-
confidential draft report forensic investigation into the true
shareholding behind the individuals and entities declared as
shareholders in finance bank zambia
prepared for the drug enforcement commission - zambia
June 2010
Your Ref: Commissioner Zulu
Our Ref: Steven Powell
Matter Number: 2001588
-
Drug Enforcement Commission - Zambia Report for discussion
purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
TABLE OF CONTENTS
Clause number and description Page
1. ABBREVIATIONS OF ENTITIES AND
SUBJECTS................................................................................1
2. LIST OF
ANNEXURES............................................................................................................................2
3. INTRODUCTION AND
BACKGROUND..................................................................................................3
4. INVESTIGATION PROCEDURES
..........................................................................................................4
5. INTERVIEWS CONDUCTED
..................................................................................................................4
6. DOCUMENT
REVIEW.............................................................................................................................5
7. CHRONOLOGY OF HISTORICAL SHAREHOLDING IN
FBZ................................................................6
8. THE CURRENT (DECLARED) SHAREHOLDING OF FBZ
..................................................................12
9. SUMMARY OF FINDINGS
....................................................................................................................12
10. DETAILED FINDINGS
...........................................................................................................................13
11.
CONCLUSION.......................................................................................................................................44
12. OUTSTANDING ISSUES
......................................................................................................................47
13. GENERAL
LIMITATIONS......................................................................................................................48
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Drug Enforcement Commission - Zambia Report for discussion
purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 1
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected]
1. ABBREVIATIONS OF ENTITIES AND SUBJECTS
Abbreviation Description
FBZ Finance Bank Zambia Limited
Dr Mahtani Dr Rajan Lekhraj Mahtani, former chairman of Finance
Bank Zambia
ENS Edward Nathan Sonnenbergs
CS Credit Suisse International Limited
CSIBV Credit Suisse Investments (Nederland) BV
Corson Christopher Corson, Managing Director at Credit Suisse
responsible for the Emerging Markets financing group in the EMEA
region
Seabrooke Robert Seabrooke
Leistner Maria Leistner, Managing Director and General Counsel
of Credit Suisse for the EMEA region
Stoltzfus Jonas Stoltzfus, declared shareholder in FBZ and
Clarkwell
Clarkwell Clarkwell Limited, declared shareholder in FBZ
Chinyata Justin Chinyata, declared shareholder in FBZ
Bazian Yousef Bazian, declared shareholder in FBZ
Loita Loita Capital Partners International Limited
Finsbury or FIL Finsbury Investments Limited, declared
shareholder in FBZ
Schultz Mary Schultz, sister to Dr Mahtani and alleged 99%
shareholder in Finsbury
Puta Estate late Pat Bwala Puta, declared shareholder in FBZ
Chamunda Patrick Chamunda, declared shareholder in FBZ
Samuel Job Albert Thiagaraj Samuel, declared shareholder in
FBZ
Mwape Dr Austin Mwape, Director Bank Supervision Department,
Bank of Zambia
BOZ Bank of Zambia
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 2 of 50
Private & Confidential This document is intended for the use
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
2. LIST OF ANNEXURES
Annexure Description
A 1-10 CSIBV 40% share purchase in FBZ Transaction
documentation
B Historical share reconciliation supported by PACRO supporting
documents
C Credit Suisse Investments (Nederland) BV 2008 Annual Financial
Statements
D Affidavit, Maria Leistner, General Counsel Credit Suisse,
Europe
E Declaration of Trust signed by Jonas Stoltzfus 25 July
2003
F Minutes of meeting Jonas Stoltzfus and Bank of Zambia n 18 May
2010
G S Powell e-mail to Stoltzfus and reply thereto from Sangwa
& Associates
H Declaration of Trust signed by Jonas Stoltzfus dated 6 April
1998
I E-mail from Paul Reed of Circle Trust to Dr Mahtani dated 4
November 2003 with a Fee schedule from Circle Trust attached
J Letter from Professional Services Limited to Finance FBZ dated
30 June 2007
K Mary Schultz statement to Drug Enforcement Commission dated 9
April 2010
L Gabriel Schultz statement to Drug Enforcement Commission dated
9 April 2010
M Finsbury letter to First Alliance Bank Lusaka dated 28 April
2010
N e-mail from M Chisa of Professional Services Limited to
Ignatius Mwape of FBZ
O 1 to 14 Reconciliation of Finsbury dividend payments attaching
Instructions from Dr Mahtani re dividend transfers
P Declaration of trust signed by Job Samuel dated 25 May
1993
Q Email correspondence from S Powell to Job Samuel dated 11 May
2010 and replies thereto
R 1-3 Credit Suisse dividends SWIFT MT 100 and Zambian Revenue
Authority returns as well as e-mail from Chris Corson
S Management agreement FBZ and Loita
T Sale of Shares agreement Dr Mahtani and Chinyanta and
Bazian
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 3 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
3. INTRODUCTION AND BACKGROUND
3.1. On 26 April 2010, ENS Forensics (Pty) Ltd, the forensics
arm of Edward Nathan Sonnenbergs Inc. was appointed by the
Commissioner of the Drug Enforcement Commission to conduct a
forensic investigation into the true persons behind the individuals
and entities declared as shareholders in Finance Bank Zambia
(FBZ).
3.2. The Zambian authorities, including the Drug Enforcement
Commission as well as the Bank of Zambia (BOZ) were extremely
concerned regarding developments at FBZ, which required
interventions to address significant governance issues at FBZ,
including insider loans and potential money laundering, which have
damaged the solvency of FBZ. These interventions culminated in the
stepping down of Dr Rajan Mahtani as chairperson of FBZ and,
shortly thereafter, led to the dissolution of the Board of FBZ.
3.3. We understand that the Board was dissolved at the behest of
BOZ, who were concerned in that Mahtani appears to have acted
autonomously in committing a serious of irregularities and
governance failings with limited or no control exercised by the FBZ
Board, and notwithstanding this fact; several of the former board
members were nominated by FBZ for re-appointment to the new Board.
We understand that this was unacceptable to Bank of Zambia and
aggravated concerns about integrity at the institution.
3.4. We further understand that BOZ has serious concerns
regarding the capital solvency of FBZ which has been hampered by
non performing insider loans.
3.5. These concerns are highly sensitive as dissemination of
this information could easily result in a run on the FBZ which
would have disastrous consequences for investors, depositors and
stakeholders. We understand that the Zambian authorities are
looking at urgent remedial steps to address the situation.
3.6. An integral part of the remedial processes that are being
considered is a forensic legal investigation to establish the true
shareholding behind the declared shareholders in FBZ. In this
regard we were advised that there are many indicators which suggest
that many of the former shareholders were merely fronts for Dr
Mahtani who has been influencing and controlling the bank even
after his purported stepping down. The forensic investigation is
required to establish the facts behind the declared
shareholding.
3.7. Kindly note that we have adopted your terminology regarding
declared shareholdings with reference to the recorded registered
shareholders.
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 4 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
4. INVESTIGATION PROCEDURES
4.1. The procedures adopted by the forensic investigation team
to determine the true shareholding behind the declared shareholding
in FBZ comprised of the following:
4.1.1. Background checks and research on the listed
shareholders;
4.1.2. Interviews with critical role players;
4.1.3. Analysis of the electronic FBZ records on the server and
computers of key personnel at FBZ;
4.1.4. Analysis of the e-mail correspondence on the mail server
as well on the computers of key personnel at FBZ;
4.1.5. Document analysis Analysis of records of FBZ and other
Mahtani entities that were seized by the Drug Enforcement
Commission. This included PACRO, and other share and statutory
information relating to FBZ and related entities. Special attention
was accorded to the cash flows and payment trails relating to
payment for shares and dividend flows from FBZ to the various
shareholders.
5. INTERVIEWS CONDUCTED
5.1. During the investigation we interviewed the following
witnesses:
Name Capacity Austin Mwape Director Bank Supervision department
Bank of Zambia Wilson Kalumba Bank of Zambia official Patrick
Chamunda Declared shareholder in FBZ Patricia Puta Daughter of Anne
Puta re Estate late Pat Bwala Puta Justin Chinyata Declared
shareholder in FBZ Job Thiagaraj Samuel Declared shareholder in FBZ
Jonas Stoltzfus Declared shareholder in FBZ Christopher Corson MD
Fixed income Credit Suisse Securities (Europe) Limited Maria
Leistner Group General legal Counsel Credit Suisse Europe Dick King
Managing Director and Chief Executive Officer, FBZ Dr Rajan Mahtani
Group Executive Chairman, Mahtani Group of companies
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 5 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
6. Document review
6.1. We reviewed the following files that were provided to us by
the DEC.
Synopsis of document Date Reviewed
Received From
Reviewed By
Reference
1 Leasing Finance Company Limited
28-Apr-10 DEC SP & RG Local Company Number 12161
2 Professional Services Corporation Zambia Limited
28-Apr-10 DEC SP & RG Local Company Number 22652
3 Finsbury Park Limited 28-Apr-10 DEC SP & RG Local Company
Number 61497
4 Finsbury Estate Limited 28-Apr-10 DEC SP & RG Local
Company Number 61496
5 Finsbury Investments Limited 28-Apr-10 DEC SP & RG Local
Company Number 11032
6 Professional Services Limited 28-Apr-10 DEC SP & RG Local
Company Number 6235
7 Zambezi Portlands Cement 28-Apr-10 DEC SP & RG Local
Company Number 57313
8 Finance Bank Zambia Limited 28-Apr-10 DEC SP & RG Local
Company Number 15083
9 Professional Travel and Tours Limited
28-Apr-10 DEC SP & RG Local Company Number 22653
10 Moor Apartments Limited 28-Apr-10 DEC SP & RG Local
Company Number 60048
11 Mukuyu Homes Limited 28-Apr-10 DEC SP & RG Local Company
Number 65561
12 Cladava Mining Limited 28-Apr-10 DEC SP & RG Local
Company Number 64513
13 Finsbury Files (Case full) various
28-Apr-10 DEC SP & RG File 11032
6.2. We reviewed extensive records received from Credit Suisse
International (Nederland) BV, CSIBV, relating to their share
purchase in FBZ in 2008, including:
6.2.1. A private and confidential memorandum relating to Credit
Suisses shareholding in Finance Bank Zambia (Provided to us by
Corson and confirmed by Leistner);
6.2.2. The Shareholders Agreement dated 23 May 2008, between FBZ
and CSIBV and Dr Mahtani and Finsbury Investments and
Clarkwell;
6.2.3. Option Deed, Clarkwell and CSIBV;
6.2.4. Share Charge, Clarkwell Limited- Jonas Stoltzfus as
Charger and CSIBV as Chargee; and
6.2.5. Mortgage over Shares dated 23 May 2008 relating to shares
in FBZ between Clarkwell as mortgagor and CSIBV as beneficiary.
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 6 of 50
Private & Confidential This document is intended for the use
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
6.2.6. Guarantee (and extension) furnished to CSIBV by Dr
Mahtani:
6.2.6.1. Barclays Bank guarantee USD 13 million; and
6.2.6.2. Royal Bank of Canada - guarantee USD 37 million.
6.2.7. Put and Call Option term sheet summary of indicative
terms and conditions (and extension thereto).
6.2.8. Side agreement between CSIBV and Clarkwell.
The CSIBV share purchase in FBZ records are attached as Annexure
A1 to A12.
6.3. We reviewed extensive records received from Justin Chinyata
relating to:
The management services contract entered into between FBZ and
Loita Financial Services;
A due diligence report done on FBZ in 2002 for Loita; and
the sale of shares to Credit Suisse in 2008.
7. Chronology of Historical Shareholding in FBZ
7.1. From our analysis of the FBZ share registry and share
certificates as well as the Registrar of Companies records, we were
able to identify the historic declared shareholding in FBZ. The
tables below set out the declared shareholding in FBZ from
inception in 1988 until 31 December 2009. Attached as Annexure
B.
Certificate % of File
31-Jul-87 Number of shares
held total shares Ref 1 Finsbury Investments Limited
3,999,999.00 100.00 4
2 Mary Schultz (Nominee for Finsbury Investments Limited) 1.00
0.00 4
Total shares 4,000,000.00
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 7 of 50
Private & Confidential This document is intended for the use
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
Certificate % of File
11-Jul-88 Number of shares
held total shares Ref 1 Finsbury Investments Limited
24,679,999.00 98.72 6 2 Zahid Sarwar Nizam 320,000.00 1.28 6
3 Mary Schultz (Nominee for Finsbury Investments Limited) 1.00
0.00 6
Total shares 25,000,000.00 100.00
Certificate % of File
17-Sep-90 Number of shares
held total shares Ref 1 Finsbury Investments Limited
39,680,000.00 39.68 10 2 Leasing Finance Company Limited
20,000,000.00 20.00 10 3 Finsbury Investments Limited (as nominees)
3,250,000.00 3.25 10 4 Pat Bywalya Puta 2,500,000.00 2.50 10 5
Lumbamba Muyambango Nyambe 1,500,000.00 1.50 10 6 Zahid Sawar Nizam
1,820,000.00 1.82 10 7 Patrick Chamunda 1,000,000.00 1.00 11 8 Job
Albert Thiagaraj Samuel 250,000.00 0.25 11
9 Finance Holdings Corporation (International) Limited
30,000,000.00 30.00 11
Total shares 100,000,000.00 100.00
Certificate % of File
31-Dec-92 Number of shares
held total shares Ref 1 Finsbury Investments LTD 314,748,000.00
40.12 13
2 Finance Holdings Corporation (International) Limited
237,957,000.00 30.33 13
3 Leasing Finance Company Limited 158,638,000.00 20.22 13
4 Leasing Finance Company Limited (as Nominees) 37,670,000.00
4.80 13
5 Pat Bwalya Puta 19,837,000.00 2.53 13 6 Patrick Chamunda
7,929,000.00 1.01 13 7 Job Albert Thiagaraj Samuel 1,975,000.00
0.25 14 8 Zahid Sarwar Nizam 5,786,000.00 0.74 14
Total shares 784,540,000.00 100.00
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 8 of 50
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
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express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
Certificate % of File
31-Dec-93 Number of shares
held total shares Ref 1 Finsbury Investments Limited
350,374,000.00 39.68 16
2 Finance Holdings Corporation (International) Limited
264,900,000.00 30.00 16
3 Leasing Finance Company Limited 176,600,000.00 20.00 16
4 Leasing Finance Company Limited (as Nominees) 58,013,000.00
6.57 16
5 Pat Bwalya Puta 22,075,000.00 2.50 16 6 Patrick Chamunda
8,830,000.00 1.00 16 7 Job Albert Thiagaraj Samuel 2,208,000.00
0.25 16
Total shares 883,000,000.00 100.00
Certificate % of File
31-Dec-94 Number of shares
held total shares Ref 1 Finsbury Investments Limited 794,382.00
39.72 17 2 Finance Holdings Corporation 600,000.00 30.00 17 3
Leasing Finance Company Limited 400,000.00 20.00 17 4 Finsbury
Investments Limited (as Nominees) 130,618.00 6.53 17 5 Pat Bwalya
Puta 50,000.00 2.50 17 6 Patrick Chamunda 20,000.00 1.00 17 7 Job
Albert T Samuel 5,000.00 0.25 17
Total shares 2,000,000.00 100.00
Annual Returns and Certificates % of File
31-Dec-95 Number of shares
held total shares Ref 1 Finsbury Investments Limited
1,191,880.00 39.73 20
2 Finance Holdings Corporation (International) Limited
900,000.00 30.00 20
3 Leasing Finance Company Limited 600,000.00 20.00 20
4 Leasing Finance Company Limited (as Nominees) 195,620.00 6.52
20
5 Estate of the late Patrick Bwalya Puta 75,000.00 2.50 20 6
Patrick Chamunda 30,000.00 1.00 20 7 Job Albert Thiagaraj Samuel
7,500.00 0.25 20
Total shares 3,000,000.00 100.00
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 9 of 50
Private & Confidential This document is intended for the use
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
Annual Returns and Certificates % of File
31/12/1996 Number of shares
held total shares Ref 1 Finsbury Investments Limited
1,295,180.00 39.73 25
2 Finance Holdings Corporation (International) Limited
978,000.00 30.00 25
3 Leasing Finance Company Limited 652,000.00 20.00 25
4 Leasing Finance Company Limited (as Nominees) 212,570.00 6.52
25
5 Estate of the late Patrick Bwalya Puta 81,500.00 2.50 25 6
Patrick Chamunda 32,600.00 1.00 25 7 Job Albert Thiagaraj Samuel
8,150.00 0.25 25
Total shares 3,260,000.00 100.00
Annual Return of a Company % of File
31-Dec-97 Number of shares
held total shares Ref 1 Finsbury Investments Limited
1,442,180,000.00 39.73 29
2 Finance Holdings Corporation (International) Limited
1,089,000,000.00 30.00 29
3 Leasing Finance Company Limited 726,000,000.00 20.00 29 4
Finsbury Investments Limited (As Nominees) 236,695,000.00 6.52 29 5
Estate of the late Patrick Bwalya Puta 90,750,000.00 2.50 29 6
Patrick Chamunda 36,300,000.00 1.00 29 7 Job Albert Thiagaraj
Samuel 9,075,000.00 0.25 29
Total shares 3,630,000,000.00 100.00
Annual Return of a Company % of File
31-Dec-98 Number of shares
held total shares Ref 1 Finsbury Investments Limited
1,442,180.00 39.73 41
2 Finance Holdings Corporation (International) Limited
1,089,000.00 30.00 41
3 Leasing Finance Company Limited 726,000.00 20.00 41 4 Finsbury
Investments Limited (As Nominees) 236,695.00 6.52 41 5 Estate of
the late Patrick Bwalya Puta 90,750.00 2.50 41 6 Patrick Chamunda
36,300.00 1.00 41 7 Job Albert Thiagaraj Samuel 9,075.00 0.25
41
Total shares 3,630,000.00 100.00
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Private & Confidential This document is intended for the use
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express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
Annual Return of a Company % of File
31-Dec-99 Number of shares
held total shares Ref 1 Finsbury Investments Limited
1,442,180,000.00 39.73 45
2 Finance Holdings Corporation (International) Limited
1,089,000,000.00 30.00 45
3 Leasing Finance Company Limited 726,000,000.00 20.00 45 4
Finsbury Investments Limited (As Nominees) 236,695,000.00 6.52 45 5
Estate of the late Patrick Bwalya Puta 90,750,000.00 2.50 45 6
Patrick Chamunda 36,300,000.00 1.00 45 7 Job Albert Thiagaraj
Samuel 9,075,000.00 0.25 45
Total shares 3,630,000,000.00 100.00
Annual Return of a Company % of File
31-Dec-00 Number of shares
held total shares Ref 1 Finsbury Investments 1,442,180,000.00
39.73 55
2 Finance Holdings Corporation (International) Limited
1,089,000,000.00 30.00 55
3 Leasing Finance Company Limited 726,000,000.00 20.00 55 4
Finsbury Investments Limited (as Nominee) 236,695,000.00 6.52 55 5
Estate of the late Pat Bwalya Puta 90,750,000.00 2.50 55 6 Patrick
Chamunda 36,300,000.00 1.00 55 7 Job Albert Thiagaraj Samuel
9,075,000.00 0.25 55
Total shares 3,630,000,000.00 100.00
Annual Return of a Company % of File
31-Dec-01 Number of shares
held total shares Ref 1 Finsbury Investments 1,442,180,000.00
39.73 49
2 Finance Holdings Corporation (International) Limited
1,089,000,000.00 30.00 49
3 Leasing Finance Company Limited 726,000,000.00 20.00 49 4
Finsbury Investments Limited (as Nominee) 236,695,000.00 6.52 49 5
Estate of the late Pat Bwalya Puta 90,750,000.00 2.50 49 6 Patrick
Chamunda 36,300,000.00 1.00 49 7 Job Albert Thiagaraj Samuel
9,075,000.00 0.25 49
Total shares 3,630,000,000.00 100.00
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Private & Confidential This document is intended for the use
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express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
Annual Return of a Company % of File
15-Nov-02 Number of shares
held total shares Ref 1 Finsbury Investments Limited
907,500,000.00 25.00 57
2 Finance Holdings Corporation (International) Limited 0.00 -
57
3 Finsbury Investments Limited (as Nominees) 0.00 - 57 4 Leasing
Finance Company Ndola 0.00 - 57 5 Estate of the late Patrick Bwalya
Puta 90,750,000.00 2.50 57 6 Patrick Chamunda 36,300,000.00 1.00 57
7 Job Albert Thiagaraj Samuel 235,950,000.00 6.50 57 8 Justin
Chinyanta 726,000,000.00 20.00 58 9 Yousef Bazian 726,000,000.00
20.00 58
10 Jonas Stoltzfus 907,500,000.00 25.00 58
Total shares 3,630,000,000.00 100.00
Annual Return % of File
07-Nov-03 Number of shares
held total shares Ref 1 Finsbury Investments Limited
907,500,000.00 25.00 75 5 Estate of the late Patrick Bwalya Puta
90,750,000.00 2.50 75 6 Patrick Chamunda 36,300,000.00 1.00 75 7
Job Albert Thiagaraj Samuel 235,950,000.00 6.50 75 8 Justin
Chinyanta 726,000,000.00 20.00 72 9 Yousef Bazian 726,000,000.00
20.00 72
10 Jonas Stoltzfus 907,500,000.00 25.00 72
Total shares 3,630,000,000.00 100.00
Annual Return % of File
31-Dec-03 Number of shares
held total shares Ref 1 Finsbury Investments Limited
907,500,000.00 25.00 81 2 Jonas Stoltzfus 907,500,000.00 25.00 81 3
Justin Chinyanta 726,000,000.00 20.00 81 4 Yousef Bazian
726,000,000.00 20.00 81 5 Job Albert Thiagaraj Samuel
235,950,000.00 6.50 82 6 Estate of the late Patrick Bwalya Puta
90,750,000.00 2.50 82 7 Patrick Chamunda 36,300,000.00 1.00
Total shares 3,630,000,000.00 100.00
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individuals and entities declared as shareholders in Finance Bank
Zambia Page 12 of 50
Private & Confidential This document is intended for the use
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
Certificate % of File
31-Dec-08 Number of shares
held total shares Ref 1 Finsbury Investments Limited
907,500,000.00 25.00 89 2 Job Albert T Samuel 235,950,000.00 6.50
89 3 Estate of the late Patrick Bwalya Puta 90,750,000.00 2.50 89 4
Patrick Chamunda 36,300,000.00 1.00 89 5 Clarkwell Limited
907,500,000.00 25.00 89 6 Credit Suisse Investments (Nederland)
B.V. 1,452,000,000.00 40.00 89
Total shares 3,630,000,000.00 100.00
8. The current (declared) shareholding of FBZ
8.1. Credit Suisse - 40%
8.2. Finsbury Investments Limited 25% (Jointly owned by Mrs.
Mary Schultz -99% and Rev. G. Schultz -1%)
8.3. Clarkwell Limited - 25% (Jonas Stoltzfus 49,999 shares and
Global Holdings Group 1 share)
8.4. Job Albert T. Samuel - 6.5%
8.5. Estate of Late Pat B. Puta - 2.5%
8.6. Patrick Chamunda - 1.0%
9. SUMMARY OF FINDINGS
We were requested to establish the true identities of the
natural persons or entities behind the declared shareholding in
Finance Bank Zambia. A summary of our findings in this regard are
set out below. In our view, there is compelling evidence to suggest
that Mahtani and/or entities under his control had direct and/or
indirect control over the declared shareholding, which becomes
apparent from thorough analysis of the CSIBV share purchase
transaction records regarding their acquisition of a 40% interest
in FBZ, which sheds light on a number of critical aspects to the
transaction. The share purchase transaction reflects the current
shareholding which we have analysed in great detail. Where we
address the various individuals and entities as declared in the
current shareholding we have also incorporated an analysis of their
historic positions.
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By way of summary, there is a compelling argument that the
current shareholding is as follows:
9.1. Credit Suisse - 40% -
9.2. Finsbury Investments Limited 25% Nominee for or under the
control of Mahtani
9.3. Clarkwell Limited - 25% Nominee or under the control of for
Mahtani
9.4. Job Albert T. Samuel - 6.5% Nominee or under the control of
for Mahtani
9.5. Estate of Late Pat B. Puta - 2.5% r
9.6. Patrick Chamunda - 1.0% -
10. DETAILED FINDINGS
10.1. Credit Suisse Investments Nederland BV
10.1.1. We are satisfied that, on the face of the information
made available to us as well as on the strength of the interviews
that we have conducted with various Credit Suisse representatives,
that Credit Suisse appear to be genuine shareholders in respect of
their 40% interest in FBZ. The evidence reflects that they made the
investment on behalf of Credit Suisse. We found no evidence to
suggest that they are acting either as a nominee for Dr Mahtani or
acting on his behalf. We are still awaiting assurance from Credit
Source regarding the source of funds used in the acquisition.
10.1.2. We were initially concerned that the Credit Suisse
investment in FBZ did not reflect in the Annual Financial
Statements of Credit Suisse International Limited, nor did it
appear to reflect on the Credit Suisse website. This anomaly has
been explained by Christopher Corson, the Managing Director at
Credit Suisse responsible for the Emerging Markets financing group
in the EMEA region and the person responsible for managing Credit
Suisses investment in FBZ, who explained that the investment is in
fact recorded in the Credit Suisse Investments Nederland BV Annual
Financial Statements for the year ended 31 December 2008. This is
the private subsidiary responsible for investments of this nature.
They explained that Credit Suisse has made similar investments in
Asia and other parts of Africa, and, in fact, initially looked at
investing in Zanaco in Zambia.
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10.1.3. Page 5 of the CSIBV 2008 Annual Financial Statement
reflects that On 28 March 2008, the Company purchased shares in
Finance Bank Zambia Ltd from a third party vendor, equating to 40%
equity interest at a market price of USD 80,000,000 (equivalent of
EUR 50,646,628 at the date of purchase). The Annual Financial
Statements of CSIBV for 2008 is attached as Annexure C.
10.1.4. We secured independent confirmation regarding the nature
of the investment from Maria Leistner, General Legal Counsel for
Credit Suisse London, who confirmed that CSIBV is the legal and
beneficial shareholder in respect of the Purchased FBZ Shares. The
payment for the Purchased FBZ shares was made by CSIBV, the
subsidiary of Credit Suisse International Limited referred to
above, who have provided assurances that they are not holding the
shares in trust for Mahtani or any entity under his control, or
acting as his nominee.
10.1.5. Maria Leistners draft affidavit is attached as Annexure
C to this report. (The affidavit is submitted as an unsigned draft
at this stage as Ms Leistner is presently out of the country and
will finalise the affidavit on her return to the UK in the week of
14 June 2010).
10.1.6. Credit Suisse are running additional probity checks to
ensure that Mahtani is not indirectly linked as investor in the
Credit Suisse investment and have undertaken to supply the
requisite confirmations in this regard.
10.1.7. Leistners affidavit which sets out the various elements
to the CSIBV share purchase is critically important for a number of
reasons.
10.1.8. As set out above, it provides confirmation that Credit
Suisse is not a nominee for Dr Mahtani.
10.1.9. The next important aspect of Leistners affidavit
evidences the fact that on 22 March 2010, Dr Mahtani and Jonas
Stoltzfus signed an indicative term sheet which restructured the
Put and Call Option Deed entered into between Clarkwell and Credit
Suisse Investments Nederland BV, originally entered into on 23 May
2008. This reveals that Mahtani continues to act regarding the
Credit Suisse transaction, notwithstanding the fact that, during
February 2010, he stepped down as chairman of FBZ.
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10.1.10. In addition to the affidavit from Leistner, in order to
gain a thorough understanding of the transaction, we conducted
several interviews with Christopher Corson, the Managing Director
at Credit Suisse responsible for the Emerging Markets financing
group in the EMEA region and the person responsible for managing
Credit Suisses investment in FBZ. According to Corson, Mahtani
negotiated the Credit Suisse transaction in 2008, and he continues
to do so, during the restructuring which has taken place over the
last few months in 2010. The Indicative Term sheet reflecting the
above, signed by both Mahtani and Stoltzfus, dated 22 March 2010 is
incorporated as Annexure A in the batch of CSIBV share purchase
documents attached as A10.
10.1.11. It is argued that this document which was signed in
March 2010 shows that Mahtani continues to hold a material interest
in the shareholding of FBZ. This would explain his continued active
involvement in the transaction, as on paper, he has no direct
shareholding and is no longer Chairman or a Director of FBZ.
10.1.12. The other revealing aspect of the information provided
in Leistners affidavit is that, (whilst it confirms that Mahtani is
continuing to be the key role player in the shareholding agreement
even though on paper, he is not a shareholder, as indicated above),
it also shows that Mahtani has managed to get Stoltzfus to put
Clarkwells shares in FBZ in the transaction, even though Clarkwell
does not appear to have a beneficial interest in that transaction.
Corson indicated that this was an oddity to Credit Suisse, who
required comfort that were able to exit the transaction in the
event of the IPO not taking place. Corson also indicated that Dr
Mahtani signed as guarantor even though he was not a beneficiary.
When interviewed by Powell Dr Mahtani stated that: Credit Suisse
needed the guarantee and they knew me, they did not know Clarkwell,
so I provided the guarantee.
10.1.13. A possible explanation for the guarantee provided by Dr
Mahtani is that the entire Credit Suisse transaction may simply
have been a loan of USD 80 million which was secured via an
elaborate sale of shares agreement. The security for the loan takes
the form of the equity stake. The PUT option would allow Dr Mahtani
to repurchase the shares in FBZ via Clarkwell which equates to
repayment of the loan. (This is however pure speculation which has
not been confirmed by any of the Credit Suisse officials, but this
would certainly explain the high 17% return guaranteed to CSIBV,
whether the IPO took place or not).
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Clarkwell
10.1.14. Clarkwell Limited is a 25% shareholder in Finance Bank
of Zambia Limited
10.1.15. Clarkwell Limited is an entity registered at the
following address 90 Main Street, P O Box 3099, Tortola, British
Virgin Islands with shareholding as follows:
Jonas Stoltzfus holds 49,999 shares and
Global Holdings Group 1 share in Clarkwell.
10.1.16. From the CSIBV share purchase documents as well as the
interviews that we conducted, it appears that Clarkwell was
acquired just before the transaction was concluded in 1998, as a
Special Purpose Vehicle, (SPV), specifically for the transaction,
as Credit Suisse were not comfortable with a single individual
owning a significant stake of the equity in FBZ and preferred to
deal with a corporate entity rather than an individual.
10.1.17. The dividends from Clarkwells interest in FBZ do not
however flow to Clarkwell as one might have expected; all dividends
due to Clarkwell were paid into the bank account of Finsbury
Investments Limited.
10.1.18. This aspect will be explored in greater detail herein
below, however we wish to point out at this stage, that the
payments made to Finsbury (an entity which was a nominee for Dr
Mahtani whom we confirmed as the beneficial owner) in respect of
dividends due to other shareholders is a common denominator amongst
the shareholders who appear prima facie, to be nominees for Dr
Mahtani and/or entities controlled by him.
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10.1.19. A review of the dividend distribution history from
Finance Bank Zambia in respect of Clarkwell Limited reflects the
following dividend payments that were made to Finsbury:
Details Gross Dividend Beneficiary Name
2003 Final Dividend 1,751,750,000 Finsbury Investments
2004 Interim Dividend
2004 Final Dividend 2,577,625,000 Finsbury Investments
2005 Interim Dividend 1,500,000,000 Finsbury Investments
2005 Final Dividend 2,125,000,000 Finsbury Investments
2006 Interim Dividend 2,375,000,000 Finsbury Investments
2006 Final Dividend 2,839,500,000 Finsbury Investments
2007 Interim Dividend 2,500,000,000 Finsbury Investments
2007 Final Dividend 2,800,000,000 Finsbury Investments
2008 Interim Dividend 3,130,285,714 Finsbury Investments
10.1.20. It is difficult to understand why Stoltzfus was
prepared to put his shares in FBZ at risk to facilitate the Credit
Suisse transaction. A strong indicator to the nature of the
relationship between the parties is derived from a Declaration of
Trust which Stoltzfus signed on 25 July 2003, in which he
acknowledges that the 907, 500 Ordinary Shares held by him in
Finance Bank Zambia Limited are the bona fide Property of Finance
Holdings Corporation (International) Limited (a Mahtani Group
entity discussed below) and further that he has no beneficial
interest in the said shares. The document goes on to state that he
acknowledges and declares that the said shares are registered in
his name for convenience sake only and that he hereby irrevocably
in rem suam authorises and empowers the owners to be true to
transfer the said shares into the name of the owners or into the
name or names of such other nominee or nominees as the owners may
think fit, promising and engaging at all times to ratify, allow and
confirm whatsoever that owners may do or cause to be done in the
premises by virtue hereof.
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Finally, the document states that he authorises the secretary of
the company to transfer all dividends payable on the said shares to
the owners (our emphasis). The Declaration of Trust dated 25 July
2003 is attached as Annexure E.
10.1.21. We noted that this Declaration of Trust was signed less
than one month after a FBZ Board Resolution was adopted (on 30 June
2003), transferring the entire shareholding of Finance Holdings
Corporation (International) in FBZ (907,500, 000 shares) to Jonas
Stoltzfus. (our emphasis). The FBZ Resolution referred to above is
attached as Annexure A (2). The relevant Form of transfer of Fully
Paid shares in Company Limited is attached to the above Board
Resolution. The share transfer form is attached as Annexure A (3).
We further noted that the form refers to fully paid shares and
refers to an amount of Kwacha nine hundred and seven million five
hundred thousand only. When questioned on his shareholding by Bank
of Zambia officials in Lusaka on 18 May 2010, by Bank of Zambia
officials, Stoltzfus indicated however that he never paid for the
shares which were to have been financed out of dividends from FBZ
over a period but he was uncertain of the amounts redeemed as well
as in respect of the exact time frame for such redemption.
10.1.22. During the meeting with officials from the Bank of
Zambia on 18 May 2010, he was specifically asked if he had ever at
any time renounced his shares in FBZ. He indicated that he had
never renounced any shares in FBZ. When shown a copy of the
Declaration of Trust bearing his signature, he confirmed his
signature on the document but indicated that when he was asked
earlier about this, he did not recall it. He confirmed that he
signed the said Declaration of Trust, confirming that the Finance
Holding Limited shares were Dr Mahtanis.
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10.1.23. In the same meeting, when Stoltzfus was asked how he
had paid for the shares (that he had stated earlier in the meeting
he had purchased from Finance Holdings Limited), Mr Stoltzfus
stated that he did not pay anything for the shares as it was agreed
that he would not receive any dividend until the value of the
shares were redeemed. When he was questioned as to whether or not
he was aware that such an arrangement was not a permissible method
of share purchase as no sale could be said to have taken place, he
pleaded ignorance. Asked whether he was informed when dividends
were declared for him to determine that he had met the conditions
of share transfer, he stated that he was never advised and was
merely waiting for a time period to lapse. The minutes of the
meeting between the Bank of Zambia officials and Mr Jonas Stoltzfus
which were compiled by Mr Norbert Mumba, Assistant Director,
Regulatory Policy, Bank of Zambia, is attached as Annexure F.
10.1.24. In analysing the statements made by Stoltzfus to the
Bank of Zambia officials, it is clear that he was not honest and
sought to evade admitting that he had simply been a front for
Mahtani and/or entities under his control, which, we submit, is the
only inference which can be gleaned from declarations which he
admitted he had signed.
10.1.25. Stoltzfus was given ample opportunity by our forensic
team to provide clarity regarding his share ownership in FBZ, but
apart from supplying some limited and cryptic information, he has
failed to do so.
10.1.26. When Stoltzfus initially received our request, he
stated that he needed confirmation that we were acting on behalf of
the Zambian authorities.
10.1.27. He indicated to us that once he received the
confirmation that he sought, he would provide the information. Our
appointment was confirmed to him by the authorities but he then
indicated that he would be travelling to Zambia shortly and would
prefer to provide the information when in Zambia.
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10.1.28. When he eventually arrived in Zambia, Stoltzfus seemed
to adopt a less co-operative stance. After meeting with the Bank of
Zambia officials, on 18 May 2010, (the details of that meeting have
already been set out above), he met with our Advocate Steven Powell
on 20 May 2010. At this stage he was represented by a local
attorney, Mr Sangwa, and declined to answer questions on the
grounds that anything that he said during the meeting may be used
in potential proceedings against him as we were also representing
the Drug Enforcement Commission. Mr Sangwa indicated that we could
put questions to his client in writing and they would consider
providing the information. We repeated our initial e-mail request
for clarification regarding Stoltzfus and on 7 June 2010 we
received a limited and cryptic response from Mr Sangwa.
10.1.29. In Stoltzfuss response, furnished to us by Mr Sangwa,
Stoltzfus denies that he has ever been a nominee for Dr Mahtani. We
believe that Stoltzfus is being dishonest in this denial of
nomineeship as he claims to have acquired his interest in FBZ from
Finsbury whereas the share transfer forms that he signed showed
that he acquired his shareholding in FBZ by taking over the shares
of Finance Holdings Corporation (International). He also refers to
taking over the shareholding in 2003, but this is inconsistent with
a further Declaration of Trust, signed by Stoltzfus on 6 April
1998.
10.1.30. In terms of the further Declaration of Trust, Stoltzfus
must have been registered and/or recorded as a shareholder or owner
of Finance Holdings Corporation (International) as this Declaration
of Trust reflects that all of the issued and fully paid equity in
Finance Holdings Corporation International Ltd, hereafter called
Finance Holdings, a company incorporated in Dublin in the Republic
of Ireland on 7 March 1990, is the bona fide property of Doctor
Rajan Lekhraj Mahtani, (our emphasis) hereafter called the owner
whose registered address is: care of Mister William Hedley of
Swepstone Walsh solicitors of nine Lincoln Inn Fields, London WC2.
This document further states that Stoltzfus empowers the owner to
deal with the said equity in any manner that he deems fit without
any reference to him (Stoltzfus) and that he undertakes to ratify
any decisions that may be requested by the owner in respect of the
issued and fully paid equity of Finance Holdings. The final comment
in the Declaration of Trust is also important as there is an
indication from Stoltzfus that he waives any claim to compensation
in respect of this holding and that he does so voluntarily and of
his own free will. The Declaration of Trust document dated 6 April
1998 is attached as Annexure H.
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10.1.31. This evidence provides a compelling argument that in
2003 as well as previously in 1998, and possibly even before then,
Stoltzfus acted as a nominee for Mahtani and/or entities under his
control. Finance Holdings Corporation (International) is reflected
as a shareholder in FBZ from 1992 to November 2003. It is argued
that the above Declaration of Trust shows that Stoltzfus must have
previously been a shareholder in Finance Holdings Corporation
(international) Limited. It is reflected in various documents (see
below) as being registered in Dublin Ireland; however we have not
located any further records confirming the shareholding of this
entity and the entity does not appear to be listed in the Company
House records in the United Kingdom.
10.1.32. It is important to point out that we found various
documents which indicate that Finance Holdings International, in
fact, formed part of the Mahtani Group of companies and furthermore
revealed a link to Stoltzfus. One of these documents is an e-mail
dated 4 November 2003 addressed from Paul Read of Circle Trust Ltd
(telephone number +441534 823333) addressed to Rajan Mahtani with
the subject header Finance Holdings. The said e-mail indicates that
Circle Trust Ltd is urgently trying to finalise the audited
accounts for the company (Finance Holdings). In the e-mail Paul
Read requests Mahtani to send by fax, copies of the new share
certificates issued to Mr Stoltzfus. He goes on to talk about the
balance in the loan account due to you. (Mahtani). Attached to this
e-mail was a Fee Schedule entitled Mahtani group of companies
reflecting the entities in that group, jurisdiction, Circle trust
minimum fees and other costs. The very first entity listed on this
Fee Schedule is Finance Holdings Corporation (International) Ltd
with jurisdiction reflected as Eire. The above e-mail
correspondence and the said Fee Schedule are attached as Annexures
I (1) and I (2).
10.1.33. In the Declaration of Trust documents referred to
above, Stoltzfus relinquished all claim to dividends flowing from
his shares in FBZ and previously in Finance Holdings. This
corresponds with information which we established confirming that
all dividends due to Stoltzfus from his shareholding in FBZ went to
Finsbury Investments Limited.
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10.1.34. In his response to our enquiries, Stoltzfus claims that
he in fact received dividends. This contradicts the evidence that
he gave to Bank of Zambia officials on 18 May 2010, where he
explained that dividends due to him from his shareholding in FBZ
were paid to Finsbury in payment for his shares. It also
contradicts Dr Mahtanis assertion to our Steven Powell that
Finsbury never paid dividends; all monies in Finsbury were
inter-company loans. Based on the available information it appears
that Stoltzfus is simply a nominee for Dr Mahtani (or entities
controlled by him) who is the beneficial owner of his shares in
FBZ. Stoltzfus has not explained the purpose of the Declaration of
Trust letters which he signed alienating his shareholding in FBZ.
It is argued that if Stoltzfus shares in FBZ were in his name for
convenience only in 2003, the same must apply to the interest of
Clarkwell in FBZ, from 2008 as his interest was merely transferred
to that entity which was an SPV for the CSIBV transaction.
10.1.35. We noted further that the dividends of all shareholders
including Stoltzfus, with the exception of Estate Late Pat Puta and
Patrick Chamunda were paid to Finsbury. The dividend flow to
shareholders is detailed below in this report.
10.1.36. In a letter dated 30 June 2007 from Professional
Services Limited to Mr A Geeverghese, the Executive Director
(Finance), Finance Bank of Zambia, headed Interim Dividend Year
Ended 31st December 2007, it is requested that the bank pay all
dividends due to the account of Finsbury Investments Limited with
the exception of the payments due to the Estate of the late Pat
Puta and Mr PS Chamunda whose cheques should be paid directly to
them. See Annexure J
Finsbury Investments Limited
10.1.37. Finsbury Investments Limited is a 25% shareholder in
Finance Bank of Zambia.
10.1.38. Finsbury Investments Limited was incorporated in May
1981. The declared shareholders of Finsbury Investments Limited are
Mary Shultz and Gabriel Schultz (her husband). They hold 99% of the
shares and 1% respectively. They are both members of the clergy.
Mary Schultz is the sister of Dr Mahtani. According to Mary
Schultz, Finsbury Investments Limited was set up as a holding
company in order to invest in economic development opportunities in
Zambia. The directors of Finsbury Investments Limited are Dr Rajan
Lekraj Mahtani (Managing Director), Mary Schultz, Gabriel Schultz
and Joan Craven.
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10.1.39. Mary Schultz admitted to the DEC in an interview on 9
April 2010 that the Finsbury Investments Limited shares in her name
(as recorded by PACRO) are held in her capacity as a nominee and in
trust for Dr. Mahtani. Dr Mahtani maintains executive powers and
duties over Finsbury Investments Limited and confirmed that she has
never received any dividends from any investments in Finsbury
Investments Limited or Finance Bank of Zambia or any other related
entities. Mary Schultz also indicated that although she regularly
attended FBZ board meetings and received directors fees, she does
not attend board meetings or AGMs related to other companies in the
group.
10.1.40. Mary Schultz further confirmed that she resides in
Canada and has not been involved in the day to day running of any
of the companies in the group and consequently plays no role in
nominating directors and senior managers for the group; her focus
is on serving the Lord. Statement recorded by DEC from Mary Schultz
by the DEC on 9 April 2010 (unsigned) as per Annexure K.
10.1.41. Gabriel Shultz also confirmed his 1% shareholding in
Finsbury Investments Limited in the meeting with the DEC on 9 April
2010. Gabriel Shultz stated that he has never received any
dividends, directors fees or salary from Finsbury Investments
Limited or Finance Bank of Zambia and that he had no interest in
knowing the business of Finsbury Investments Limited as he is only
interested in spreading the word of God. Gabriel Shultz has never
attended board meetings and that Dr Mahtani has all the executive
powers to make decisions. Statement recorded from Gabriel Schultz
by the DEC on 9 April 2010 (unsigned) as per Annexure L.
10.1.42. During the forensic investigation, our Steven Powell
conducted two interviews with Dr Mahtani on 5 and 6 May 2010
respectively, during which he requested clarity regarding the
shareholding in FBZ. On the issue of Mary Schultz owning 99% and
Gabriel Schultz owning 1% of Finsbury, which owned 25% of FBZ, Dr
Mahtani stated (in the presence of his lawyers) that they are
basically my nominees, so I effectively own those shares (our
emphasis).
10.1.43. During the data analysis exercise we discovered a
letter from Finsbury to the Manager, First Alliance Bank, Lusaka
signed by Gabriel and Mary Schultz confirming that Dr Mahtani will
be the sole signatory on the bank account of Finsbury Investments.
This further supports the above argument. The Letter from Finsbury
is attached as Annexure M.
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 24 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
10.1.44. During the analysis of e-mail correspondence on the
servers and computers of FBZ and related entities we found an
e-mail from Ignatius Mwape of FBZ to M Chisha of Professional
Services Limited, dated 3 February 2010, and headed REVISED FIL
PROFILE. The e-mail is a confirmation that an earlier request to
delete the reference to Ultimate Beneficial Shareholder Dr RL
Mahtani 100% in the Executive Summary of the Finsbury Investments
Profile, has been actioned and the revised document which no longer
reflects the Ultimate beneficial shareholder - Dr Mahtani 100%, is
attached. We argue that this provides further proof that the
Schultzs were mere fronts for Dr Mahtani and provides written
confirmation of his admission to Steven Powell. The said e-mail
correspondence with the attachment is attached as Annexure N.
10.1.45. As per the DEC records made available to us, we noted
the following dividend payments totaling USD 660,000.00 flowing
from the Finsbury Investments Limited (Dollar Account administered
at Finance Bank Zambia) for the period 3 February 2009 - 22 January
2010.
Date
Instruction addressed to
Dollar Account Number Instruction
Amount US$ To
Bank Beneficiary
1 03-Feb-09 Finance Bank of Zambia
842645026 "Transfer the following amount in respect of the
dividend"
200,000.00 The Hong Kong & Shanghai Banking Corporation
Erving Brettell Solicitors
2 29-Mar-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
50,000.00 KBC Bank N.V., Antwerpen Noord, Belgium
For the credit of Overseas Trading Company N.V.
3 10-Sep-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
40,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
4 14-Sep-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
60,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
5 18-Sep-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
75,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
6 22-Sep-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
75,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
7 08-Oct-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
5,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
8 22-Oct-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
5,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
9 02-Nov-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
50,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 25 of 50
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
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express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
10 04-Nov-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
50,000.00 CITI Bank New York
For onward credit: Punjab National Bank
11 17-Nov-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
20,000.00 Commercial Bank, Livonia, Michigan
Erika I Droste (Acc 6820801733)
12 04-Dec-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
5,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
13 11-Dec-09 Finance Bank of Zambia
842645026 "in respect of the dividend"
15,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
14 22-Jan-10 Finance Bank of Zambia
842645026 "in respect of the dividend"
10,000.00 Gold Pacific Development Limited
DSB Bank, Hong Kong
10.1.46. Note that all of the above instructions to FBZ to pay
these dividends were on the instruction of Dr Mahtani. (Note that
Dr Mahtani had informed Steven Powell that Finsbury never paid
dividends; all funds in Finsbury were inter-company loans). The
above reconciliation, including the instruction letters signed by
Dr Mahtani are attached as Annexure O.
Job Samuel
10.1.47. Job Albert Thiagaraj Samuel, of Lakeland Drive,
Etobicoke Ontario, Canada (a retired professional accountant) is
declared to hold a 6.5% shareholding in Finance Bank Zambia
Limited. Mr Samuel confirmed to us that Finsbury is the beneficial
owner of his shares and that he was simply a nominee shareholder
with no beneficial interest in the shares reflected in his
name.
10.1.48. From documents made available to us by the DEC we see
from a Declaration of Trust dated 21 May 1993 that Job Albert
Thiagaraj Samuel acknowledges and declares that 1975,000 ordinary
shares of K1 each numbered 96,500,001 96,750,000, 169,750,001
170,000,000, 493,790,001 494,540,000, 783,815,001 784,540,000 held
by him (Job Albert Thiagaraj Samuel) in Finance Bank of Zambia
Limited are the bona fide property of Finsbury Investments Limited
and that he (Job Albert Thiagaraj Samuel) has no beneficial
interest in the said shares. (our emphasis) The document further
states that Job Albert Thiagaraj Samuel acknowledges and declares
that the said shares are registered in his name for convenience
sake only and that he irrevocably and in rem suam authorize and
empower Finsbury Investments Limited to be the true to transfer the
said shares into the name of Finsbury Investments Limited or into
the name or names of such other nominee or nominees as Finsbury
Investments Limited think fit. Further that Job Albert Thiagaraj
Samuel authorizes the Secretary of Finsbury Investments Limited
to
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individuals and entities declared as shareholders in Finance Bank
Zambia Page 26 of 50
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other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
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express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
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pay all dividends payable on the said shares to Finsbury
Investments Limited. See signed Declaration of Trust attached as
Annexure P.
10.1.49. During the data analysis we discovered a further
Declaration of Trust in the name of Job Samuel. The unsigned
document, dated 30 June 1990, declared that Dr Mahtani was the
owner of shares in FBZ reflected in the name of Job Samuel.
10.1.50. On 11 May 2010 we corresponded with Job Albert
Thiagaraj Samuel via email (on the address [email protected])
and requested him to provide clarity on the following:
Please advise how much money you paid for the shareholding which
you acquired in FBZ;
Did you enter into any agreement regarding financing of your
share purchase? If so, please supply a copy of any share purchase
agreement;
Have you ever received any dividends from FBZ or Finsbury?;
Did you act as a nominee for Dr Mahtani?; and
Have you received dividends flowing from your shareholding in
FBZ?
10.1.51. In his response to us Mr Samuel stated the following
regarding his Finance Bank Zambia Limited shareholding:
No money was paid by me for my shareholding in FBZ;
No agreement was made for financing of any share purchase in
FBZ;
No dividends were received by me from FBZ or Finsbury;
I held 235,950,000 Ordinary shares in FBZ and had no beneficial
interest in these shares;
After I ceased to be a Director of FBZ, the above shares were
transferred in a Declaration of Trust; and
No dividends were received by me from the nominee shares held by
me in FBZ.
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 27 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
10.1.52. Mr Samuel has indicated that he will supply us with a
sworn affidavit confirming the above information shortly. Copy of
email correspondence from Job Samuel attached as Annexure Q.
10.1.53. Dr Mahtani claimed that these shares were to have been
placed in a trust for employees that Dick King was involved in
setting up. King confirmed that he was engaged in setting up an
employee share scheme, however in the interim; Samuel remained the
recorded shareholder, over an extensive period, while he was not in
fact a beneficial shareholder and the dividends flowing from his
shareholding went to Finsbury, which as confirmed above, was
effectively owned by Dr Mahtani. The parties spoke of these shares
being transferred to Joan Craven, but she is not recorded as the
owner of the 6,5% shareholding registered in Job Samuels name.
10.1.54. Dr Mahtani also confirmed that Stoltzfus, as well as
Justin Chinyanta and Yousef Bazian were to have financed their
share acquisitions in FBZ out of future profits from FBZ. (This
aspect will be dealt with in greater detail below). Dr Mahtani
initially indicated that If you look at the share certificates you
will see a note recorded in the certificate that there is a five
year payment plan for the shares. All dividends go to Finsbury as
payment for the shares. He added that all monies in Finsbury are
inter-company loans there are no dividends out of Finsbury. We
attached above a series of letters of instruction from Finsbury
Investments Limited to the Manager of FBZ, signed by Dr Mahtani
instructing that various USD amounts in respect of dividend
payments from Finsburys dollar account No. 842645-026 be paid to
various accounts across the globe. The narrative on the payments
refutes Dr Mahtanis claim that Finsbury never paid dividends.
Annexures O1 to 23 refer.
10.1.55. We reviewed the share certificates in question, but
found no notation relating to a five year payment scheme out of
future dividends. In fact, on the contrary, the certificates
describe the shares as fully paid up.
10.1.56. On 6 May 2010, when we confronted Dr Mahtani with the
fact that there was no such annotation on the Share Certificate, he
then indicated that he referred us to the Share Transfer Form, not
the Share Certificates. We then checked the Share Transfer forms
but again found no annotation referring to a delayed payment
scheme. These documents once again referred to fully paid up shares
which we know is not the correct position.
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Drug Enforcement Commission - Zambia Report for discussion
purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 28 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
10.1.57. Regarding Dr Mahtanis allegation that no dividends were
paid from Finsbury we identified documents from FBZ which indicate
that funds were transferred from Finsburys account at FBZ to Dr.
Mahtanis personal account held at HSBC in Hong Kong and the Jersey
Islands. The narration details on the transfer refer to dividends.
The relevant transfer instructions were signed by Dr Mahtani. It is
currently unclear how and when, if at all, the dividends, once in
Dr Mahtanis personal accounts, were paid out to other shareholders
of FBZ.
10.1.58. Regarding the dividends due to Credit Suisse, we have
confirmed that Finsbury transferred the dividend due to Credit
Suisse for 2008 to the beneficiary account of CSIBV. We enquired as
to the reason why the dividend from FBZ to CSIBV was routed via
Finsbury. Corson stated that Dr Mahtani arranged the dividend
payment which came from Finsbury. CSIBV accordingly did not
question the source of this payment as they were transacting with
Mahtani and he converted the Kwacha dividend at a favourable US
Dollar exchange rate. The amount transferred, namely USD 832, 057,
14 is contained in documents sent by Corson via e-mail to the
Deputy Governor of the Bank of Zambia. These documents are attached
as Annexures R1 to R3
10.1.59. Corson explained that the dividend due to CSIBV for the
2009 year was waived by Credit Suisse in order to facilitate the
guarantee which Mahtani provided in respect of the transaction in
March 2010. He indicated that this waiver of the dividend is
reflected in the restructuring term sheet and was part of the
agreement for securing the restructuring and guarantees/payment of
USD 50 million as a guarantee. See Annexure A6
10.1.60. Mahtani admitted that he effectively controlled
Finsbury which received the dividends due to Finsbury from its
shareholding in FBZ. Mary Schultz and her husband Gabriel have
already confirmed they did not receive dividends from Finsbury.
Finsbury also received the dividends due to Clarkwell and prior to
the creation of that entity in 2008, it received all dividends due
to Stoltzfus, as well as all dividends due to Chinyanta and Bazian.
The rationale being that these parties had never paid for their
shares which were to have been financed out of future dividends.
The position was slightly different regarding Job Samuel who also
never paid for his shares and the dividends in respect thereof also
went to Finsbury, but he confirmed that he was simply a nominee for
Dr Mahtani and was never the beneficial owner of those shares and
accordingly was never intended to receive dividends.
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 29 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
Justin Chinyanta and Yousef Bazian
10.1.61. For the purpose of this report it is also important to
gain a clear understanding of the position regarding the
shareholding prior to the Credit Suisse transaction. Credit Suisse
acquired the shares of Chinyanta and Bazian who were declared
shareholders in FBZ from 2003 to 2008, with each party owning 20%
of the issued share capital of FBZ.
10.1.62. We have not traced Yousef Bazian who we understand is
living in Palestine at present. Bazian has not responded to our
e-mail to his address at Loita, which we understood from Dick King,
was still operational. We did however manage to contact Justin
Chinyanta who has provided the background and documentation to the
sale of their shares in FBZ to Credit Suisse.
10.1.63. Chinyanta explained that the basis of the relationship
between the above parties is the Management Services Agreement
(MSA) entered into between Finance Bank of Zambia (FBZ), the
shareholders of FBZ and Loita Capital Partners International (copy
herewith), which was approved by the Bank of Zambia (BOZ) prior to
its coming into force.
10.1.64. Loita Capital Partners International Limited is an
investment banking firm focused on Africa. Loita provides services
in the arrangement and funding of debt transactions; advisory
services and capital-raising for equity transactions; bank
management; correspondent banking; asset management; and other
corporate-oriented financial services.
10.1.65. Per clause 13 of the said Agreement, it was FBZs
responsibility to obtain all related approvals to ensure
implementation of the provisions of the MSA.
10.1.66. The background to the MSA was inter alia, the poor
performance of the bank, poor market perception, internal
management divisions and weak regulatory relationships, which
according to Dr. Mahtani (who led the discussions with Loita) had
prompted the shareholders to seek an external professional party to
manage the bank back to health. Dr Mahtani although known Justin
Chinyanta personally during the days when he was VP of Citibank in
Zambia, was aware of the work which Loita was doing in Malawi
(where he had a bank branch) and Rwanda in nursing bank to
financial health and subsequent successful privatization of two
government owned banking institutions (FINCOM and BACAR);
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purposes Forensic investigation into the true shareholding behind
individuals and entities declared as shareholders in Finance Bank
Zambia Page 30 of 50
Private & Confidential This document is intended for the use
of the Commissioner of the Drug Enforcement Commission, Zambia and
other officials authorised by him and may contain legally
privileged and confidential information. Dissemination,
distribution and/or copying of this document is prohibited without
express written permission of Commissioner Zulu. If you receive
this document in error, please immediately notify Commissioner Zulu
on +260 (211) 25114 or [email protected].
10.1.67. A condition precedent of the MSA per clause 4.1.1 was
the requirement for a due diligence exercise to be conducted by
Loita, and also the representation and warranty (per clause 4.1.2)
that FBZs business was being conducted in accordance with the
provisions of the Banking and Financial Services Act and generally
in compliance with the requirements of the BOZ. The said due
diligence was accordingly undertaken by DCDM a reputable regional
advisory and audit group on behalf of the Loita group.
10.1.68. We do not attach the due diligence report, which is
extensive with limited relevance to the investigation. The
important aspects of the due diligence is that it reported that the
draft 2002 Bank of Zambia Inspection report reflected that Finsbury
Investments, Finance Holdings and Leasing Finance Limited are
related parties to the Chairman by virtue of common shareholders
and they represent 89,75 % shareholding in FBZ. The due diligence
report went on to state that this may not be in accordance with the
Banking and Financial Services (Amendment) Act requirement, which
states that no single shareholder should own more than 25% of the
voting rights to the bank. It further reflected that September 2002
was the deadline set for all banks in Zambia to regularise their
shareholding.
10.1.69. This requirement is clearly the catalyst which obliged
Mahtani to shift his shareholding into the names of Bazian and
Chinyanta as well as Stoltzfus. The limitation on voting control is
contained in the Banking and Financial Services Act (Chapter 387 of
the laws of Zambia). The relevant section is set out below:
23. (1) Shares issued by a bank shall be only of such classes or
series as may be approved by the Bank of Zambia.
(2) A person shall not, without prior approval in writing of the
Bank of Zambia-
(a) acquire any beneficial interest in the voting shares of a
bank; or
(b) enter into any voting trust or other agreement;
that would enable that person or another person to control more
than twenty-five per centum of the total votes that could be cast
on any general resolution at a general or special meeting of the
bank:
Provided that this subsection shall not apply to a company which
is publicly listed on a securities exchange in a jurisdiction
outside the Republic acceptable to the Bank of Zambia.
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Drug Enf