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Zambia Scraps FirstRand Purchase, Fires Central Bank Board

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Oct. 3 (Bloomberg) -- Zambian President Michael Sata reversed FirstRand Ltd.’s purchase of Finance Bank Zambia Ltd. and fired the board of the central bank and three agencies. The kwacha plunged the most against the dollar of all currencies tracked by Bloomberg.

Sata, who defeated incumbent Rupiah Banda in a Sept. 20 election, dissolved the boards of the National Pensions Scheme Authority, Zambia Revenue Agency and Zesco, the power utility, Sata’s spokesman George Chellah said in an e-mailed statement today. Bank of Zambia Governor Caleb Fundanga was removed from his post on Sept. 29.

The currency of Africa’s biggest copper producer dropped as much as 3.8 percent to 5,014 against the dollar today, where it was trading as of 6:39 p.m. in Lusaka. Sata’s overhaul may heighten investors’ concerns at a time when copper prices have dropped 27 percent since August, undermining the economy’s outlook.

“To go and chance everything and scare investors away won’t make sense,” Thea Fourie, an economist at IHS Global Insight in Johannesburg, said in a telephone interview. “There has been a lot of uncertainty after this election.”

Sata didn’t give a reason for annulling FirstRand’s 27 billion kwacha ($5.5 million) takeover of Finance Bank Zambia Ltd.. The central bank seized Finance Bank in December for breaching financial laws and agreed to sell it to Johannesburg-based FirstRand, which had been managing it for eight months.

‘Due Process’

“We strongly believe that due process was followed and that the agreements reached with the Bank of Zambia were concluded in accordance with Zambian law,” Michael Jordaan, chief executive officer of FirstRand’s First National Bank, said in an e-mailed statement today.

John Sangwa, a lawyer for Finance Bank’s former Chairman Rajan Mahtani, said the central bank’s decision to dispose of Finance Bank’s assets was “flawed” and Mahtani was “very happy” with the decision.

Sata yesterday fired the country’s anti-corruption chief and three senior aides. Last week he fired the directors of the Energy Regulation Board and appointed an inquiry to investigate reports of alleged corruption in the procurement of oil.

To contact the reporters on this story: Anthony Mukwita in Lusaka at amukwita1@bloomberg.net; Andres R. Martinez in Johannesburg at amartinez28@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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