draining development.pdf - Khazar University

The Kleptocrat’s Portfolio Decisions 443Funding was sought on the grounds that debts left behind by the formerregime had to be met. In the letter, Chungu wrote as follows:I wish to recommend that these debts be treated as part of the nationaldebt. The amounts involved are quite modest and can, therefore, beaccommodated within the external debt service budget without drawingthe attention of the IMF [International Monetary Fund] and the donorcommunity. I stand ready, Hon. Minister, to work with your PermanentSecretary and the Director of Budget and Loans Investments . . . in orderto come up [with] a repayment program. 29This letter was written shortly before the Meridien collapse.A series of letters was then written by Chungu stating that the SecurityIntelligence Services would provide a company, Access FinancialServices Limited, with funds to be utilized for selected projects. Thiscompany was licensed hard on the heels of Meridien’s collapse. Penzaauthorized a financial services license to be granted with immediateeffect in October 1995 without any previous evaluation by the Bank ofZambia. The company was licensed as a nonbank financial institutionand authorized to conduct financial, but not banking services. Penza wasmurdered in 1998, although no evidence was adduced at the trial as towhy or by whom he was murdered.Chungu would then, from time to time, give the company instructionson disbursements to be made from the account. The company wasassured that it would not be asked to disburse funds for unlawful activities.As the letter stated, “you are relieved from making an enquiry about,and will often be unable to know, the use of application of funds afteryou have disbursed them.” Chungu thus purported to give immunityfrom claims by others or any successor government officials.At the same time, a woman, Stella Chibanda, the sixth defendant andone of the conspirators, was, first, assistant director (loans and investments)at the MOF; then director of external resource management, aninternal MOF department, in December 1997; and, finally, permanentsecretary, MOF, in December 1999. She was a powerful figure whomnobody dared to cross. Until September 1998, monies were transferredfrom the MOF account at the Bank of Zambia on the authority of MOFletters carrying two signatures. After that date, a new system of payment