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Tanzania | Sun, Jan 22nd, 2012
The Controller and Auditor General(CAG) has recommended that all officials who participated in the controversial Airbus A320-214 leasing be taken to court for forcing cash strapped Air Tanzania to sign a dubious deal with a Lebanese company about four years ago, The Guardian on Sunday has learnt.
The CAG's recommendation is also strongly supported by two parliamentary standing committees, namely the Parastatal Organisations Accounts Committee (POAC) and the Public Accounts Committee (PAC).
The move comes as ATCL management tabled two conflicting report about the actual debt accrued as a result of controversial and dubious leasing of Airbus A320-214.
While ATCL told the Public Organisations' Accounts Committee (POAC) that total debt resulting from the leasing of Airbus was $39 million (Tsh62.4m), the Public Accounts Committee (PAC) learned from the CAG that the accumulated debt on the same was Tsh322 billion($200 million).
The Guardian on Sunday had been informed that the leasing agreement was signed prior to approval of government guarantee, an act which is contrary to the law.
It has also emerged also that inconsistencies have been noticed over the debt resulting from the leasing agreement of the aircraft from Wallis Trading Inc. back in 2007.
POAC chairperson Kabwe Zitto told this newspaper that his committee had directed the government and the Clerk of the National Assembly to take appropriate actions.
"Our committee told the government not to pay the debt until the controversy is cleared and we have directed the Clerk of the National Assembly to appoint a team of lawyers that would review the controversial agreement and eventually advise the legislature on appropriate action to be taken," the Kigoma North MP (Chadema) noted.
He affirmed that the committee's ruling was delivered at a meeting on Thursday when the ATCL management led by Chief Executive Officer Paul Chizi, the Deputy Permanent Secretary for the Ministry of Transport and the Treasury Registrar were summoned.
"We got our figure ($39 million) from the ATCL management but we are informed that PAC has a bigger figure compared to what we have. This is shocking and it is a massive fraud," the legislator underlined.
This paper has been reliably informed that in principle the committee agreed the government should take legal action against all officials involved in entering into the leasing agreement before a government guarantee was issued as recommended by CAG in the annual audit report for the 2009/10 financial year.
The two committees also want the government to take legal action against official(s) at the Treasury who issued the guarantee retrospectively after the leasing agreement was entered into, contrary to the law governing government loans, guarantees and grants.
The Government Loans, Guarantees and Grants Act, 1974 as amended in 2003 requires the approval guarantee prior to signing a particular agreement. The guarantee is issued by the minister responsible for Finance.
A government guarantee is an assurance to a lender by an agency of the government, or the main governing body itself, that a financial obligation will be honored, even if the borrower is unable to repay the debt. In many instances, a government guarantee allows the borrower to be approved for the loan.
The Guardian on Sunday has established further that whereas the agreement was entered into in October 2007, government guarantee was issued some months later.
Parliamentary standing committees ordered that the transferring process of the debt from the Ministry of Transport to the Treasury be put to hold and it (debt) remains in ATCL books until controversy surrounding the whole issue is resolved.
When contacted PAC chairperson, John Cheyo qualified the matter as serious,, saying it needs extra urgency in dealing with it, so the government should take immediate action to avoid huge waste of public finances.
Cheyo, legislator for Bariadi East, said he would not go into details of the matter as he would not like to contravene laws governing the workings of parliamentary committees by briefing the press before submitting the committee report to the House.
A few weeks ago Transport Minister Omari Nundu told this paper that his office had directed a detailed review of the controversial lease agreement for Airbus 320.
The position came upon learning that the said aircraft, leased to ATCL by Wallis for six years was sold in Zimbabwe at $16 million, less than 50 percent of the leasing bill totaling to $32.6 million accumulated by the country's flag carrier as per the aircraft releasing agreement signed on October 27, 2011.
Nundu said as a country they could not refuse to pay if the debt was clear and genuine, but they could not pay if not satisfied with all aspects on how the debt arose and the eventual selling of the aircraft.
The minister said: "The review is unavoidable even if such a review may lead the leaser (Wallis Trading) opting for a court action against the government."
The issue of staggering amount of taxpayers' money due to be paid by the government for leasing a plane that did not fly was broken by this paper on November 13, 2011.
Anatomy of the matter
ATCL leased aircraft A320-214 from Wallis Trading Inc. for a period of six years (72 months) but the plane remained in ATCL hands for 48 months, 41 of which it was grounded for major technical maintenance in France.
The shoddy agreement stipulated that the leasing charges would remain the same whether the plane was flying or grounded for any reason.
An aircraft expert who spoke to this paper in November 2010 but preferred to remain anonymous said it was inconceivable that the lease rate of $370,000 per month remained the same when the plane was operating and during maintenance, as non-operational lease charges would have gone down as to $30,000 a month. There would be no chargeable effects on the plane as it would not be in operation.
The Airbus leasing in October 2007 was in line with preparations for what was expected to be a divestiture of ATCL, which was to be partly sold to Chinese company Sonangol, which never signed a formal contractual agreement with the Government. But it had pledged to buy ATCL not less than five Airbus aircrafts by 2012 as part of the proposed privatization scheme.
In line with the then eagerly awaited ATCL take-over by Sonangol, ATCL management rushed to lease A320-214 from Wallis Trading, a company said to have a close working relationship with Sonangol, headed by influential Hong Kong businessman, Sam Pa.
The plane (A320) had been operated in Liberia where it was leased, before it was leased to a South American country, El Salvador.
By the time Tanzania entered into the lease agreement in October 2007 the aircraft was due to go for major technical maintenance, carried out every 12 years (known as ‘Check C' plus 12 years in airline industry). But that fact was only established after the agreement was hastily penned down, leading to the aircraft to be grounded in France for seven months.
On its return from technical maintenance in May 2008, the plane remained in the air for seven months until December 2008 when was re-grounded for maintenance and never flown ever since, until it was released by ATCL in October 2011. That was two years before expiration of the lease agreement but the leasing bill stands as if the plane fully operated throughout the agreed period of lease.
By Florian Kaijage, The Guardian
The Controller and Auditor General(CAG) has recommended that all officials who participated in the controversial Airbus A320-214 leasing be taken to court for forcing cash strapped Air Tanzania to sign a dubious deal with a Lebanese company about four years ago, The Guardian on Sunday has learnt.
The CAG's recommendation is also strongly supported by two parliamentary standing committees, namely the Parastatal Organisations Accounts Committee (POAC) and the Public Accounts Committee (PAC).
The move comes as ATCL management tabled two conflicting report about the actual debt accrued as a result of controversial and dubious leasing of Airbus A320-214.
While ATCL told the Public Organisations' Accounts Committee (POAC) that total debt resulting from the leasing of Airbus was $39 million (Tsh62.4m), the Public Accounts Committee (PAC) learned from the CAG that the accumulated debt on the same was Tsh322 billion($200 million).
The Guardian on Sunday had been informed that the leasing agreement was signed prior to approval of government guarantee, an act which is contrary to the law.
It has also emerged also that inconsistencies have been noticed over the debt resulting from the leasing agreement of the aircraft from Wallis Trading Inc. back in 2007.
POAC chairperson Kabwe Zitto told this newspaper that his committee had directed the government and the Clerk of the National Assembly to take appropriate actions.
"Our committee told the government not to pay the debt until the controversy is cleared and we have directed the Clerk of the National Assembly to appoint a team of lawyers that would review the controversial agreement and eventually advise the legislature on appropriate action to be taken," the Kigoma North MP (Chadema) noted.
He affirmed that the committee's ruling was delivered at a meeting on Thursday when the ATCL management led by Chief Executive Officer Paul Chizi, the Deputy Permanent Secretary for the Ministry of Transport and the Treasury Registrar were summoned.
"We got our figure ($39 million) from the ATCL management but we are informed that PAC has a bigger figure compared to what we have. This is shocking and it is a massive fraud," the legislator underlined.
This paper has been reliably informed that in principle the committee agreed the government should take legal action against all officials involved in entering into the leasing agreement before a government guarantee was issued as recommended by CAG in the annual audit report for the 2009/10 financial year.
The two committees also want the government to take legal action against official(s) at the Treasury who issued the guarantee retrospectively after the leasing agreement was entered into, contrary to the law governing government loans, guarantees and grants.
The Government Loans, Guarantees and Grants Act, 1974 as amended in 2003 requires the approval guarantee prior to signing a particular agreement. The guarantee is issued by the minister responsible for Finance.
A government guarantee is an assurance to a lender by an agency of the government, or the main governing body itself, that a financial obligation will be honored, even if the borrower is unable to repay the debt. In many instances, a government guarantee allows the borrower to be approved for the loan.
The Guardian on Sunday has established further that whereas the agreement was entered into in October 2007, government guarantee was issued some months later.
Parliamentary standing committees ordered that the transferring process of the debt from the Ministry of Transport to the Treasury be put to hold and it (debt) remains in ATCL books until controversy surrounding the whole issue is resolved.
When contacted PAC chairperson, John Cheyo qualified the matter as serious,, saying it needs extra urgency in dealing with it, so the government should take immediate action to avoid huge waste of public finances.
Cheyo, legislator for Bariadi East, said he would not go into details of the matter as he would not like to contravene laws governing the workings of parliamentary committees by briefing the press before submitting the committee report to the House.
A few weeks ago Transport Minister Omari Nundu told this paper that his office had directed a detailed review of the controversial lease agreement for Airbus 320.
The position came upon learning that the said aircraft, leased to ATCL by Wallis for six years was sold in Zimbabwe at $16 million, less than 50 percent of the leasing bill totaling to $32.6 million accumulated by the country's flag carrier as per the aircraft releasing agreement signed on October 27, 2011.
Nundu said as a country they could not refuse to pay if the debt was clear and genuine, but they could not pay if not satisfied with all aspects on how the debt arose and the eventual selling of the aircraft.
The minister said: "The review is unavoidable even if such a review may lead the leaser (Wallis Trading) opting for a court action against the government."
The issue of staggering amount of taxpayers' money due to be paid by the government for leasing a plane that did not fly was broken by this paper on November 13, 2011.
Anatomy of the matter
ATCL leased aircraft A320-214 from Wallis Trading Inc. for a period of six years (72 months) but the plane remained in ATCL hands for 48 months, 41 of which it was grounded for major technical maintenance in France.
The shoddy agreement stipulated that the leasing charges would remain the same whether the plane was flying or grounded for any reason.
An aircraft expert who spoke to this paper in November 2010 but preferred to remain anonymous said it was inconceivable that the lease rate of $370,000 per month remained the same when the plane was operating and during maintenance, as non-operational lease charges would have gone down as to $30,000 a month. There would be no chargeable effects on the plane as it would not be in operation.
The Airbus leasing in October 2007 was in line with preparations for what was expected to be a divestiture of ATCL, which was to be partly sold to Chinese company Sonangol, which never signed a formal contractual agreement with the Government. But it had pledged to buy ATCL not less than five Airbus aircrafts by 2012 as part of the proposed privatization scheme.
In line with the then eagerly awaited ATCL take-over by Sonangol, ATCL management rushed to lease A320-214 from Wallis Trading, a company said to have a close working relationship with Sonangol, headed by influential Hong Kong businessman, Sam Pa.
The plane (A320) had been operated in Liberia where it was leased, before it was leased to a South American country, El Salvador.
By the time Tanzania entered into the lease agreement in October 2007 the aircraft was due to go for major technical maintenance, carried out every 12 years (known as ‘Check C' plus 12 years in airline industry). But that fact was only established after the agreement was hastily penned down, leading to the aircraft to be grounded in France for seven months.
On its return from technical maintenance in May 2008, the plane remained in the air for seven months until December 2008 when was re-grounded for maintenance and never flown ever since, until it was released by ATCL in October 2011. That was two years before expiration of the lease agreement but the leasing bill stands as if the plane fully operated throughout the agreed period of lease.
By Florian Kaijage, The Guardian
