Tanzanian Affairs

For months the people of Tanzania have been waiting to see whether any of the people exposed in the many corruption investigations haunting Tanzania (TA Nos 90 and 91) would be punished for their alleged misdeeds.
Eventually, by the end of November 2008, some 25 top business people and two senior former cabinet ministers had been arrested and it was believed that others might follow.

Public opinion
After four months had passed with no sign of further action against the suspects, people all over the country, actively supported by a free and critical press, became impatient.

Kikwete addresses the crowds in Mbeya (photo Issah Michuzi)

The Swahili press reported that when President Kikwete visited Mbeya region in October his entourage was mobbed and stoned by a crowd wanting him to take stern steps over the Bank of Tanzania (BoT) External Payments Account (EPA) scandal (see TA No 91). Thousands of people shouted slogans complaining that, while billions were being pocketed by a few culprits, people were suffering from severe economic hardships. Some were heard urging the President to step down if he couldn’t do anything about it. The crowd became more frenzied as the President stepped out of his car to talk to them. In the end he gave up as security and police tried in vain to jostle with the crowd. As the entourage drew away people jeered and booed the officials and journalists were told that they were traveling with corrupt leaders. Similar incidents occurred twice when Kikwete was driving to Kiwira, though the crowds were smaller.

The State House later denied that it was the presidential motorcade that was pelted with stones, noting that it was the second motorcade that followed behind and that is why the “President did not notice the incident” – Habari Leo.

Then the ruling Chama cha Mapinduzi (CCM) party lost an important parliamentary by-election. Foreign donors, who are providing a major part of the country’s recurrent budget, piled on the pressure and some threatened to withhold aid unless action was taken against corruption.

There was some surprise when in the EPA case President Kikwete announced that those implicated had until the end of October 2008 to repay the money they were alleged to have taken illegally or they would face further action. The implication was that if they did return the money they would not be punished.

The sums involved totaled $230 million and involved 22 different companies (TA No 90).

A trap

On November 28 the Guardian published a story claiming that President Kikwete’s strategy had been carefully planned for nine months. ‘He had not been willing to sacrifice his popularity and credibility for the protection of a cadre of powerful but crooked businessmen’. The article went on to say that the President’s low profile had all been part of a plan to trap the key suspects so as to ensure that they stayed in the country and returned the money. The President later revealed that TShs 69 billion out of TShs 90 billion or 76.7% stolen from the EPA account had been recovered. Just after the release of the Ernst & Young auditing report which had revealed what had been going on, there had been panic among key suspects and some of them were said to have been planning to destroy evidence or escape to unknown destinations.

A senior official was reported to have said “We had to do something to calm the situation and restore confidence.”

The investigators were also wary of repeating any of the mistakes that led to Sailesh Vithlani, the key suspect in the controversial BAE Radar deal, fleeing the country and avoiding prosecution by staying in Switzerland. Just hours after Kikwete’s speech some suspects celebrated with champagne, according to reliable sources.

The arrests

Then suddenly in the EPA case, a series of arrests were made and by November 15th over 20 people had been taken in on numerous different charges of conspiracy, fraud, forgery, theft and/or obtaining credit under false pretences between 2003 and 2006. They included four Central Bank senior officials (two of the female suspects wept bitterly as they were brought to the courtroom) but most were prominent businessmen. The accused pleaded not guilty and the prosecution told the court that investigations were still incomplete. Many suspects were unable initially to meet the bail conditions and were remanded in prison until later in November but most were eventually given bail – Guardian.

Former senior cabinet ministers arrested

Daniel Yona and Basil Mramba (photo Issah Michuzi – http://issamichuzi.blogspot.com)

On November 24 there was a further dramatic development when two former senior cabinet ministers appeared before the Kisutu Resident Magistrate’s Court in Dar es Salaam charged with abuse of office and occasioning the loss of over TShs 11billion to the government. They both denied the charges and were remanded in custody for failure to meet bail conditions.

Former Finance Minister Basil Mramba and former Minister for Minerals and Energy Daniel Yona faced a total of 13 counts. They pleaded “not guilty”. Members of the public booed them as they were being taken to Keko Remand Prison.

The charges were not related to the EPA scandal as was previously assumed by many. Both accused faced jointly five charges of abuse of office and one count of occasioning loss to the government. Mramba alone faced eight similar counts.

The prosecution alleged that between August 2002 and May 28, 2005, the duo were said to have arbitrarily procured M/S Alex Stewart (Assayers) UK and its subsidiary company, M/S Alex Stewart (Assayers) Government Business Corporation to sign and execute gold production assaying agreements in Tanzania in contravention of the Public Procurement Act and Mining Act, respectively. The prosecution alleged that the former ministers left the Alex Stewart Government Business Corporation to sign an addendum extending a gold production assaying agreement for two years from June 14, 2005 to June 23, 2007 in contravention of the relevant legislation. It was alleged further that the duo invited Dr. Enrique Sugura of the company to formalise the two years extension before the Government Negotiation Team was convened to work on the matter. The accused also abstained from attending discussions on the mining assayer’s fees issue and submitting the agreement to the Attorney General for vetting as had been recommended. The result was said to have been an extension of a gold production assaying agreement for two years.

The prosecution alleged that there had also been unjustified tax exemption in favour of M/S Alex Stewart thereby occasioning loss to the government to the tune of TShs 11,752,350,148.

Protracted cases

The preliminary hearing of cases in the EPA scandal began on November 20 and, according to the Guardian’s report, covered debt collection, a company in India, a fictitious company director and some uncertainty about whether two culprits with the same name were related. Because of space constraints TA is only likely to be able to cover the briefest details of these cases in the coming months. The Inspector General of Police warned that the cases were going to be very protracted.

Reactions

Reactions to these sensational developments came from all sides.

“This is a good start….the new spirit should go beyond the EPA scandal” said Secretary General of the opposition CHADEMA party Dr Wilbroad Slaa. He added however that if the owners of one of a line-up of companies linked to the scam – Kagoda Agricultural Limited – which was alleged to have taken TShs 40 billion – were not taken to court he would name them. He told reporters that it was surprising how government officers avoided naming them although they were ‘known.’

Chairman of the opposition CUF party, Prof. Ibrahim Lipumba, also urged the Director of Public Prosecutions (DPP) PP to stop being secretive and evasive about Kagoda and drag them to court – Majira.
Confederation of Tanzania Industries Chairman Reginald Mengi applauded President Kikwete’s handling of the matter.

However, he also called on the DPP to give the public full details about Kagoda as they were anxious to know what Kagoda was.

The government owned Daily News wrote: ‘At last persons involved in one way or another in siphoning money out of the EPA have been brought to justice, which is one-up for the government. Therefore, if there is any ‘doubting Thomas’ out there who had doubts on the ability of the government to effectively deal with its most pressing challenges, the court appearance of the suspects would prove them wrong…. …. But patience is always finally rewarded. After all, you cannot bring people before the law overnight before exhausting all the necessary investigations…. It was, therefore, not an easy job to get to the core of the financial chain and haul out suspects…. At times, the police had to operate beyond the country’s borders to check whether some of the loot was stashed in some foreign accounts. Let all agree that the speed at which the government has handled this matter is commendable. At long last, the government has proved its critics wrong by acting – and very decisively – on the matter’.

Some members of the Tanganyika Law Society praised the DPP for the way he speedily and efficiently handled the EPA prosecution. But the advocates differed on the way the accused were brought to court and charged. Talking anonymously, they pointed out that the charges were varied with different dates, amounts and nature. As such the accused should have been treated individually instead of being charged in the group trial that was taking place.

Special treatment?

Jeetu Patel (far right) and other defendants appear in court (Issah Michuzi)

Nipashe reported that the suspects were said to be being given special treatment at Keko prison. They were being kept in VIP rooms, away from ordinary prisoners who lived under squalid conditions. But a prisons spokesman denied this. He said the suspects were separated for their personal security, since the EPA was a high profile case that had generated lots of public resentment.

The Sunday Observer gave more details under the heading: ‘How they spend their days inside the prison.’ Extracts: ‘One relative of the imprisoned tycoon Jeetu Patel said that the boss didn’t believe what was happening and felt that he had been betrayed by his allies in the government. But he has now surrendered his fate to the Almighty God….. According to a week-long survey conducted by The Guardian on Sunday, despite being locked behind bars, some suspects were still managing their businesses from the prison…. The prison’s parking yard is full of posh cars as relatives and friends gathers here to visit the suspects.

Inside prison however, some of them are enjoying a relatively good lifestyle compared to their fellow inmates, one of the aspects of which is the allowance for accessing food from outside, while ordinary inmates scramble for the little, unpalatable official variety. Some suspects are confined to sickbays to protect them from attacks by ordinary inmates…. in future all visitors must secure special permission from the Prisons Department Headquarters as the suspects hold financial power which could easily corrupt low paid staff.

Overheard during the court case a joke to the effect that: “The police have taken theirs, it is now the turn of the judiciary to take theirs.”

Need for stability

The Managing Director of the Prevention and Combating of Corruption Bureau (PCCB), Edward Hosea said that prosecuting all the corrupt elements in the country might lead to chaos. He told a university seminar: “To take them all to task is to paralyse the whole country. We have got to have some stability. Fighting grand corruption needs political will and the right strategy. These people have financial clout which they can use to disorient us.”

Prime Minister Mizengo Pinda told parliament that moves against corruption needed to be carefully handled because the persons involved were powerful – Mtanzania.