Property compensated at adjusted cost does not exceed the book value of the insured investment at the
time of the property loss. OPIC has not paid any other compensation to the Investor for political violence

In addition, none of the adjustments described in Section 7.04(b) of the Contract is required in this
instance.

C. The Investor has complied with all of its duties under the Contract

The Investor filed an application for this political violence claim, together with proof of the
amount of compensation due, within six months of its occurrence. The Investor has certified that it
remains the beneficial owner of the Foreign Enterprise and remains eligible for OPIC insurance in
accordance with Section 9.01.2 of the Contract. In addition, the Investor has complied with its duties

under the Contract in all material respects and has provided a certificate to that effect that is satisfactory
to OPIC.

Vv. CONCLUSION
For the foregoing reasons, OPIC concludes that the claim of the Investor is valid. The aggregate

amount of compensation to be paid for the property loss on September 22, 201 1, due to political violence
is determined to be $38,027.37.

OVERSEAS PRIVATE INVESTMENT CORPORATION
» Te) Mh

D&S. De Amis”
Name: Dén S. De Amicis

Title: Vice President and General Counsel

Date: Ron uu 2012



MEMORANDUM OF DETERMINATIONS

Political Violence Claim of Seaboard Overseas Limited (the “Investor”)
Zambia — Contract of Insurance No. F123

L CLAIM

By an e-mail dated October 18, 2011, the Investor gave notice to OPIC that the Investor had
suffered losses of tangible property on September 22, 201 1, as a result of political violence in Zambia.
Through a number of subsequent e-mails, the Investor provided an application for compensation, which
consisted of an account of the lost tangible property and additional information regarding the
circumstances of the losses.’

The losses occurred during riots in the Copperbelt administrative province of Zambia, which
began due to the delay in the publication of the results of the presidential election on September 20, 2011.
According to information supplied by the Investor, the Copperbelt province generally is very supportive
of the opposition party. As a result of the delay in publishing the presidential election results, a large
number of opposition supporters began to protest by rioting violently in the streets, clashing with police,
and looting shops. OPIC finds the claim is valid and that the Investor is entitled to compensation in the
amount of $38,027.37.

I. FACTUAL BACKGROUND?

Zambia achieved independence from the United Kingdom of Great Britain in 1964. Kenneth
Kaunda dominated Zambian politics from independence until 1991, and he ruled Zambia during that time
through his political party, the United National Independence Party. For much of that time, Zambia was a
one-party state and all political parties, other than the United National Independence Party, were banned.
In 1991, Zambia established a new constitution based upon a multi-party democracy, resulting in the
formation of new political parties, including the Movement for Multiparty Democracy (“MMD”) and the
Patriotic Front (“PF”). The MMD’s candidates for president won the presidential elections in 1991, 1996,
2001, and 2006.

The most recent presidential elections were held on September 20, 2011, between the incumbent
President Banda of the MMD and the opposition PF’s candidate, Michael Sata, who had run for president
three times previously and narrowly lost a special election in 2008. The Zambian media was banned from
announcing the results of the September 20, 2011 election until the results had been verified by the
electoral commission, which resulted in a delay in announcing the winner of the election? The BBC
reported that the secretary general of the PF elieved the results were being deliberately delayed because
the MMD knew it had lost the election.’ This delay angered PF supporters and ultimately led to violent
rioting in the Copperbelt province, where PF supporters have a strong presence,” The BBC reported that

' The notice, application for compensation, and related documents are attached hereto as Exhibit 1,

? Unless otherwise noted, the factual description is based upon the State Department background notes, available at:
http://www.state. gov/r/pa/ei/bgn/2359.htm.,

> ZambiaPoll: Riots in Kitwe and Ndola over Slow Results, BBC News, September 22, 2011, available at:
http:/Avww.bbe.co.uk/news/world-africa-15019198,

“Id.

° Id; Chris Mfula, Poll Riots Hit Zambia, Opposition Leads Tight Race, Reuters, September 22, 2011, available at:
http://www. reuters.com/article/20 1 1/09/22/us-zambia-election-idUSTRE781 11G201 10922.


the rioters set a market on fire in Kitwe and police set up barricades in the city’s township of Wusaikile,°
which is the location of one of the Investor’s looted depots. According to the Investor, the depots that
were looted during the riots are located in Wusaikile, Masala, and Chifubu, all of which are towns in the
Copperbelt province. In addition to looting the inventory and cash at the depots, the rioters damaged the
depot buildings by setting them on fire, smashing windows, and ripping out doors.

I. THE CONTRACT

A. Scope of Coverage

Contract of Insurance No. F123, dated as of September 30, 1999, between the Investor and OPIC
(the “Contract”) provides insurance against inconvertibility, expropriation, and political violence in
connection with the Investor’s equity and debt investments in National Milling Company Limited, a
Zambian company that produces and sells wheat and maize products to the Zambian market (the “Foreign
Enterprise”), for the acquisition, ownership, and operation of the Foreign Enterprise (the “Project”). As
of September 22, 2011, the active amount of coverage for political violence was $1,294,362.

Article VI of the Contract provides that compensation is payable, subject to certain exclusions
and limitations, if political violence is the direct and immediate cause of the Permanent loss (including
loss of value by damage or destruction) of tangible property of the Foreign Enterprise used for the Project.
“Political violence” is defined in Section 6.01 of the Contract to mean “a violent act undertaken with the
primary intent of achieving a political objective, such as declared or undeclared war, hostile action by
national or international armed forces, civil war, revolution, insurrection, civil strife, terrorism or
sabotage. However, acts undertaken primarily to achieve labor or student objectives are not covered,”

Section 6.02 sets forth the exclusions that apply to compensation for a political violence claim,
which include (a) excluded property (precious metals, gems, works of art, money, or documents), (b)
minimum loss (if the amount of compensation would be less than $5,000), (c) if the loss results from the
failure to take reasonable measures to protect or preserve the property, and (d) if the preponderant cause
of the loss is unreasonable action attributable to the Investor.

B. Compensation

Section 7.01 of the Contract provides that, if the requirements of Article VI of the Contract are
satisfied, and subject to certain limitations, OPIC shall pay compensation for a loss in United States
dollars in the amount of either (a) the adjusted cost of the lost Property, which is the Investor’s share of
the lowest of (i) the original cost; (ii) fair market value; or (iii) the reasonable cost of repair; in each case
less anything of value received by the Investor on account of the property lost and less then Investor’s
share of any such receipts by the Foreign Enterprise, or (b) if the Investor so elects, the replacement cost
of the lost property with equivalent new property, provided that the replacement cost does not exceed
200% of the original cost of the property.

IV. DETERMINATIONS UNDER THE CONTRACT

A determination under an OPIC insurance contract addresses three categories of issues: (a)
whether the acts of which the insured party has complained satisfy all of the elements required to bring
them within the scope of coverage; (b) the amount of compensation payable; and (c) whether the insured
party has fulfilled its duties under the insurance contract.

° Ia.


A. Political violence was the direct and immediate cause of the permanent loss of tangible
property of the foreign enterprise used for the project

supporters who were angered by the delay in the announcement of the election results by the media, and
the extent of the violence and its cause have been documented by accounts in the international press and
confirmed by the U.S. Embassy in Lusaka, Zambia. Therefore, the rioting that occurred on September 22,
2011, in the Copperbelt province of Zambia constitutes political violence, as defined under the Contract.

In its application for compensation the Investor described the damage to the tangible property of
the Foreign Enterprise. The damage included damage to the depots to enable the rioters to gain entry to
the depots, such as breaking windows, tearing down locked doors, and destroying roofs, as well as the
looting of products for sale in the Wusaikile and Masala depots, such as maize flour products, wheat flour
products, rice, salt, and sugar. In the Chifubu depot, the rioters damaged the building but did not actually
loot the store. However, all of the stock of the depot was contaminated by tear gas fired by the police to
deter the rioters and thus the stock is no longer fit for human consumption. Therefore, the political
violence was the direct and immediate cause of the permanent loss of the tangible property (stocks and
inventory) of the Foreign Enterprise at its depots.

Of all the exclusions that apply to political violence claims, only one applies to the Investor’s
application for compensation. Pursuant to Section 6.02 of the Contract, no compensation for political
violence shall be payable for excluded Property, which includes money. The Investor has stated in its
application that cash from the prior day’s sales was among the property stolen from the Wusaikile and
Masala depots during the riots. Since money is an excluded property under the Contract, no
compensation will be payable for the looted cash. None of the other exclusions applies to the Investor’s

B. Compensation is payable in an amount of $38,027.37 on the basis of the adjusted cost of
the lost property

Section 7.01 of the Contract provides two options for compensation in the event of property loss:
adjusted cost and replacement cost. The Investor did not elect replacement cost as the basis of
compensation for the lost property; therefore, the basis of compensation is the adjusted cost of the lost
property. Considering the nature of the property lost (perishable products sold for human consumption)
and the fact that the lost property was intended for sale, the original cost of the property is the most
appropriate measure of compensation. The Investor provided a spreadsheet listing all of the stock that
was stolen or destroyed from each depot during the riots of September 22, 2011, and the original purchase

destroyed stock is $38,027.37. The “Investor’s share” of the Foreign Enterprise (as such term is defined
under the Contract) is 100%, and thus the amount of compensation payable, prior to taking into account
any possible limitations and adjustments, is $38,027.37.

Section 7.02 of the Contract includes three possible limitations for compensation for a loss. None
of these limitations applies to the Investor’s application for compensation. The Active Amount for
political violence as of the date of property loss was $1,294,362, well above the value of the looted stock,
The Investor still retains the risk of loss of at least 10% of the book value of its interest in the Foreign
Enterprise, as required under Section 9.01.3 of the Contract. Finally, the aggregate compensation for

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