Generous new incentives for Mlimani City project investors: PS Mgonja now linked with TIC`s Ole Naiko -Govt lawyers: We are tired of being associated with bad contracts signed by the government� THISDAY REPORTER Dar es Salaam THE Permanent Secretary in the Ministry of Finance, Gray Mgonja, has been named alongside Tanzania Investment Centre (TIC) Executive Director Emmanuel Ole Naiko as having been the main enforcers of a controversial new contract favourable to the investors of the Mlimani City project in Dar es Salaam. According to a report prepared by three government lawyers who scrutinized the draft new contract beforehand and questioned the legitimacy of some new incentives included therein, Ole Naiko as head of the government negotiating team was insistent that the document be signed without further ado, and that he had Mgonjas permission to go ahead and sign. The three lawyers - A.S. Kagomba from TIC, E.A. Mwankenja from the Ministry of Finance, and N.R. Mwaikambo from the Attorney-Generals Chambers � were part of a government delegation led by Ole Naiko which travelled to Gaborone, Botswana last year to try to woo back the proprietors of Mlimani Holdings Limited, who were threatening to disinvest in the project unless certain conditions were met. Other members of the delegation to Gaborone were TIC director of investment and resource mobilization Dr. A. Chungu, P. Kassera from the Tanzania Revenue Authority (TRA), and University of Dar es Salaam Professor F.D. Luoga. The Mlimani Holdings Limited team was spearheaded by lead investor Gulam Abdoola. According to the lawyers report of the trip and what transpired in Gaborone in July last year, the lawyers were not happy with a number of aspects of the negotiations, including some members of the government delegation defending the investor so much that they portrayed a picture that they were defending investors interest instead of government interests. It was the lawyers opinion that the draft performance contract should not be signed until prior authority to do so has been established, since lawyers are tired of being associated with bad contracts signed by the government, the report stated. But it continued: In response, the head of delegation (Ole Naiko) reiterated his position that he has full mandate from the (Treasury) permanent secretary to sign, and that the role of the lawyers is to advise only as they have done. According to the lawyers detailed report, the other members of the government negotiating team made efforts from the start to divide them (lawyers) by summoning them one by one to internal meetings on strategy. The lawyers own joint position was that the draft new contract be annexed to the original contract, with the final signature done in Dar es Salaam after consultations with the Attorney-General and the State House chief secretary. All the three government lawyers were of the view that the draft performance contract under discussion had gone out of its way with regard to incentives proposed and the mandate for signature, the report stated. The proposed new incentives which the lawyers questioned included Mlimani Holdings being given strategic investor status plus several tax incentives such as withholding tax on foreign consultancy, interest on loan repayments, rentals, 100 per cent capital allowance, and exemptions on customs duty and value added tax. The lawyers said in their report that they were in regular telephone consultations back home with the Deputy AG, Sazi Salula, and Chief Secretary Philemon Luhanjo during the Gaborone negotiations. But the final word is said to have come from Mgonja, who in a telephone conversation with one of the lawyers (Mwankenja) is understood to have directed that if senior members of the government team were insisting on the contract being signed immediately in Gaborone, then certain safeguard clauses must be inserted. These clauses, according to the report, were; (a) the project facilitation team should have powers to summon the investor, and/or (b) to require him to furnish cash flow statements for monitoring of the capital recouping. Mgonja also advised that any backdating of the contract should not have any element of refunds from the government.