UK faces $8m claim in Tanzania bribery scandal

Dar es Salaam. The Sh12 billion ($6 million) foreign loan scandal is back in the limelight with one of Tanzanians implicated in the matter now demanding that the UK pay the Tanzanian government an extra $8.4 million (about Sh19.3 billion) in compensation.

Mr Sioi Graham Solomon, who was incarcerated for four years awaiting trial has gone to court challenging the rightful ownership of the $8.4 million that was declared profit by the UK’s Standard Bank Plc (now ICBC Standard Bank Plc) that transacted the $600 million foreign loan deal with the government of Tanzania.

Standard Bank pleaded guilty to fraudulently obtaining a $600 million deal to help Tanzanian government raise fund to finance key infrastructure projects for the 2011/12 financial year and was fined over failure to prevent bribery.

The bank was fined $25.2 million and required to pay a further $7 million to the government of Tanzania that had engaged the UK bank for an infrastructural bond through its local subsidiary, Stanbic Bank in Dar es Salaam.

The deal in 2013 would lead to a high-profile bribery scandal in which government officials, bank officials and a private company obtained $12 million (about Sh27.6 billion) kickback as facilitation fee for the deal.

But now Mr Sioi has filed a constitution petition in the High Court of Tanzania challenging the decision of the UK government to pocket $8.4 million (about Sh19.3 billion) that Standard Bank declared as profit from loan deal.

Mr Sioi has asked the court to declare that the $8.4 million is collectively owned by the people of the United Republic of Tanzania and should be paid to the government of Tanzania as the sole beneficiary.

He argues that Tanzania was the injured party after Standard Bank allegedly admitted that the deal with Tanzanian government was obtained fraudulently and that it was unfair that the UK government that was not party to the deal received the profits through its Consolidated Fund.

Why Sioi?

Mr Sioi who had worked for Stanbic Bank as Head of Legal and Company Secretary was among three Tanzanians arrested and charged with unbailable money laundering charges arising from the transaction.

Others were the former Tanzania Revenue Authority (TRA) Commissioner General, Harry Kitilya and former Stanbic Bank Head of Corporate and Investment Banking, and one time Miss Tanzania, Shose Sinare.

According to investigations led by the Prevention and Combating of Corruption Bureau (PCCB) over the $6 million payment made by Stanbic Tanzania to a local partner Enterprise Growth Market Advisors (EGMA) intended to induce Tanzanian public officials to show favour to Stanbic Bank Tanzania and Standard Bank’s proposal for the $600 million deal on behalf of the government.

The three were incarcerated for four years at Segerea Prison in Dar es Salaam before gaining their freedom through plea bargaining that saw the Tanzanian government netting Sh1.5 billion.

The case against them never took off to a full hearing for reasons of incomplete investigations.

On gaining their freedom, other than Sioi’s case that seems not to focus on personal gain, Ms Sinare has sued her former employer Stanbic Bank for $30 million (Sh69 billion) compensation allegedly for ruining her banking carrier.

Standard Bank admitted to failing to prevent Ms Sinare and Bashir Awale from committing bribery with the intention of obtaining or retaining the $600 million deal.

Ms Sinare feel deeply offended by the bank’s self-reporting to the UK’s Serious Fraud Office (SFO). She has sought a declaration that the information passed on to the SFO by Standard Bank was full of misrepresentation. The case is going on.

Basis of claim

Mr Sioi has based his claims on Article 27(1) and (2) of the Constitution of the United Republic of Tanzania that entrusts him the duty to safeguard public property combat all forms of waste and squander of national resources.

He thus argues that all funds collected by the government are property collectively owned by Tanzanians.

He argues that the $600 million agreement became voidable after Standard Bank own admission to SFO through Deferred Prosecution Agreement of March, 2013 to have procured the deal fraudulently.

“The 48.4 million declared profit by Standard Bank made out of the Agreement, is part of the property collectively owned by the people of the United Republic of Tanzania and collected by the government through taxation,” argues the petitioner.

One among the remedies resulting from a voidable contract as is the with the agreement is for the party profiting from illegal or wrongful act to give up any profits he or she made as a result of his or her illegal conduct to the injured party.

Mr Sioi now wants the court to issue an order directing ICBC Standard Bank Plc (formerly Standard Bank Plc) and Stanbic Bank Tanzania Limited to pay the Tanzanian government the $8.4 million being the declared profit made out of the foreign loan agreement.

He further argues that unless the $8.4 million is paid in full, the court should order the government, through the minister of Finance and Planning and the Attorney General not to engage in any other future business with the two banks involving public funds.

Apart from ICBC Standard Bank, Stanbic Bank Tanzania Limited, other respondents to the petition are the minister of Finance and Planning, the Attorney General of Tanzania, the Attorney General of UK, Chief Secretary to Her Majesty’s Treasury (HM Treasury) and the director of SFO.