IMF denies ignoring cobalt sales corruption

The IMF has rejected claims made by London's 'Financial Times' last week that it ignored indications of irregularities in Zambia's cobalt sales. IMF African Department Associate Director Ernesto Hernández-Catá said on Thursday that an editorial in the newspaper published on 16 February was misleading.

"Far from 'ignoring' indications of irregularities in Zambian cobalt sales, the IMF was the first to raise the issue with the Zambian government, which agreed to the commissioning of an independent outside audit as a condition for IMF lending and for IMF debt relief. The Zambian government immediately launched the audit," Hernández-Catá said. He added that it was in fact an IMF economist who discovered the discrepancy between the market price of cobalt and the actual return under the contract signed by Zambia Consolidated Copper Mines two years ago.

"It was precisely Zambia's agreement to proceed with the audit that allowed the IMF loan and the subsequent debt reduction accord to go ahead. With that agreement in place, and because ZCCM is no longer a government entity and has new management, it was entirely appropriate to move rapidly to help a country facing a heavy debt burden and severe poverty," Hernández-Catá said in a letter to the newspaper. Hernández-Catá said the Zambian government should be commended for agreeing to the audit to address the corruption allegations and the IMF was interested in the outcome of the audit when it was completed later this year.