Tough questions TZ faces on grand graft

Mr Job Ndugai (right), then Deputy Speaker, receives the final report on the Tegeta escrow account scandal from Public Accounts Committee chairman Zitto Kabwe (middle) and his deputy Deo Filikunjombe in Dodoma. PHOTO|FILE

What you need to know:

  • In 2006, it was revealed that Sh133 billion was looted from the Bank of Tanzania’s (BoT’s) External Payment Arrears (EPA) account during the 2004/05 fiscal year, prompting the Controller and Auditor General to call for a special audit. The audit conducted by Ernst & Young revealed that the funds had been dubiously paid out to 22 local companies.

Dar es Salaam. Over the last 15 years, billions of shillings of taxpayers’ money have been misappropriated in mega corruption scandals that have haunted the country since the mid-2000s.

In 2006, it was revealed that Sh133 billion was looted from the Bank of Tanzania’s (BoT’s) External Payment Arrears (EPA) account during the 2004/05 fiscal year, prompting the Controller and Auditor General to call for a special audit. The audit conducted by Ernst & Young revealed that the funds had been dubiously paid out to 22 local companies.

It became the first major corruption scandal to engulf the Jakaya Kikwete administration after only a year in office.

With the EPA scandal yet to be dealt with, it was uncovered that the cost of constructing the BoT twin towers was inflated by Sh222 billion.

President Kikwete sacked BoT governor Daud Ballali in 2007 and replaced him with Prof Benno Ndulu while opposition MPs pressed the government in Parliament. Civil society organisations and donors piled on the pressure, insisting that the suspects should be brought to court. President Kikwete assured them of immunity if they returned the funds.

By November 2008, cases involving over 20 EPA scandal suspects were filed at the Kisutu Resident Magistrate Court. A few months later, the Richmond scandal hit the Kikwete government. The nation was facing a serious power shortage in 2006 due to a drought and investors were invited to generate 100MW of electricity.

 A US-based firm, Richmond, won the tender only to be discovered that the whole process had been marred by irregularities costing the country Sh172 billion.

A Parliamentary Special Committee chaired by Dr Harrison Mwakyembe came up with findings that Richmond was actually a briefcase company. Heads rolled.

Prime Minister Edward Lowassa resigned after he was implicated in the scandal.  Two cabinet ministers — Dr Ibrahim Msabaha and Mr Nazir Karamagi — also resigned. The cabinet was dissolved.

 President Kikwete picked Mizengo Pinda as prime minister.

The recent ruling by the International Centre for Settlement of Investment Disputes (ICSID) that awarded Standard Chartered Bank-Hong Kong victory has revived the debate on the country’s readiness to end corruption.

 ICSID ordered the Tanzania Electricity Supply Company (Tanesco) to pay $148 million (about 320 million) to the bank in capacity charges.

This means Sh306 billion which was deposited in the Tegeta escrow account at BoT and irregularly siphoned off and deposited to various bank accounts in two banks was supposed to settle these payments.

 Some people are suggesting that Tanesco challenges the ruling.

One of them is Prof Haji Semboja of the University of Dar es Salaam, who suggests that Tanesco should appeal. On the contrary Kigoma Urban MP Zitto Kabwe (ACT-Wazalendo) said there is no room for the government to appeal, warning that any delay to honour the award would unnecessarily complicate issues.

He said there are only three grounds for an application to reverse the ICSID ruling as it holds a similar status to the highest court in the country.

According to him, one can challenge the ruling on the grounds of wrong composition of the tribunal. “The ruling can also be challenged if it is proven that the tribunal acted outside its boundaries, something which Tanesco could not do as it participated in the entire process without raising any concern.”

According to him, Tanesco can also challenge the award only if it can prove that the tribunal was bribed “But this amounts to accusing its representatives in the tribunal, that they were corrupt” he said.

He proposed that the government should make the owner of Pan African Power (PAP), Mr Habinder Seth, pay the award based on the agreement reached when his company was paid the money from the Tegeta escrow account in 2014.