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Mkapa`s memo that cost $2.5m
2009-04-19 14:01:15
By Staff Writer
2009-04-19 14:01:15
By Staff Writer
The controversial decision taken by Benjamin Mkapa`s office to revoke a multibillion-shillings hotel tender has cost taxpayers about 3.37bn/-, in another damaging revelation about the already graft-tainted third phase regime, The Guardian on Sunday can reveal.
The Hotel 77 was built in 1979 in order to accommodate 77 heads of states who were meeting in Arusha for the historic Group of Seventy Seven Nations summit.
The hotel, which has 368 rooms plus 23 presidential suites, was once considered a luxury hotel, but had recently suffered from years of mismanagement by the government.
Following the controversial move taken by the State House under the directive of former President Mkapa, the government has finally paid an Arusha-based trader compensation of $1.5m, in addition to a free hotel valued at $1m.
The compensation was paid to Melleo Mrema who had earlier won the tender to acquire Hotel 77 at the cost of $1.2m and had paid a 25 percent down payment before State House revoked the deal on May 12, 2001. Mrema is the proprietor of the Impala Hotel and Ngurudoto Mountain Lodge.
According to details made available to The Guardian on Sunday, State House instead ordered the hotel to be sold to a foreign investor, ASB Tanzania Ltd, a subsidiary of the Swiss-based company that runs the Kempinski hotel chain.
ASB Tanzania Ltd is the proprietor of the Kilimanjaro Kempinski and Zamani Zanzibar Kempinski in Tanzania, and was not among the bidders who had sought to acquire Hotel 77 during the tendering process announced early in 2001.
During the tendering process spearheaded by the Parastatal Sector Reforms Commission (PSRC), the Impala Hotel proprietor was chosen as the winner of the contract over more than ten bidders including foreign investors. In March 2001, the PSRC informed Impala Hotel Ltd that it had won the tender and requested that it pay 25 percent of the total tender value, which was pegged at $1.2m.
Impala Hotel paid the $300,000 down payment as requested, but was then thrown out of the race, much in the same way that another local bidder was boxed out of taking over the state-owned Kilimanjaro Hotel in Dar es Salaam.
Though that bidder, Reginald Mengi - who is also the executive chairman of the IPP group of companies - won the tender, the hotel was instead handed over to ASB Tanzania, which reopened it in 2006.
The PSRC informed Impala Hotel that State House had revoked the tendering process and ordered that the multibillion-shilling property be sold to ASB Tanzania Ltd for an undisclosed amount of money.
Impala Hotel refused to be railroaded by the `executive decision`, and it went to court to seek compensation for the unlawful revocation of the tender.
According to details made available from the Consolidated Holding Corporation (CHC), which is the current caretaker of Hotel 77, on March 21, 2001, the High Court ruled in favour of Impala Hotel, ordering the government through the PSRC to pay compensation amounting to $1.2m.
The PSRC appealed the ruling, but before the case reached the court of appeals, the fourth phase regime settled out of court with Impala Hotel.
The settlement, according to a secret report seen by The Guardian on Sunday, was intended to end the saga amicably after officials realised that the previous regime had erred in its decision. Impala Hotel agreed to the settlement, but insisted that they be paid compensation amounting to $1,962,291.92 for losses suffered plus interest.
Knowing that they had cornered the government, Impala Hotel also demanded that apart from the $1.96m, the Arusha-based firm should also be given the Moshi Hotel for free.
The Ministry of Tourism and Natural Resources tabled a cabinet paper on the subject for approval before the inter-ministerial technical committee on February 19, 2007.
The cabinet paper proposed that the $1.2m in compensation and the Moshi Hotel be given to Impala Hotel, and that the Hotel 77 deal with ASB Tanzania should go through as recommended by Mkapa�s office. After eight years of conflict, the government paid out $1.5m, in addition to the Moshi Hotel, to Impala Hotel last year.
The Guardian on Sunday has learnt that Parliament, through a committee responsible for overseeing all public-owned corporations, has already ordered a full dossier on what really transpired during the privatisation of Hotel 77.
Sources within the CHC told The Guardian on Sunday that last month Acting Director General Shaaban Ngalupia wrote a full report detailing the controversial deal for Parliament as requested.
According to documents seen by The Guardian on Sunday, on April 5, 2007, the government signed a contract with ASB Tanzania, allowing the latter to acquire the property worth billions of shillings for an unknown amount.
Among other things, ASB Tanzania promised to demolish the original property and build a five-star hotel with a capacity of 150 rooms at a cost of $25m for the first phase of the project alone.
According to ASB�s business plan seen by The Guardian on Sunday, during the second phase, the foreign investor has also promised to build a shopping mall and business centre at a cost of $35m.
The first phase of the project was scheduled to launch early last year, but has still not broken ground today.
ASB Tanzania told the government recently that the delay of the project was caused by the ongoing financial crisis, but insisted that their original business plan was still intact.
SOURCE: Sunday Observer