS LIMITED
PUBLIC STATEMENT FOLLOWING UNFOUNDED ATTACKS BY CLIVE CHIRWA
Following a series of press statements in the Daily Nation and Lusaka Times attributed to the Managing Director of Zambia Railways Limited, Clive Chirwa, members of the Board of Directors that are not in Government would like to make a response in order to protect the integrity of innocent people whose only reason for accepting appointment to sit on the Board by His Excellency the President was to diligently serve the Nation in this important assignment. Public interest and commentary following the statements made by Clive Chirwa is clearly understandable especially when an immediate rebut was restrained for about a week now on the request from Government. Considering that Clive Chirwa has continued, on a daily basis, to misinform the Nation on the true happenings in the Board, the laws of the Land and that of natural justice demand that truth must be made known to enable the public appreciate better what is really happening in this Public Company. We shall respond to the main utterances made in turn:
Corrupt Board Members are demanding up to K500 million in sitting allowances
A charge like this against innocent professionals can only come from a sick mind. At no point has the Board or any of its members demanded to be paid a ridiculous amount of K500 million. Since their appointment late last year, Board members have been receiving a sitting allowance of KR2,600 per sitting, the amount that was inherited from the former Board and which Management itself proposed to us. Although the Minister advised the Board to revise this upwards to reflect what obtains on the market in the light of what he considered a mammoth task of transforming a non-performing Company, the Board, during its sitting on 22 March 2013, actually resolved to retain the same amount of K2,600 given the insolvency of Zambia Railways at present. Board members have never, repeat, NEVER, received allowances higher than this amount. The Board minutes and Company financial records are there to verify and are open to public scrutiny, Zambia Railways being a Public Company. It is also important to add here that, contrary to what was reported in the press attributed to the Minister of Transport, the Board has not at any point asked Government to approve the payment of K500 million to each member or for the sitting allowance of K7 million to Board members or for any other amount for that matter. As is normal practice, boards set their own allowance levels and Zambia Railways Board did exactly that. As anyone who understands the average sitting allowances for corporate boards in Zambia would agree, the KR2,600 the Board currently receives is in the lower side on the market. Since this is one issue that has justifiably attracted considerable interest from the Public and has enlisted a huge public outrage, including statements coming from politicians in the opposition, the Press should pursue Clive Chirwa to justify his irresponsible statement which, thus far, he has not retracted in case he now claims he was misquoted. For a man of his public image and who even once dreamed of becoming a President of Zambia, a lie of this magnitude against innocent people is unacceptable in a community of descent people.
The Board Suspended the Director of Finance because she refused to pay the huge sitting allowances to Board Members
Again, there is nothing more distant from the truth than this and the relevant arms of Government are aware of the circumstances surrounding the Board’s decision to put Ms. Regina Mwale on leave. The letter to her is very clear and for Clive Chirwa to misinform the Public is unfortunate. The truth is this: Clive Chirwa, in the Contract appointing him, is expected to live in the Chief Executive’s Residence in Kabwe. However, he believes that Kabwe is too small for him since he claims that he owns and lives in a multi-million Brirtish pounds manor house in the UK (the picture of which he strangely circulated to Board members in the hope of intimidating them). Instead, he opted to live in Lusaka from where he commutes to Kabwe, spending a total of 4 hours in travel time every day. He lives at Fallsway luxury apartment where the Director of Finance continued to pay more than K72 million per month in rentals. This was in contravention of the Board directive to relocate Clive Chirwa to the town where Zambia Railways is located, as per his Contract of appointment, or to a cheaper accommodation in the short-term. When the Director of Finance, clearly working in league with Clive Chirwa, resisted the relocation to Kabwe, and mindful that there were several financial irregularities that could not be justified (including paying the over K72 million monthly rentals without a tenancy agreement), the Finance and Administration Committee of the Board resolved to recommend to the full Board to institute forensic audit of Zambia Railways in order to protect public money. As is usual, the Board, on advice from the parent Ministry and in its own judgement, resolved to put Ms. Mwale on leave, on full-pay, pending the completion of forensic audit by the Auditor General’s Office. This development greatly disturbed Clive Chirwa who defiantly attempted to block the leave but with no success. He has continued to this present day to live in Fallsway, in full defiance of Board directives. In the light of this, the Board was appalled to read in the Daily Nation that Ms. Mwale was suspended for refusing to pay corrupt board members’ sitting allowances and for “resisting transferring money from ZANACO to Finance Bank” and now Clive Chirwa demands that Ms. Mwale be recalled from leave before the Auditor General completes its audit. This information is in the public domain and all the communications, including Board minutes, are available for public scrutiny should anybody, including the Daily Nation, wish to do so.
US$120 million Eurobond Money moving without Knowledge of Clive Chirwa
Clive Chirwa has also lied by claiming that the Board is moving the US$120 million without his knowledge or authority. It is untrue that the Board has moved money to Finance Bank for boards never get involved in such things. It is as simple as that. After Clive Chirwa left on a 15-day unapproved leave and having abandoned the Company without appointing someone to act as CEO, the Board at its last sitting on 22 March 2013 regularised this anomaly by appointing one of the senior management staff in acting capacity. During the Board Meeting which Clive Chirwa boycotted in preference to attending the Victoria Falls University graduation function, the Acting Director of Finance informed the Board that the Kwacha equivalent of US$120 million from the Eurobond allocated by Ministry of Finance had been received by Zambia Railways and that Management had deposited it in the ZNCB account where it was yielding 4.0% interest. Considering that the Eurobond money was borrowed by Government at around 5.6 percent interest, the Board directed Management to scan the market and revert back to it if there was a bank that can offer Zambia Railways a better rate. Management subsequently received and communicated to the Board a much better offer from Finance Bank at 12.5% for 12 months; 11% for 180 days; 10% for 90 days; 7.5% for 60 days; and 7% for 30 days. All this information is there for public scrutiny. On receipt of this information, the Chair of the Board contacted the Ministry of Finance that advised, in writing, that Zambia Railways should move the money to a bank that offers the best interest since the Eurobond is a loan. Contrary to Clive Chirwa’s strange reports to the public through the Daily Nation, all this was done above board and with the full knowledge and involvement of Management of Zambia Railways. Since he was out of the country, the Acting Managing Director as well as the Acting Director of Finance attended the Board Meeting and can be interviewed to verify this information. The fact that Clive Chirwa absconded from work during that time alters nothing. There is no reason for the Board to believe that the then Acting Managing Director did not brief him, as is standard practice, for him to plead ignorance about these consultations and decisions. It is now clear to the Board, following Clive Chirwa’s running to the Daily Nation to peddle falsehoods, that there could be a good reason why he wishes to keep the money in an account where the Company has lost more than a billion Kwacha in interest every month. It is also clear that these lies were reported in a manner that aimed to maximally damage the reputation of innocent Board members. Anybody interested in this case can easily establish the truth from members of ZRL Management, including the Acting Company Secretary; from the Ministry of Finance - Deputy Minister’s Office; and from the Board of ZRL itself. In the light of this development and now realising that these untruths are fast catching up with him, Clive Chirwa is now reportedly trying to negotiate with ZNCB for it to offer a higher interest rate and to probably back-date it. The truth will still come out for this is of public interest. It is in the Board’s view that this development amounts to corruption and is against clean corporate governance norms. It is also noteworthy that, contrary to Clive Chirwa’s claims, the Board has not opened any bank account at Finance Bank and no money has moved, another issue that has also caused public outrage based on Clive Chirwa’s falsehoods. Indeed, as all those that are competent in board operations worldwide would attest, it is never within the remit of boards to open bank accounts on behalf of management and Zambia Railways is no exception. Anybody who understands corporate decision-making would appreciate that the advice the Board and Ministry of Finance extended to ZRL Management over this issue falls neatly within normal prudential protocol in financial and corporate management.
Why is Clive Chirwa having difficulties with the Board?
The Public ought to know the nature and magnitude of the challenges the Board has faced with the acclaimed Professor. This may help the Nation better understand why he feels threatened by some personalities who he prays should be ousted from the Board and whose hard-earned integrity he wishes to be a subject of public ridicule. The following are noteworthy:
Making ridiculous Package Demand
The challenges the Board faces with Clive Chirwa began right at the beginning when it rejected his demand of US$560,000 annual salary (or K248 million per month) and a 25% shareholding in Zambia Railways at the end of his 5-year contract. This is in addition to demanding K2.6 billion annual bonus and six free tickets per annum for the wife to UK/Europe. These demands are there and are available for public scrutiny. Such demands were considered obscene by both the Board and Government and the Board rejected them. It is not a coincidence that the four Board members that he prays should leave the Board, as repeatedly reported in the Daily Nation, are the ones that negotiated with him and who rejected his demands.
Shifting of the Headquarters of ZRL from Kabwe to Lusaka
Clive Chirwa, on his own and with the involvement of neither the Board of ZRL nor its Management, attempted to relocate the Company Headquarters from Kabwe to Lusaka. This was immediately blocked by the Board and he was advised that such a decision can be effected only with Government/Cabinet approval and endorsement of the Board. In his characteristic manner, he objected to this and went ahead to initiate the procurement of premises, which the Company was to pay about K1.2 billion per month in rentals. He appealed to the Minister of Transport to overturn the Board decision. A special meeting of the Board had to be called where he was instructed to abandon the idea, among several other similar ones. Simply to imagine that, because he does not like to live in Kabwe, he can shift the entire corporate headquarters from there to Lusaka without Board or Government approval placed the Board in an awkward situation. The Board has so far spent so much time in special meetings, at high cost to the Company and to themselves, simply to advise Clive Chirwa on what not to do. Ironically, the same man turns back and complains that the meetings are too frequent, allowances-induced, and wasteful, clearly oblivious of the fact that under normal conditions, so much of the Board members’ valuable time would not be sacrificed.
Undertaking Rehabilitation of Zambia Railways without Feasibility Studies
Clive Chirwa announced at a Public Lecture that he was against feasibility studies since, according to him, they are a waste of money and that he will go straight into investing the money towards his own plans for turning around Zambia Railways. This statement hit the headlines in local papers, to the embarrassment of the Board although to the excitement of some members of the Public that have limited appreciation of what it takes to undertake programmes of this magnitude. He was summoned by the Ministry of Transport where, in the presence of the Board, was advised that the Board (as custodian of the Shareholder) would not allow him to spend its money without appropriate financial, technical, environmental and value-for-money feasibility studies. The Board has since received several complaints from professional engineers, donors and financing houses regarding where the Board is heading to if it is authorising Management to take this route. As a result of this development, the Board resolved that Clive Chirwa should not be allowed to throw the money to the major restructuring projects until Management has submitted to the Board for approval clearly argued and properly sequenced activities. The Board has received insults from him for maintaining this position and, in one of his letters to the Chair of the Board, he stated that he is at a different level of “intellectuality” to be wasting his time with what he describes as a useless Board that is doing nothing and that delays the implementation of “his” grand Vision. He does not recognise the Board in the restructuring process given his self-centred “I, me and myself’ approach to everything. Among his ‘visions’ is to build underground railway stations without feasibility studies and without approval of the Board. He has since refused to facilitate the development of a Strategic Plan for ZRL, preferring to use his own document that he developed before the Board was appointed and which he rolled out to the Public before Board approval. He told the Board that it should accept his own Vision of ZRL otherwise he will leave what he described as a “rudimentary” Company, claiming that he has led and managed bigger companies abroad (companies he forgot to include in his CV). He has clearly demonstrated that he does not agree with the globally-accepted standard norm of preparing strategic/corporate plans. The Board has said no to all this and, on his part, he believes, as reported in the Daily nation, he can discipline the Board for its failure to follow his ‘instructions’ (a characteristic case of the proverbial tail wagging the dog).
Board Refusal to allow Clive Chirwa to chair the Procurement Committee
Clive Chirwa, from the very beginning, informed the Board that he will chair the Tender Committee of ZRL. The Board immediately advised him that good corporate governance should distance the CEO from direct involvement in procurement. He refused to accept this, a situation that has resulted in some tension between him and those Board members that have persistently advised him why this would not be allowed. He was also advised in January 2013 that, before any procurement is effected, the Board should approve the 2013 Operational Plan of the Company, as is standard practice everywhere. He has been evading submitting this to the Board and the Company is almost half way into the financial year. In the meantime, he has advertised big procurement jobs for supply of equipment, including initiating the recruitment of senior management staff before Board approval. Letters written to him by the Board Chair guiding him on how it is done elsewhere, including on the importance of following Government procurement procedures, have always received scorn and attracting name-calling. Any procurement that ZRL management may be undertaking now are outside the clearance or guidance of the Board and if there are irregularities (including those of implicating a minister, as the Daily Nation reported) are completely outside the knowledge, let alone sanctioning of the Board. It is of interest to the Board if the procedures Clive Chirwa has adopted without Board approval are now generating corruption charges especially if he is the Chair of the Tender Committee. To now blame the Board for any anomalies in procurement (especially if such an accusation is coming from no other than Clive Chirwa himself), raises legitimate questions regarding the professional stability of the man. These challenges in corporate governance were communicated to the highest office on 18 March 2013 when State House directed the Board Chair to furnish it with information on the happenings following Clive Chirwa’s sending to State House a blind copy of his response to charges from the Board. Subject to clearance protocols of Government, the Board is ready to share with the Public what was submitted, on instruction, to the Head of State.
Attempt to single-source his dormant company to train senior staff of Zambia Railways Limited
One disconcerting development that borders on a possible case of corruption relates to Clive Chirwa’s attempt to use his own company, Clavel Incorporated Limited, to train all senior management staff at Zambia Railways Limited – and without declaring interest. He informed the very first meeting of the Board (and it is minuted) that he will hire the company to offer this service. He was advised then that the Board would not allow single sourcing as it is against Government procurement regulations and that the President has already made a clear position on this. Coming from outside, he was actually briefed of some cases currently in the courts of law regarding anomalous procurement practices. After investigations by the Board, it was established that this company, registered in 2000 in the UK, is (as per the filed Accounts for the financial year ending 31 August 2011, signed by Clive Chirwa himself) a dormant company with hardly any assets and owned by Clive Chirwa and his family members (wife and two sons). This information is available for public scrutiny. This revelation brought further credence for the Board to be even more vigilant against the CEO of ZRL being the Chair of the Tender Committee. He now claims to the Daily Nation that the Board is corrupt and that it is choosing consultancy firms, presumably in reference to the Board’s swatting of his attempt to sneak in his inoperative company into Zambia Railways. Legal opinion received by the Board suggested that this singular act bordered on criminality in a country that boasts of zero-tolerance on corruption. The case shall be referred to the relevant authorities for investigation. It was part of the Board briefing sent to State House in March.
In the light of the happenings in the past week, the five members of the Board that are not serving in Government hereby demand that the case of corruption that Clive Chirwa is alleging against the Board be referred immediately to the Anti-Corruption Commission to establish the real truth behind the claims. The integrity and public image of all the Board members is at stake judging by the outrage sparked by the falsification of facts by Clive Chirwa. At the same time, the Board is hereby publicly announcing its readiness to step down to facilitate independent investigations by the appropriate arms of Government.
Board of Directors of Zambia Railways Limited (excluding Members that are Government employees)
Mr. Mark Chona, Chairman
Prof. Oliver S. Saasa, Vice-Chairman
Mr. Geoffrey Mulenga, Board Member
Mrs. Irene Z. Mbewe, Board Member
Mr. Jonam Mwansa, Board Member
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