Mahtani’s Business Empire Hangs on Election Outcome For many foreign and domestic investors in Zambia, the outcome of the January 20 presidential looms large in terms of political risk. In the mining sector, foreign multinationals are crying foul over a new royalty tax on open-pit operations that they say is unfair punitive, while major state contractors on infrastructure projects such as roads, healthcare, and schools are deeply concerned that a change in government could lead to the revocation of a vast series of partly-completed projects, which was the case when the Patriotic Front (PF) took over power from the Movement for Multiparty Democracy (MMD) in 2011. But no one stands to lose more than one of Zambia’s wealthiest and most controversial businessmen, Rajan Mahtani. Some observers are saying that Mahtani could be facing the wrath of the courts once again if Edgar Lungu prevails in the election, as the ruling party candidate has already gone on record to state that he would hold some of Zambia’s most infamous tax evaders to accountability. Others say that Mahtani has tried to take a role in supporting Hakainde Hichilema’s campaign of the United Party for National Development (UPND), especially following the endorsement of his agent MP Slyvia Masebo, however other supporters have steadfastly insisted that HH would not back down from prosecuting Mahtani, as the UPND leader has claimed a zero tolerance anti-corruption policy. What is certain is that the outcome of this election poses tremendous uncertainty for the Mahtani empire, leading him to reduce exposure at his major assets and move assets out of reach of the Zambian government. Mahtani has a long established history of confrontation and collusion with various Zambian political leaders. Although he was initially very close to former President Frederick Chiluba, he was later jailed by this president for having sponsored a failed coup attempt against his former patron. When Chiluba fell out with Mahtani in 2007, he was quoted by media as commenting, “There are many such instances and sad chapters in my relations with Dr. Mahtani which only helped me to distance my self because he progressively became the epitome of greed, insatiable greed. Each time I saw him, I feared I was looking neo-colonialism or imperialism itself in the face.” Whereas many companies and investors are concerned by fiscal reforms and changes to the tax code, Mahtani largely owes the existence of his current business empire to his past political alliance with the late President Michael Sata, whose 2011 campaign was largely funded by the businessman of Indian origin. Before Sata’s narrow victory at the ballot box, Mahtani had lost Finance Bank Zambia Limited (FBZL), which had its shareholder interests suspended by the Bank of Zambia on December 31, 2010 after it was discovered that he was illegally holding more than 56.5% of the bank’s shares (and allegedly up to 90% of the shares) through false intermediaries and shadow shell entities. Mahtani was also found to have violated a slew of other provisions of the Banking and Financial Services Act (BFSA), including insider borrowing and money laundering. In addition to losing his bank, Mahtani was also facing a separate money laundering investigation with assistance from the U.S. Department of Justice, as well as two pending criminal charges, one of which had advanced to prosecution of the judge finding him with a case to answer. However, once Sata was elected, Mahtani’s fortunes rapidly changed – Sata immediately declared a Commisssion of Inquiry into the state’s takeover of Finance Bank and subsequent sale to First Rand. But before this commission could even sit, within three weeks of his election victory President Sata decided that his political benefactor had waited long enough – on October 3, 2011, he order Finance Minister Alexander Chikwanda to hand the bank over to Mahtani on the basis of his personal decree. With a friendly government in power, Mahtani also made quick work to dismiss the state’s criminal charges against him. Mahtani’s close ally Mutembo Nchito was made Director of Public Prosecutions. Facing a select parliamentary committee, Nchito was questioned thoroughly on whether or not he would recuse himself from cases in which he owed large amounts of money to defendants, and he said he would. However, once confirmed as DPP, Nchito quickly issued a highly unusual noelle prosequi against Rajan Mahtani. To pay him back for his efforts, Mahtani withdrew a multi-million dollar legal claim against Nchito for a debt owed to Finance Bank following the bankruptcy of his failed company, Zambian Airways. Some called this debt forgiveness “a form of a bribe” to Nchtio for granting him impunity to dismiss the charges for his alleged crimes. Mahtani’s business empire also benefited from their influence over the courts following Sata’s victory. His Finsbury Investments vehicle was able to obtain a historically unprecedented Supreme Court decision, which actually ruled against a previous Supreme Court decision based on a submission from a non-party, which allowed him to seize back control of the highly valuable Zambezi Portland Cement (ZPC) company. An earlier court ruling had accepted expert testimony and evidence that he had forged share transfer certificates and had illegally deported company executives in order to steal away control of the company from its original owners. He similarly gained control over assets in highly questionable legal proceedings, including the ownership of the Radisson Blu Hotel in Lusaka after defrauding the investors who had originally borrowed from him. Indeed, over the years Mahtani’s name has become toxic among among the business community in Zambia for his allegedly corrupt practices, but with a new election on the horizon, there are many who are hoping that his fortunes change with a new government that supports rule of law and independent judiciary to avoid such abuses from politically connected businessmen. zambiareports/2015/01/06/mahtanis-business-empire-hangs-election-outcome/
Posted on: Tue, 06 Jan 2015 03:58:49 +0000
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