Zambia probes ex-finmin over Pepsi tax deal

* Says tax concession was illegal

* Ex-finmin probed for abuse of authority

LUSAKA Jan 27 (Reuters) - Zambia is investigating former Finance Minister Situmbeko Musokotwane for abuse of power over a tax deferment deal he concluded with an Indian company.

President Michael Sata's government has also reversed a number of deals it said were irregularly awarded to private companies to build and operate border facilities in Zambia.

A report of a government inquiry made public on Thursday said that under Musokotwane, in 2010, tax incentives were irregularly granted to Varun Beverages - an Indian-owned company that promotes and distributes Pepsi in Zambia.

The government cancelled the deal and investigators said Musokotwane was questioned about it.

"Government has no scores to settle but there will be no sanctuary given to those who have committed crimes," Finance Minister Alexander Chikwanda said on state radio on Friday.

Under the deal, Varun Beverages was granted a deferment of value added tax and excise duty for five years. The company will now have to pay the duties, said Fedson Yamba, secretary to the Treasury.

"We are going to write to Varun today to ask them to pay the 15 billion kwacha that they owe the government," Yamba said.

"The deal was cancelled because such a concession cannot be exclusively granted to one company on grounds that it has cash flow problems."

Musokotwane was not immediately available for comment on Friday. He has previously denied wrongdoing and said giving such a concession could not be done by the minister alone.

Sata's government was elected on a promise to fight graft and he has chipped away at several deals made during the administration of his predecessor Rupiah Banda.

The government this week dissolved the board of Libya-controlled Zamtel and appointed a new acting CEO, a day after it announced plans to seize 75 percent in the fixed-line operator from owner LAP Green Networks.

In November, a government inquiry ruled the 2010 transaction illegal.

In December Sata appointed a renowned corruption-busting lawyer as the country's chief prosecutor. (Reporting by Chris Mfula; Editing by Phumza Macanda and Robert Woodward)