KEY “ESCROW” SUSPECTS ARRESTED

Harbinder Singh Sethi and James Rugemalira kneel outside the courtroom

Two key suspects in the alleged corruption case around power generation contracts – popularly known as the “Escrow” case – have been arrested and charged in Dar es Salaam.

Harbinder Singh Sethi of Pan Africa Power Solutions Tanzania (PAP) and James Rugemalira of VIP Engineering and Marketing jointly face six charges of economic sabotage, forgery, impersonation, running a criminal syndicate, obtaining money by false pretence and causing loss of money to the government. This is the first time that the two, who were at the centre of one of the most high-profile scandals in Tanzania’s recent history, have appeared in court, almost three years after Parliament recommended their prosecution.

Their arrest is seen by many as a strong move by the government to bring to justice suspects implicated in mega scandals. It will also likely boost President John Magufuli’s scorecard on his pledge to combat corruption from the top. Donors and others have previously criticised what they perceived as government inaction on the case, including delaying some aid disbursements.

Mr Sethi and Mr Rugemalira were brought to the court on June 19th, under tight security. Mr Sethi knelt down and Mr Rugemalira squatted before they were led to the dock. They face economic sabotage charges relating to causing the government a loss of over USD $22m and TSh 309m. The suspects were denied bail.

Government prosecutors told the court that Mr Rugemalira, who owned a 30% stake in IPTL, and Sethi, the executive chairman of PAP, colluded with government officials in running an illegal syndicate with an intention of profiteering from their collusion. The prosecution accused Mr Sethi of forging a company registration certificate in October 2011 and lying that he was a Tanzanian resident living in Masaki area while knowing it was not true. Both the accused were said to have illegally withdrawn large sums of money from the escrow bank account.

Mr Sethi, who mostly lives in South Africa, was reportedly arrested at Julius Nyerere International Airport as he and his wife were about to fly out.

Mr Sethi and Mr Rugemalira were named in 2014 in Parliament as having overseen a plan which saw more than TSh 300bn transferred from an Escrow account held jointly by IPTL and the Tanzania Electric Supply Company (Tanesco) at the Bank of Tanzania (BoT). According to the investigations of the Tanzanian media, followed up by the National Audit Office and the Public Accounts Committee of Parliament, much of the money was shared around among a long list of high level politicians, government officials, judges and religious leaders, among others. The scandal led to the resignation of the then Attorney General, Fredrick Werema, and Energy and Minerals minister Sospeter Muhongo, while President Jakaya Kikwete fired the then Lands, Housing and Human Settlements Development minister, Prof Anna Tibaijuka. Several other senior government officials in various ministries are facing charges over their role in facilitating the matter or receiving money from the escrow proceeds.

“For a long time now, people have been curious to know the progress of our investigation on the Tegeta escrow and IPTL scandals,” said Valentino Mlowola, Director General of the Prevention and Combatting of Corruption Bureau (PCCB). “I can announce today that the prime suspects … have been arrested and will be charged with economic sabotage and other related offences.”

“I want to sincerely thank the government for charging the two businessmen over the escrow scandal as recommended by Parliament,” said Mr Zitto Kabwe, the ACT-Wazalendo party leader and Kigoma Urban MP. Mr Kabwe chaired the Public Accounts Committee that investigated the case.

Following the arrests, one of those accused of receiving a portion of the funds, William Ngeleja, the former Minister of Energy and Minerals and the current MP for Segerea (CCM), said he would return to the government the TSh 40.4m he had received from Rugemalira. Ngeleja said he had accepted the money as a “donation” to support constituency development activities and had not at the time realised the money was connected with a scandal.

PCCB public relations officer Musa Misalaba said the bureau has all the details of how the IPTL account funds were disbursed, and will use all its tools of investigation to determine the extent of impropriety, if any. He said the investigations are covering all beneficiaries and others implicated in the scandal, irrespective of whether they are politicians, public servants, religious leaders, or similar, but he declined to disclose the names of the beneficiaries.

Those widely named as having received funds from Rugemalira include Prof Tibaijuka, and Andrew Chenge, former Attorney General and current MP for Bariadi West, who are both reported to have received TSh 1.6bn. Others said to have received smaller amounts include judges, religious leaders, and employees and board members of various public institutions including Tanesco, the tax authority (TRA) and the Tanzania Investment Centre (TIC).
(The Citizen, The Guardian, Daily News, Mwananchi)

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