France is just one of many donor nations which have said it is encouraged by actions taken by the Tanzanian government in tackling corruption cases, and is now happy that the money it donates will not end up in the pockets of corrupt individuals.

European Union (EU) head of delegation Tim Clarke and Swedish Ambassador Stefan Herrstrom also hailed the actions being taken by the government. Clarke said that legal steps being taken against senior state officials implicated in corruption scandals were a true indication that there was maturity in the political leadership – Guardian.

The following is a summary of recent events:

The ‘Radar’ deal

After nearly three years of investigation, the UK`s Serious Fraud Office (SFO) has published remarkably detailed accounts of what it believed had happened during the negotiations leading up to the purchase in 2002 by Tanzania from Britain’s BAE Systems of an air traffic control (radar) system at an inflated price of $40m including an apparent figure of $12 million as ‘commission.’ (See many previous issues of TA– Editor). The report was summarized in several Tanzanian newspapers. It named former Infrastructure Minister and now Attorney General Andrew Chenge and several other persons, including Sailesh Vithlani (a Briton of Asian background, who is alleged to have played a major role) and Dr Idriss Rashidi a former Governor of the Central Bank plus six British people as having been involved in the deal. The SFO believe that Chenge was ‘a conduit’ through which the lost money was distributed to selected top government officials whose decisions were crucial to the deal. The SFO established that Chenge received money through a slush fund he set up in Jersey when he was serving as Attorney General. According to information provided by the authorities in Jersey, the $1.5m was transferred from a Frankfurt branch of Barclays Bank to Chenge’s account in Jersey. Chenge was said to have used the money to pay others involved in the radar deal.

The SFO established that on September 20, 1999 Chenge personally authorised the transfer of $1.2m to the Royal Bank of Scotland International in Jersey. The SFO report concluded that Rashidi and Chenge were key figures in the deal, but they were acting with the full support of top government officials. The SFO investigation established that, to avoid being caught, the facilitators of the deal gave Vithlani the codename ‘Mr Fat’, while any mention of bribing or corruption was replaced with the euphemism ‘commitments’. In what is believed to have been a tactic to obscure the deal’s corruption, Vithlani and his partners registered a front company in Panama which received $8m between 2000 and 2005. The payments came from ‘Red Diamond Trading Co Ltd’ registered in the British Virgin Islands, alleged to be a front company of BAE Systems – until December 2005 when it was terminated through a settlement of $3.36m.

Meanwhile, in Tanzania, the Guardian has reported that the Prevention and Combating of Corruption Bureau (PCCB) had been contacting various sources outside the country in order to build up convincing evidence to enable it to prosecute. The Bureau urged people to be patient while the investigations continued.
To add to his troubles Mr Chenge was recently involved in a car crash in which two women died – Mtanzania.

Andrew Chenge is escorted to Kinondoni court to hear the charges against him with regard to the recent traffic accident (photo Mroki Mroki/TSN)

The Richmond/Dowans Electricity saga

There have been several new developments in the on-going Richmond/Dowans electricity saga but space in TA does not allow for a full account of all these extremely complex events. Most of the print media outlets in Tanzania have been competing with each other to make further revelations about what has been happening. The Sunday Observer has played a prominent role.
TANESCO announced earlier this year that Tanzania would again face serious shortages of electricity in the coming months unless urgent action was taken to increase electricity supplies. It recommended that TANESCO should procure (for some TShs 60 billion) the defunct, but apparently still operational, 100 Megawatt electricity generating plant which was to have been built by the Texas-based Richmond Development Company (but this company was found, after its contract had been signed, to be incapable of doing so) and the successor company Dowans, in association with the Tanzanian company Independent Power Tanzania Ltd. Dowans eventually completed the job in 2006. After very detailed investigation by a Parliamentary Select Committee under Dr Harrison Mwakyembe MP (TA No 92), which resulted in the resignation of the then Prime Minister, Minister of Minerals and Energy and Minister for East African Cooperation, attention began to focus on the responsible parties of Richmond (the head of the company was revealed to be Naeem Adam Gire) and Dowans, whose actual leadership was determined only recently by the media. Gire was taken to court in Dar es Salaam in January 2009 on five counts of forgery and giving false information to TANESCO. He pleaded not guilty and was given bail. The major shareholder in Dowans turned out to be Suleiman Mohammed Al Aawi, a retired general and businessman in Oman.

As the Sunday Observer reported that TANESCO was on the brink of collapse with heavy debts, dilapidated infrastructure and losses of electricity in transmission of 24% (South Africa which, is also facing an energy crisis, 4.5%) politicians began to fall out about what should be done. Dr Mwakyembe, who strongly opposed the procurement of Dowans by TANESCO and accused some people of pushing the deal for personal reasons (Mtanzania), was later found to be one of the leading lights in a private company planning to generate electricity in Singida.

As this issue of TA went to the printers the media revealed that the government was in negotiations with another company for the construction of a 300 Megawatt, $300 million generating plant at Mnazi Bay by Barrick Tanzania but the negotiations were taking longer than expected.

The Bank of Tanzania scandal

As reported in TA No. 92 and previous issues of TA, this major scandal involves the loss from the External Payments Arrears Account of the Bank of Tanzania (BoT) of Shillings 133 billion. Some 20 Bank staff and prominent businessmen have been arrested.

In a separate case former Minister of Finance, Basil Mramba and a former Minister for Minerals and Energy were also arrested. All of the accused persons were allowed bail and investigations have been proceeding slowly. In the Mramba case the prosecution said that it would call 13 witnesses and Mramba admitted that he had asked the BoT Governor to pay $1 million to a British firm to extend a gold production assaying agreement for two years, which was contrary to the relevant legislation. He added however that this had been in response to an order from the State House – Mwana Halisi

Mwana Halisi recently claimed to have obtained a set of documents which indicated that the loss of funds from the BoT had been done with the full knowledge of the government. It went on to allege that Shillings 50 billion of fake bonds had been sold to a company called Tangold, plus another called the Deep Green Finance Company, and to Nedbank of South Africa. The paper went on to claim that some of the crucial documents in the case were missing and had been replaced by forged ones and that this would make it more difficult to prosecute the accused persons.

Similarly, a company called Kagoda Agriculture, was alleged to have taken Shs 40 billion from the BoT. Under pressure from the media to reveal who the owners of this company were, in January, the Business Registrations and Licensing Agency (BRELA) published the names of two individuals. The company had an address in Temeke, Dar es Salaam.

But opposition CHADEMA Secretary-General Zitto Kabwe MP questioned this and alleged that Kagoda had been formed by the ruling CCM party with the aim of getting money from the Central Bank to fund its 2005 general election campaign. The two individuals who had been named did not exist, he said. In response CCM Publicity Secretary John Chiligati said that CHADEMA was engaging in childish politics. BRELA was an autonomous body which should be trusted as a free and independent public institution.

Under pressure from Nipashe and others in the media to explain how far the investigation into Kagoda had gone, it was revealed that the relevant files were still being studied by the Director of Public Prosecutions and the Director of Criminal Investigations.

Identity Cards

The contract for the implementation of the government’s TShs 200 billion ID card scheme (there were 54 bids for the contract) has come under scrutiny by MP’s and allegations have been made against a government minister. But the minister filed a lawsuit in the High Court against three newspapers and demanded TShs 2.5 billion in damages.

At about the same time National Assembly Speaker Samuel Sitta barred MPs from discussing sensitive issues, including the tendering process for the identity card project, and said that a debate on this particular issue could have caused needless delays in proceedings and huge losses. The tendering process was still under way, he said.

Former President Mkapa

Former President Benjamin Mkapa has been the subject of a number of allegations described in earlier issues of TA. According to Majira he said recently that he regretted having led the country into rampant privatisation leading to foreign control, and leaving local citizens out of the loop. His intention had been to deliver Tanzanians from poverty by inviting foreign investment. If it were possible to turn the clock back he would review the privatisation policy.

As the debate in parliament and in the media on whether the former President should be prosecuted (See previous issues of TA), National Assembly Speaker Sitta finally declared that such a move was impossible under the current parliamentary rules and the current political system. However, according to the Guardian, some MPs, even within the ruling CCM party, were planning to initiate a process to prosecute. There was said to be talk of a private members’ motion to lift his legal immunity.

Prof. Mwesiga Baregu, a senior political science lecturer at the University of Dar es Salaam, came out in support of Mkapa’s prosecution, saying that although the constitution granted immunity to ex-presidents, such immunity was conditional and only applied to offences the ex-president committed in the course of executing presidential duties, not otherwise. If necessary the immunity could be lifted through parliamentary procedures.
CHADEMA MP Philemon Ndesamburo quoted in the Sunday Observer said that since the former president was the chairman of the cabinet meetings that had made important decisions (including hiring a certain person who is being mentioned in other corruption cases) he too, should be taken to court.
But many are said to believe that the presidency is a post that should be highly respected if national unity is to be strengthened. The normally outspoken CHADEMA MP Zitto Kabwe said that grand corruption in the country could not be fought by taking ex-presidents to court. “Once we start arresting ex-heads of state then the country will never be the same again” he said.
President Kikwete was quoted as having said in 2006 that Mr Mkapa should be left alone to rest.

But the former president continued to be pursued by the media. The Sunday Observer published extracts from a 27-page Tanzania Building Agency (TBA) report on the sale of government houses to senior politicians and officials during his rule. Extracts: ‘As a result of selling public housing and land at a fraction of market values to a relatively small group of politicians and senior officials, the government had foregone a windfall income of hundreds of billions of shillings and would continue to lose money on future sales. In Oysterbay, Upanga, Sea view and other prime areas in Dar es Salaam, the current market value of the land on which the auctioned government houses were built ranges between $150,000 and $500,000, yet the buyers paid not more than $50,000 to acquire the properties. A total 7,159 houses were sold countrywide’

The National Development Corporation (NDC)

A new scandal seems to be emerging after reports that the NDC took a loan of $2.0 million from a bank, most of it disappearing in such a way that even government auditors had failed to detect it. Sources quoted in Nipashe said that the NDC management had borrowed the money from Barclays Bank in 2000 in order to finance the Mchuchuma Coal Mine and the Liganga Iron Mine. But $1.5 million was said to have been used as guarantee for a personal loan from the Investec Bank in Mauritius without the authorisation of the NDC board. Investigation was said to have been stopped because certain documents had disappeared.