CORRUPTION – RECENT DEVELOPMENTS

Issue Number 89 of Tanzanian Affairs described in some detail the major cases of alleged corruption which had been revealed at that time (see here). The latest situation can be summarized as follows:

THE BANK OF TANZANIA SCANDAL

The report of the Presidential Task Force on the biggest scam – in the External Payments Arrears (EPA) section of the Bank of Tanzania (BoT), involving the loss of some $130 million – is being eagerly awaited but had not been published as this issue of TA went to press. Rumours of possible involvement of big personalities were circulating. The Bank’s sacked Governor Dr Daudi Balali, was reported to be in America. Police have already claimed to have recovered some $50 million of the estimated losses and to have identified some of the guilty parties.


In a statement in Parliament earlier, Finance Minister (before the recent changes) Mrs Zakia Meghji, said that an extract of the Ernst & Young audit report on the Bank’s EPA had revealed that those who had received dubious payments had used forged documents. The revela- tions had prompted friction between the BoT and the foreign auditing firm whose duties were suspended by the management in retaliation for telling the truth. “The government intervened and instructed the office of the Controller and Auditor General to make sure that the accounts were audited comprehensively,” the minister said, adding that it took five months between January and May 2007 to identify a qualified foreign audit company, Ernst & Young, to carry out the assignment.

The minister said the accumulation of debts dated back more than 27 years and showed that TShs 133 million had been wrongly paid to 22 local companies. She named the companies. The minister said that a total of TShs 42 million had been paid to nine companies which lacked any supporting documents to authenticate the payments, making it difficult for the auditors to track down the mode of payment. Two companies were not registered with the Registrar of Companies, she said.

However, in an interview, the Chairman of the Presidential Task Force, Attorney General Johnson Mwanyika, told Mwananchi that he was not aware of any culpability of the former Governor Daudi Balali, as he had no evidence to that effect. He was asked by Mwananchi if Balali would be extradited to answer charges. Mwanyika said he couldn’t talk about extradition as he didn’t know why Bilali had left the country in the first place, or what he was doing overseas.

Later, a mob was reported to have raided farms belonging to Bilali on the outskirts of Dar es Salaam. The invaders listed their names and started carving out plots, claiming that, after all, the land was bought with funds looted from the BoT – Nipashe.
British High Commissioner Philip Parham said he was dismayed to learn of such mismanagement of the BoT. He said disciplinary action ought to be taken against those responsible for improper payments and those who failed to take steps when they first learnt of the swindle. “All those who benefited from the scam must be held accountable. This is vital for the confidence not only of development partners, but also of both Tanzanians and foreign investors,” Parham said.

Some parts of the media have speculated that if the former Bank Governor were to be brought back to Tanzania he might ‘spill the beans’. They suspect that he knows more than has appeared in the Ernst & Young audit. They fear that, if pushed into a corner, he might open a Pandora’s Box and that this might lead to wider repercussions and even social upheaval. Tanzania Daima alleged that Balali was using his secrets as a trump card to protect himself against any legal measures that might be taken against him.
Meanwhile family members of the former Governor have complained about the way he is being accused and smeared by the media. Talking to Majira at his birthplace in Mufindi district, Pascal Balali (48) said he knew his elder brother as a simple man of principle and ethics. He insisted that Balali had gone out of the country for medical treatment and not to escape from anything. This was after he suffered from a mild stroke on his arm. He said despite his brother being in a top financial position he never amassed wealth. “He never used his position to push us upwards or to do us any favours,” Pascal emphasised, adding that those who accused him would do better to go to the village and see how the family house was dilapidated. Regarding his whereabouts, Pascal said, following all the media hype, his family has not been able to communicate with him.

THE TWIN TOWERS
The main office of the BoT in Mirambo Street in Dar es Salaam has been extended by erecting twin towers – at an original project cost of $80 million. But the cost has increased and now stands at $340 million. One of the first steps of the new Governor of the BoT has been to float tenders for a specialised consulting firm to undertake a technical and valuefor- money audit on the project in view of concerns being expressed about possible corruption. The construction was undertaken by a South African firm after an earlier contractor from Sweden was disqualified –The East African.

RADAR SAGA –ANOTHER MINISTER GOES

Accusations that the sale by BAE Systems of a Traffic Control System to Tanzania had involved illegal payments to certain individuals, are now being dealt with in the Tanzanian courts. Meanwhile, in Britain, the government was shocked to be told that its action in stopping further investigation by the Serious Fraud Office (SFO) in to the much bigger fraud case (the total cost of the contract was £43 billion) against BAE in Saudi Arabia, following Saudi objections, had been an unlawful act. The SFO decided to appeal.

However, the SFO is continuing investigations into the Tanzanian case and similar cases involving BAE in deals in South Africa, Romania and the Czech Republic.

The person who was alleged to have been involved as ‘the middle man,’ in the Tanzanian case – the British citizen Sailesh Vithlani – appears to have disappeared and has not appeared in court in Dar.

In mid-April, the London Guardian alleged that the Tanzanian Minister for Infrastructure Development Andrew Chenge, had deposited about $1 million in a Bank in Jersey. It was further alleged that the money had come as a kick back from the BAE scandal. Besieged by the media, Chenge then incurred the wrath of many MP’s when he described the money as ‘vijisenti’ (peanuts) Later he retracted his remark. But, as soon as President Kikwete arrived home from his foreign travels, Chenge presented his resignation so as ‘to allow investigations to proceed.’ Then several MP’s called for legal action against him so that he would not get away with merely a resignation – Majira.

Rai and Mwana Halisi then published articles quoting ‘sources’ saying that President Kikwete had ordered a probe into the foreign accounts of many prominent Tanzanians to ascertain how much they may have stashed away, but this report is not confirmed. The article went on to say that Chenge didn’t volunteer to jump but President Kikwete pushed him. This report again is without confirmation. Many more heads were expected to roll the papers said. They went on to speculate to the effect that the $1 million in the Jersey account was just the tip of an iceberg and listed a number of other possible related transactions.

On April 28 Minister of State in the President’s Office (Good Governance) Sophia Simba was quoted in Kuli Koni as saying “Andrew Chenge is under investigation by national and international institutions, so as to establish if he has a case to answer.” She said that the government investigation was underway and that if Chenge had a case to answer he would appear before a court of law. Government had taken note of the accusations and that is why he had resigned. “Let’s wait for the report” The SFO in Britain is also understood to be investigating Chenge. Meanwhile, accordinmg to the same paper, Chenge is also connected to an account in Dar es Salaam in the name of Tangold Ltd (which apparently owns Buhemba Gold Mines in Mara region) with $ 12.9 million.

4 Comments »

  1. Tanzanian Affairs » CORRUPTION - CRUSADE CONTINUES said,

    September 1, 2008 at 1:03 am

    […] news on the various allegations of corruption is as follows: (for background see previous articles issue 90 and issue 89 – […]

  2. Olivetree said,

    December 20, 2008 at 7:18 pm

    IT’S NOT JUST BOT !!!!!!!!!!CORRUPTION IS PERVASIVE IN TANZANIA !

    A GLIMPSE AT THE ‘SILVERDALE CASE’ DEMONSTRATES THE DEEP SEATED NATURE OF CORRUPTION IN TANZANIA AND THE GOVERNMENTS REFUSAL TO ADDRESS IT.

    ‘SILVERDALE CASE’

    Tanzania’s most senior law officer Chief Justice Augustino Ramdhani, told the British Government this week that he will not Review the fourteen civil and criminal cases brought against British Investors Sarah Hermitage and Stewart Middleton by Benjamin and Millie Mengi between 2005 and 2008. This was despite stating in January, that he would do so. The Chief Justice has given no reason for changing his mind.

    Benjamin and Millie Mengi initiated the litigation against the investors in what is now widely known as the ‘Silverdale Case’. In May 2004 Benjamin and Millie Mengi, through their company Fiona Tanzania Ltd sold the lease to Silverdale & Mbono Farms (Hai District) to the investors company, Silverdale Tanzania Ltd and one year later, after negotiating to sell the lease a second time to British Investor Konrad Legg (Tudeley Estates) demanded the lease back. The litigation followed the investor’s refusal to do so.

    Former British High Commissioner to Tanzania, Andrew Pocock describes the ‘Silverdale Case’ as a continuing outrage and in February 2008, the British Foreign and Commonwealth office in London, issued a statement to the BBC, that it had ‘..credible evidence of harassment and intimidation against the investors’. Despite several assurances to the British government from President Kikwete, that the ‘Silverdale Case’ would be fairly resolved, it remains very much unresolved and, set to undermine Tanzania’s commitment to the rule of law for the foreseeable future.

    A cursory glance at the litigation quickly prompts the question ‘why doesn’t the Chief Justice review them as a matter of urgency’ given, they show overt and serious abuses of law and due process. Most, if not all of the plaints issued by Mengi contain no right to sue and others show legal defects so serious, that any failure to address them must question the objectively of the Tanzanian government in the ‘Silverdale Case’. The abuses of law are unsophisticated and obvious. An example of the overt and simplistic nature of the abuse was that in early 2006, Mengi sued the investors for statements printed by the Daily News. The investors did not print, publish or write the article (the Daily News did so) and therefore could not be sued for Libel. Despite representations to the Chief Justice and Public Corruption Bureau (who agreed the proceedings were abusive) the Moshi Magistrates court allowed and heard the plaint and gave judgement to Mengi for TSH 90,000,000 ($90,000). Following this and despite further representations from the British Government, the courts ordered seizure of the investors property in October 2007 on the basis of the court ruling. None of the fourteen cases issued by Mengi against the investor’s shows any lesser or more complicated degree of legal abuse.

    Tanzania’s Minister of Lands John Chillingati refuses to register the investors lease to the farms and the Minister of Home Affairs Joseph James Mungai refuses to recognise the legal assignment of the lease to the investors or, any of the their company documents properly registered at Companies House in Dar es Salaam. Whilst the Chief Justice seems reluctant to talk to his law officers in order to rectify their overt abuses of office, he does offer to sit and talk with the investors and mediate the situation between themselves and Mengi.

    This suggestion is surprising and given the clarity of the legal abuses to some, abhorrent. Commenting on the offer, British investor Sarah Hermitage who is admitted to the Supreme Court of England & Wales states, ‘There is nothing complicated abut the ‘Silverdale Case’ but it is important to be clear that it is not a commercial dispute. The case involves abuse of legal process and the failure of the Tanzanian government to address that abuse for whatever reason. The abuse is simple and clear to see vis-à-vis the laws of Tanzania. There is no legal or constitutional provision for mediation of this kind. We ask and have only ever asked for the proper application of the rule of Tanzanian law. Our conduct in Tanzania has been and remains exemplary. We purchased a lawful assignment of a lease, paid in full and refused to give it back when harassed, imprisoned and threatened by the police and courts. The suggestion that we now mediate the abuses is repugnant and insulting and objectively illegal. The Chief justice originally made this offer when we had fled Tanzania in fear of our lives and lost our entire investment. As much as the Tanzanian government wish to portray it as such, this is not a commercial dispute. It is and remains, a choice that the Tanzanian government have to make. A choice between the lawful interests of bona fide investors and the unlawful activities of certain State institutions. Mediation can never circumnavigate these fundamentals’.

    Asked how he sees his future in Tanzania British investor Stewart Middleton states, ‘One thing is for sure. The issue is not going away. If the Tanzanian government refuse to implement the domestic law of Tanzania then it will be forced to account to international law for its failure to protect our investment. This is only right and proper. If countries sign up to International Treaties, they must account to them for their conduct’.

    In January 2008, British Member of Parliament for Thanet North, called upon the British government to suspend all aid to Tanzania until the ‘Silverdale Case is fairly resolved. The investors state they are now meeting with lawyers in London with a view to take the case before the International Bilateral Investment Treaty arbitration panel.

    18th December 2008

    Linda Levy, Freelance Press

  3. Tanzanian Affairs » SUSPECTS FINALLY ARRESTED said,

    January 6, 2009 at 7:30 pm

    […] 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 […]

  4. Tanzanian Affairs » OTHER CORRUPTION CASES said,

    January 6, 2009 at 7:38 pm

    […] been taken by former Infrastructure Development Minister, Andrew Chenge (who later resigned) – see TA No 90 – were continuing in Jersey where $ 1 million was said to have been placed by the Minister. Ms […]

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