CORRUPTION – CRUSADE CONTINUES

New developments in Tanzania’s remarkable exposure of corruption and the battle against it have continued to stand head and shoulders above other news from Tanzania during the last few months.

The government has promised to continue investigating allegations of fraud and other forms of crime involving huge contracts. Prime Minister Mizengo Pinda said the focus would be on such contracts because they were the ones where poor performance and foul play usually resulted in mismanagement or misappropriation of massive amounts of public funds.

754 allegations

The Prime Minster also revealed that the relevant government agencies had received a total of 754 corruption-related allegations by March this year. He added that plans for the incoming financial year included the establishment of seven Prevention and Combating of Corruption Bureau (PCCB) offices around the country.

Also lined up for implementation during the year would be a review of all policies and laws governing the operations of the mining sector “to make it reap more revenues for the country’s economic prosperity.” The PM said that the government was also contemplating the enactment of legislation to govern the activities of and to add value to the country’s minerals and gemstones. More land would be allocated to small scale miners to help them access capital more easily.

New directive and new investigations

According to Rai, ‘bigwigs’ seem to be losing sleep since a new directive by President Kikwete demanding that the local and foreign accounts of people in the public and private sectors be investigated. The aim was to search for unaccounted money, mostly stashed in offshore banks. The Immigration desk at the Dar es Salaam airport had reported that at least five suspects had left the country – one to the USA, two to Switzerland and two to London in transit to elsewhere in Europe. Managing Director of the PCCB Dr. Edward Hosea said: “They are just burying their heads in the sand. It won’t help to transfer the funds since we can trace their movements.” He said ten major investigations were under way.

MP’s not happy

The opposition CHADEMA party and, in particular, its Deputy Chairman Dr Wilbroad Slaa and also many MP’s from the ruling CCM party have continued to demand detailed clarification over all the allegations. They have made it clear that they want urgent action to be taken against all those implicated in the various scandals.

Slaa wondered why the Bank of Tanzania/EPA audit report remained a secret six months after it had landed in President Kikwete’s office. He also demanded the immediate removal of the Permanent Secretary in the Treasury for his alleged involvement in the scam. He called for exhaustive investigations into various gold mining and finance companies which were linked to big corruption scandals and named many other companies which were alleged to be involved in corruption.

ONGOING CORRUPTION CASES

The latest news on the various allegations of corruption is as follows: (for background see previous articles issue 90 and issue 89 – Editor).

The RADAR Saga

Former Minister for Infrastructure Development Andrew Chenge, who was forced to resign over corruption allegations linked to the £28million purchase by the government of a military air traffic control system in 2002 was said by the Serious Fraud Office in the UK to have deposited $1 million in his account in Jersey. The case is under investigation also by the Prevention and Combating of Corruption Bureau (PCCB). Chenge has not disputed the money in his offshore bank account, but has strongly denied suggestions that he received corrupt payments from Britain’s BAE Systems which sold the radar system to Tanzania. He was quoted as saying he was only involved in minor aspects of the radar deal, which was promoted by other ministries and approved by the cabinet. He said that the spate of allegations directed at him and his resignation were ‘political accidents’ and that the investigation would prove his enemies wrong.

Visiting his Bariadi (Mwanza Region) constituency he said that he would not quit his parliamentary seat as he was still a trustworthy representative of the people. Welcoming Chenge, the CCM Regional Secretary congratulated him for resigning to allow investigations to proceed. Arriving in Bariadi in a 22-car car cavalcade, Chenge received a warm welcome from the people and it was reported that a cow had been slaughtered in each village through which the motorcade passed.

In February, former Prime Minister Edward Lowassa had also been given a heroic welcome in his Monduli constituency soon after resigning following allegations of his involvement in another financial scandal.

CCM Secretary General Yusuf Makamba said there was nothing wrong in CCM throwing big welcoming parties as both MP’s were still in Parliament and their voters still counted on them. He said the two ministers were innocent until proven guilty. However, many other CCM MP’s said that big receptions accorded to leaders accused of corruption were typical examples of how some politicians could take advantage of poor voters – Mwananchi.

The Bank of Tanzania (BoT) Scandal

Drama was piled on drama when it was revealed that the apparent mastermind in this scandal, former Central Bank Governor Daudi Balali, who was expected to be a vital source of information in the enquiry, had died in America on May 16. It is believed that he had been fighting leukaemia. He was said to have wanted to be buried in Washington ‘as his name was being dragged in the mud back home despite his having served the country diligently for a long time’.

Later, Finance and Economic Affairs Minister Mustafa Mkulo surprised parliament when he announced that the TShs 133 billion believed to have been paid to 22 different companies in 2005 and 2006, having been embezzled from the BoT’s External Payments Arrears (EPA) account, was not government property. The money belonged to private firms and the central bank was just an agency holding it in trust. The private firms had used the National Bank of Commerce (NBC) to pay external debts in respect of imported goods. The NBC was then the only bank commissioned to deal with such matters. The country then had very limited foreign currency reserves and hence the accumulated debt. The minister explained that several amendments had been made to the procedures followed in effecting the payments when the NBC was privatised in the 1990s, with the EPA account being moved to the central bank.

The Finance Minister appealed for patience from MP’s and the public, reminding the House that the team appointed by President Kikwete to probe the controversy was yet to submit its findings. During the budget debate in parliament MP’s expressed impatience at the continued delay.

The presidential team investigating the allegations is chaired by Attorney General Johnson Mwanyika, with Inspector General of Police Said Mwema and PCCB Director General Edward Hoseah as members. It had been given six months – until June 9 this year – to complete the assignment. Its report was expected very shortly. At one stage, the government announced that it had recovered TShs 60bn out of the total amount fraudulently paid out but this has not been confirmed.

The Richmond saga

As explained in earlier issues of TA, the American Richmond Development Company was awarded a contract on June 23, 2006 to provide 100MW of emergency power as Tanzanian electricity supplies had been affected by low rainfall and low water levels at the reservoirs that supplied the country’s main hydro-electric schemes.

According to the Public Procurement Regulatory Authority (PPRA) there was remarkable political interference by ‘higher authorities’ in government in the awarding of the tender to Richmond. Despite receiving $152,000 a day under the terms of the contract, the company had failed to provide electricity before the water levels in the dams had risen and power supplies had returned to normal. Richmond’s generating equipment did not turn up on time and the state power company TANESCO recommended that the company’s services were no longer needed. However, the then Prime Minister advised the government to extend the deal, despite the fact that Richmond had sold its contract to another firm, Dowans Holdings, in 2007.

On November 11th 2007, the Speaker of the National Assembly formed a parliamentary select committee under the chairmanship of Dr. Harrison Mwakyembe MP, after members of parliament demanded investigation into the contract.

The committee presented its report to parliament in February this year showing that the company had no experience, nor expertise, and was financially unable to carry out the task; it had no share records or proper registration in the US or Tanzania and the whole bidding process had been marred by corruption and gross irregularities.

The committee advised the government to take action against all the people involved in the contract and to terminate the contract with Dowans.
Following these recommendations, then Prime Minister Edward Lowassa, former Minister for Minerals and Energy Nazir Karamagi and former Minister for East African Cooperation Ibrahim Msabaha, who were all alleged to have been implicated in the scandal, resigned.

Decisive action has now been taken by the government. On July 6 TANESCO Managing Director Dr Idris Rashid announced that the power company had decommissioned the services of Dowans Tanzania Limited with effect from August 1st 2008. He said that he had taken legal advice and had been told that the methodology applied in entering the contract with Richmond had violated the Public Procurement Act of 2004. Due to the violation, the contract was null and void and thus lacked legal mandate. Even if the agreement had been valid, the transfer of contract from Richmond to Dowans Holdings Limited and eventually to Dowans Tanzania Limited did not abide by the terms of the contract and was therefore illegal.

Dr Rashid said the legal consultants had traced the origins of the firm all the way to Costa Rica, where it was registered as having a capital of only $100 and no references.
On whether the impact of Dowans withdrawal from power generation would be felt by TANESCO, Dr Rashid said: “Their absence won’t be felt. We have already established another 100MW power plant of our own at Ubungo, in Dar es Salaam” – Guardian.

Meanwhile, MP’s became more restive at the lack of further action by the government against those alleged to have been involved. Dr. Mwakyembe warned during the budget debate in parliament that continued attempts by his fellow CCM legislators to absolve people implicated in the Richmond scandal put the status of the National Assembly at serious risk. He said the attempts were ill-timed and therefore improper, uncalled for and a disgrace to the House.

It was reported however that the government was contemplating legal action against Dowans Tanzania Ltd following the termination of its power purchase agreement with the company.

Energy and Minerals Minister William Ngeleja made the revelation in an exclusive interview with the Guardian in which he said he said his office was consulting other members of the government over the matter, adding that the decision on whether or not to sue would be made shortly. “We haven’t decided yet whether to take legal measures against Dowans because their power generating machines are still here (at the site).” he said.

Expressing optimism that everything would be sorted out, he added that the government and its various advisory and implementation agencies needed time to work on the matter because there were lots of delicate issues to look at.

Former President Benjamin Mkapa

Former President Mkapa is under continuing pressure from MP’s and the media about allegations of possible corruption linked to his purchase, with the then Minister of Energy and Minerals Minister Daniel Yona, of the Kiwira Coal Mines in Mbeya region at a price below what they were worth. It is believed that the mines were constructed by the Chinese at a cost of $4 billion, yet Mkapa and Yona were said to have purchased them for TShs 700 million under cover of the then government’s indigenisation policy.

In May KuliKoni reported that some 1,600 workers at Kiwira were complaining that since the mines were taken over by the two leaders in 2005 their working conditions had become worse. There was a lack of fresh air underground, some workers had lost their lives and the owners had not visited the site since they took over.

However, doubts remain on whether former presidents are immune from trial on charges related to offences that they might have committed while in office, but which are outside the scope of presidential duties. Two ministers and the House Speaker, when asked about this in parliament, said they were not in a position to give a clear answer. According to a university law lecturer the constitution protects the President when he executes official duties at State House, but the law allows a president to be taken to task where he is doing private business while violating the laws of the land.

Prime Minister Mizengo Pinda told Parliament that the government had begun working on allegations of abuse of office and other excesses levelled against some government leaders and that former President Mkapa would be among those to be scrutinized.

He said the government wanted to know the truth of the matter and was therefore working hard to establish whether the allegations were criminal or ethical before taking appropriate action. He said that allegations hinging on ethics could hardly be solved by the court system and would thus most likely be treated politically, but also added that substantive allegations of a criminal nature would be dealt with by courts of law -Guardian.

Mkapa responds

The former President, speaking in his constituency Masasi, denied the allegations made against him saying they were spun by those he refused to favour when he was in power. They should be ignored because they had personal axes to grind. The crowd cheered him when he said he was not as wealthy as people think. “I live on my pension just like my predecessor Ali Hassan Mwinyi. It is all lies….lies….lies.” He criticised the country’s media for repeatedly reporting the words uttered by politicians, instead of putting an emphasis on analysis of government policies and decisions.

Mkapa has written later an article in a book about the challenges faced by African leaders, authored by former US Ambassador to Tanzania, Rev Charles Stith. He wrote: ‘Free media institutions are capable of ensuring that the government of the day acts responsibly and democratically.’ He challenged the media to work more effectively, contending that at present many newspapers just look at the profit side of business instead of striving to report on issues that educate the masses – Habari Leo.

The CCM MP for Same East and other CCM MP’s said that Mkapa should answer the charges. “People don’t want to know about his pension but his assets and how he obtained them. We want him to tell us how he came to possess Kiwira coal mine. It is a massive project that should not be in the hands of public leaders, as this was against leadership ethics.” The Chairman of the Democratic Party Rev. Christopher Mtikila, who is frequently involved in litigation, said he intended to take the former president to court to answer charges. He said that contrary that, to public misconceptions, the Constitution did not protect him from abusing the office – KuliKoni.

1 Comment »

  1. Tanzanian Affairs » SUSPECTS FINALLY ARRESTED said,

    January 6, 2009 at 7:31 pm

    […] 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 […]

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