draining development.pdf - Khazar University

442 Draining Development?• A claim relating to a property company registered in the United Kingdomand owned by the Zambian government in respect of which itwas alleged that one of the defendants had breached his fiduciaryduty by improperly obtaining a consultancy agreement in relation tothe letting of a property owned by the company• A claim relating to payments of about US$20 million made by theZambian government pursuant to an alleged arms deal with a Bulgariancompany (the BK conspiracy)In respect of the first claim, the court found that the Zambian defendantsin the case had conspired to misappropriate US$25 millionthrough the Zamtrop conspiracy. In respect of the second claim, thecourt found that the defendant in question had not breached his fiduciaryduty in obtaining the consultancy agreement. In respect of thethird claim, the court found that there had, indeed, been a conspiracy tomisappropriate US$20 million through the BK conspiracy, and thedefendants were found fully liable for that amount.The Zamtrop conspiracyThe Zamtrop conspiracy arose following the collapse, in early 1995, ofthe Meridien Bank of Zambia, of which Meridien International BankLimited, registered in The Bahamas, was the parent; the ultimate parentwas ITM International S.A., a company registered in Luxembourg. OnMay 19, 1995, the then minister of finance in Zambia, Ronald Penza,announced that the Bank of Zambia would seize the Zambian subsidiaryof Meridien under powers in the Banks and Financial Services Act.Receivers were appointed on June 5, 1995, and compulsory liquidationwas subsequently ordered.There was an investigation into the collapse by the accounting firmKPMG, which reported in November 1995, but no proceedings werebrought. It was the attorney general’s case that the conspiracy washatched in April 1995. Xavier Chungu, the fourth defendant, was thepermanent secretary at the Office of the President, Special Division, alsoknown as the Zambian Security Intelligence Services, of which Chunguwas the director-general. Chungu wrote to Penza seeking financial assistancefor the Security Intelligence Services for unspecified projects.