Court rules against Geita Gold Mine Shl2.5bn deal

What you need to know:

  • Reni International Company Limited sued the GGM in 2018 after it accused the mining company of allowing political interference from regional authorities that changed terms of the contract

Dar es Salaam. The High Court has declared that political interference frustrated and led to unlawful termination of a Sh2.5 billion contract for the supply and installation of street lights in Geita Township that the mining giant, Geita Gold Mine, had awarded to a local firm.

The court said GGM cannot escape liability for accepting alterations of the contract as directed by the office of the Geita Regional Commissioner.

Reni International Company Limited sued the GGM in 2018 for payment of Sh763.5 million after it accused the mining company of allowing political interference from regional authorities which changed terms of the contract

The contract was part of Corporate Social Responsibility Projects in Geita Township financed by GGM. Reni was to supply and install 606 street lights in 12 kilometers. However, days after the contract was signed and the firm paid suppliers for materials required for the work,the project faced frustrations that culminated in termination of the contract only after the company had installed the lights in 3 kilometres.

The political interference, according the company, led to changes of the terms of the contract by reducing the scope of the works, the number of street lights that were to be installed.

Reni further alleged that under the pressure from the Regional Commissioner and contrary to the agreement and the expert’s advice, GGM advertised a new tender for the same work without following termination procedure agreed in the contract.

The company was demanding Sh763.5 million from GGM in compensation and payment of $65,000 being an amount paid to suppliers of materials. GGM refuted the claims, saying the change of terms of the contract and mode of implementation were a result of negotiations between the two parties.

GGM also denied having entertained political interference and accused the company of installing defective street lights, which came to the attention of the regional authorities.

GGM insisted that the government, which was the beneficiary of the project and an interested party, had the obligation of making sure that the projects was implemented according to standards.

The plaintiff’s lawyer, the late Dr Masumbuko Lamwai, said when making final submissions that the testimony as well as documentary evidence tendered in court proved there was serious interference from the RC and the local authority.

In his recent decision Justice Butamo Philip said: “There is no doubt that there were interferences in the execution of the contract by the RC and local authorities which were done in the presence of the defendant (GGM).”

“It is the finding of this court that the contract was frustrated by the interferences by the RC and local authorities. The plaintiff was stopped from performing the contract as per the terms agreed upon in the contract,” said the judge.

The judge said that GGM cannot escape liability for frustrating the contract by allowing the RC and local authorities to interfere with the fundamental terms and conditions of the contract.

The court also agreed that the terms of the contract were altered to the extent that the plaintiff ended up being supervisor of other people who were given the works.

“The evidence adduced proves that there were meetings which were conducted at the RC’s office and the directives given after the meetings affected and changed the terms of the contract,” said the judge.

The judge awarded Reni Sh20 million in general damages and declined to grant a prayer for Sh763.5 million and $65,000 for lack of evidence.