MINISTER of Communication and Transport Christopher Yaluma says the Zambia Railways board has been dissolved.
This comes barely a day after the board of directors have made the revelations that ZRL Chief executive officer Professor Clive Chirwa was demanding to be paid US$560,000 as his annual salary (or K248 million per month) which the Board rejected.
The five board members were responding to allegations by Professor Chirwa that the management board was corrupt and that the directors were demanding K500 million as sitting allowances.
A full statement from the Minister will follow.
However, the five Board members issued a statement denying the allegation and revealed that there was in fact mismanagement of the company, and accused the ZRL chief executive officer of gross mismanagement and serious breaches of corporate governance ethos.
The five, who are not serving in Government, are Mark Chona, the chairperson, and members Geoffrey Mulenga, Irene Mbewe and Jonam Mwansa. The members are paid K2, 600 as sitting allowances.
ZRL Board vice-chairperson Oliver Saasa, who issued the statement on behalf of his colleagues, said that Prof Chirwa had in fact been making decisions without the approval and involvement of the Board, a practice he said was against corporate decision-making.
Prof Saasa said Prof Chirwa embarrassed the Board when he announced that he would invest the US$120 million Eurobond funds to turn around the company without a feasibility study which, according to Prof Saasa, was a waste of money.
“As a result of this development, the Board resolved that Clive Chirwa should not be allowed to throw money to major restructuring projects until management has submitted to the Board for approval clearly-argued and properly sequenced activities,” Prof Saasa said.
“The Board has received insults from him for maintaining this position and, in one of his letters to the chairperson 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 delays the implementation of ‘his’ grand vision.”
He said that Prof Chirwa was self-centred and did not recognise the Board and had refused to facilitate the development of a strategic plan for ZRL preferring to use his document he developed before the Board was appointed.
Prof Saasa said Prof Chirwa’s differences with the Board started when it rejected his demand for $560,000 annual salary (or K248 million per month) and 25 per cent shares in ZRL at the end of his five-year contract.
This is in addition to K2.6 billion annual bonus and six free tickets per annum for his wife to UK/Europe which the Board and the Government considered obscene.
He said Prof Chirwa even attempted to shift the company’s headquarters from Kabwe to Lusaka which the Board rejected because the move could only be effected with the Government’s approval and the Board’s endorsement.
Prof Saasa said one issue that bordered on corruption was Prof Chirwa’s attempt to use his own company, Clavel Incorporated, to train all senior management staff at the company without declaring interest.
He was advised that the Board would not allow single-sourcing as it was against the Government’s procurement regulations and that President Michael Sata had already made a clear position on the matter and was briefed on current court cases regarding anomalous procurement practices.
Prof Saasa said legal opinion received by the Board suggested that the singular act bordered on criminality in a country that boasted of zero-tolerance to corruption.
As managing director, Prof Chirwa also wanted to chair the tender committee and when the Board advised him that the move was against good corporate governance, he refused to accept resulting in tension with some Board members.
In the meantime, he had advertised big procurement jobs for supply of equipment, including initiating the recruitment of senior management staff before the Board’s approval.
“Any procurement that ZRL management may be undertaking now are outside the clearance or guidance of the Board and if there are irregularities they are completely outside the knowledge, let alone sanctioning of the Board,” he said.
On accusation that the Board suspended the finance manager because she refused to pay Board members huge allowances, Prof Saasa said there were financial irregularities and the office of the Auditor General had been requested to carry out a forensic audit.
He said Prof Chirwa had refused to shift to Kabwe and was living at Fallsway luxury apartments and the company was paying K72 million as monthly rentals contrary to the Board’s directive.
He said that when the company received the $120 million from the Eurobond funds, the money was deposited in Zanaco account yielding four per cent interest when Finance Bank was offering between seven to 12.5 per cent interest depending on the period.
Efforts to get a comment from Prof Chirwa proved fruitless as he was not answering the phone calls.