Frederick Chiluba

Abstract

Introduction

Frederick Jacob Titus Chiluba was born April 30, 1943 and served as the President of Zambia from 1991 to 2002. In 1990 he helped form the Movement for Multiparty Democracy (MMD) and, as its presidential candidate, he went on to successfully challenge Kenneth Kaunda's rule in the 1991 elections. He won a second five-year term in 1996. Chiluba stepped down at the end of his term on January 2002 and was replaced by Levy Mwanawasa, his once time vice-president.

Chiluba quickly became a target of Mwanawasa's campaign against corruption. In February 2003, he was charged along with his former intelligence chief, Xavier Chungu, and several former ministers and senior officials, with 168 counts of theft totalling more than $40m.

The allegations centred on monies diverted from the Ministry of Finance into an account held at the London branch of the Zambia National Commercial Bank (Zanaco). Chiluba explained the account was used by the country's intelligence services to fund operations abroad whereas the Zambian government claimed it was used to meet Chiluba and Chungu's private and personal expenses.

Proceedings in London

Despite Zambia's Parliament having removed Chiluba's immunity from prosecution, the legal process had practically stalled: a co-defendant had fled the country, two out of three of his trials collapsed, and prosecutors complained of political interference. Zambia's President Levy Mwanawasa even flirted with offering his predecessor a pardon if he returned 75% of the laundered money. However, a decision to pursue the allegedly stolen assets through British civil courts offered probably the best hope of repatriating some of the laundered money and reaching an official judgment over the behaviour of Chiluba and his co-conspirators.

The case, which was brought by the Attorney General of Zambia for and on behalf of the Republic of Zambia against Chiluba and 19 of his associates, was held entirely in private on the judge's orders. The civil trial opened in London on 31st October 2006 and centred on claims to recover sums which were transferred by the Ministry of Finance between 1995 and 2001. The money in question was transferred on the basis that it was required to pay debts owed by the Government. It is acknowledged by the Zambian Attorney General that some money was used in that way but most of it was not - very large sums were diverted away for private purposes for various of the defendants.

Mr Justice Peter Smith, the High Court Judge, made the unusual ruling to hear the case in private in order not to prejudice a parallel criminal trial in Zambia where Chiluba and three others were charged with corruption. Part of the Zambian case was funded from a $2m grant for anti-corruption work from the UK's Department for International Development.

On 4 May 2007 Chiluba and his co-defendants were found guilty of stealing $46m (£23m).The High Court judge accused Chiluba of shamelessly defrauding his people and flaunting his wealth with an expensive wardrobe of "stupendous proportions".

The judge singled out as "the most telling example of corruption" his $500,000 purchase of hundreds of suits and monogrammed shirts from an exclusive boutique in Switzerland, as well as 72 pairs of handmade, high heel shoes to extend his 5ft stature. "This was at a time when the vast majority of Zambians were struggling to live on $1 a day and many could not afford more than one meal a day. The people of Zambia should know that whenever he appears in public wearing some of these clothes he acquired them with money stolen from them."

The court ruled that Chiluba ''was uniquely positioned to stop corruption'' in government, but that he elected instead to join in it. Although Chiluba has said in a statement that he did not recognize a British court's authority in Zambian issues, arguing that the case circumvented Zambia's justice system, other African experts said the verdict, the first against a current or former head of state, could set an anticorruption precedent.

The judge also said of his lawyer, Iqbal Meer "I am satisfied that no honest solicitor in his position would have done what he did." His unquestioning acceptance of the money - transferred to a London bank account by the Zambian intelligence service - was "classic blind eye dishonesty". The central London law firm of Meer Care & Desai handled $10m of the stolen money, which was used to fund lavish lifestyles for Chiluba's family and friends. A second London law firm, Cave Malik & Co, was found to have illegally handled $3m.

The case in the London civil courts fell into 3 distinct parts:

The first arises out of the transfer of about $52,000,000 from Zambia to a bank account operated it is alleged outside ordinary governmental processes called the Zamtrop Account held at Zambia National Commercial Bank Limited ("ZANACO") in London. This has been called throughout the proceedings "The Zamtrop Conspiracy".
The second claim relates to a UK registered property company called MOFED Ltd. It is owned by the Zambian Government. This has been known as the "MOFED Claim" and relates solely to the Fifth Defendant Atan Shansonga. It is a claim for breach of fiduciary duty on the basis that a consultancy agreement was improperly obtained by him in relation to the letting of the property owned by MOFED which provided for him to receive £100,000 per annum.
The third related to payments of about $20,000,000 made by Zambia pursuant to an alleged arms deal with Bulgaria and paid into accounts in Belgium and Switzerland at least some of which funds found their way to London. This claim has been known throughout the litigation as "The BK Conspiracy".

The Zambian based Defendants did not participate in the trial despite special arrangements being made to deal with their position. Chiluba refused to give evidence to the court. However, they did advance applications to seek a stay/dismissal of the action. This was done on the basis that

(a) the trial should be postponed until after any criminal trial that might take place in Zambia;
(b) a ring fencing order should be made which prohibited the release or use of any material (including evidence) revealed in the civil trial for any other purpose without the permission of the Court; and
(c) that the defendants could not attend trial in London particularly as the terms of their bail required them to remain in Zambia.

Despite a number of unsuccessful appeals in the UK it is important to note that Chiluba and the other defendants never said the decision to hear the trial in London was wrong. In dismissing the appeal the Court of Appeal noted "[the Defendants] ... accept that there is no question of the civil proceedings taking place wholly in Zambia and it follows that they accept, in my judgment properly and correctly, that the civil proceedings should take place in England".

However, they did intimate in the Zambian press that in some way the proceedings and the High Court judge, sitting as a Special Examiner in Zambia, were unconstitutional as regards Zambia, an infringement of Zambia's sovereign rights and an attempt by the former colonial power to impose its will upon the Zambians.

Mr Justice Peter Smith sat in Zambia as a Special Examiner to hear the evidence of the Zambian based Defendants. Special arrangements were made for this together with a live video link and daily transcripts for the rest of the evidence heard in London. The cost of this exercise was considerable and it was done primarily for the benefit of the Zambian defendants who spurned it. It did however enable Zambian Attorney General to reduce the number of Zambian witnesses who needed to come to London.

As stated above one of the notable features of the level of corruption was the expensive designer clothing that was bought by Chiluba in Switzerland and also the manner in which there was a systematic misappropriation of monies via the Zamtrop Account and under the BK Conspiracy which allowed Chiluba and the other defendants to spend millions of dollars on significant personal items of expenditure, ranging from personal payments to Chiluba's children, paying for their education and residence abroad, to large amounts of expenditure on 5 Star hotels, expensive restaurants, clothing and jewellery, motorcycles and properties all round the world.

In the final judgment Chiluba and the other defendants were adjudged to have conspired to misappropriate a headline figure of $25,000,000 under the Zamtrop Conspiracy and $21,000,000 under the BK Conspiracy. They have also been adjudged to have broken their fiduciary duties which they owed to the Republic or dishonestly assisted in such breaches (FK and AC). The conspiracy was effected because of the intimidation of government employees by defendants and maintaining that there should be no challenge to what was going on because it was all "secret operations" of the Government Security Arm ZSIS.

In fact the Zamtrop Account was set up as part of the conspiracy to steal. It was operated under the Financial Charter 1970 to hide what was going on and to inhibit legitimate queries. By operating under that regime Chiluba and his Head of Intelligence were able to restrict investigation of the operation of the Zamtrop Account to themselves.

There was no lawful reason for this operation; it was the vehicle for the fraud. There was equally no legitimate basis for the payments out under the BK Conspiracy. There were no genuine arms sales to justify the payments nor would the Republic have entered into the arrangements it did if it had been properly advised. This too was merely a vehicle for their fraudulent removal of government money by the Zambian based Defendants.

It is yet to be seen what effect the civil ruling in the UK will have on the criminal proceedings in the Zambian courts. However, Chiluba remains on trial in Zambia and in mid August 2007 Chiluba appeared before a Lusaka Magistrates Court where he is charged with corruption and abuse of office.

Chiluba's wife, Regina, was arrested on September 3 2007 for allegedly receiving money and property stolen by Chiluba during his time in office, despite having previously been released after the case against her had been dropped.