Contents of the radar case file
THIS DAY
AT least four prominent Tanzanians being investigated by Britains Serious Fraud Office (SFO) over allegations of bribery and corruption in the 2002 military radar deal could face up to seven years in a UK prison if tried and convicted of criminal offences in a possible indictment by British prosecutors.
The SFO believes that several public officials in Tanzania committed offences of corruption in the purchase of the air traffic control system from BAE Systems, the UKs biggest arms manufacturer.
The UK is a signatory to the Organisation for Economic Co-operation and Development (OECD)s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (convention) 1997.
In December 2001, the UK implemented the convention by enacting Part 12 of the Anti-Terrorism, Crime and Security Act of 2001.
This law effectively amended Britains Prevention of Corruption Act 1906, in the view of the government, to clarify the scope of the legislation in relation to extra-territorial applicability.
The provisions of the UKs amended Prevention of Corruption Act 1906, in so far as it affected the corruption of agents of foreign principals, came into force in Britain in February 2002.
The SFO believes that several Tanzanian nationals - including ex-attorney general Andrew Chenge, former Bank of Tanzania governor Dr Idris Rashidi, and business tycoons Tanil Somaiya and Shailesh Vithlani - committed offences of corruption under section 1 of the UKs Prevention of Corruption Act 1906.
According to this law: If any agent corruptly accepts or obtains, or agrees to accept or attempts to obtain, from any person, for himself or for any other person, any gift or consideration as an inducement or reward for doing or forbearing to do...any act in relation to his principal's affairs or business, or for showing or forbearing to show favour or disfavour to any person in relation to his principal's affairs or business, is guilty of a criminal offence.
The maximum penalty if convicted of such crimes is imprisonment for a term not exceeding seven years or a fine, or both.
Legal experts say there are several scenarios to consider before any Tanzanian suspects can face criminal charges in the UK.
First of all, the UK has to identify the stated Tanzanian suspects as accused persons, and successfully file an application for their extradition to Britain.
Indications are that the SFO is more interested in nailing BAE Systems as a company than targeting the Tanzanian suspects, hence could enter into a deal with Vithlani and the others to testify against BAE in exchange for avoiding prison themselves.
On the other hand, Tanzanias own Prevention and Combating of Corruption Bureau (PCCB), which has also been investigating the radar transaction, could oppose a possible extradition of Tanzanian suspects to the UK because that could affect its own pending indictments.
Following is a rundown of the alleged roles of some of the main Tanzanian personalities who were in positions of influence in the military radar transaction:
Shailesh Vithlani & Tanil Somaiya
In 1999 BAE, through Red Diamond Trading Limited, a company registered in the British Virgin Islands, entered into an agreement with a Panamanian entity, Envers Trading Corporation. Envers, identified as a consultant firm working in Tanzania, was jointly controlled by Vithlani and Somaiya. Documents disclosed to the SFO confirm that Envers received $12m (approx. 15bn/-) in illegal kickbacks from BAE through a Swiss bank account to facilitate the radar deal. Part of the money in this secret payment is believed to have been used to pay bribes to senior officials in the third phase government of ex-president Benjamin Mkapa to sweeten the transaction.
Both Vithlani and Somaiya have been questioned under oath by SFO investigators in Dar es Salaam on several occasions. Court records show that the duo formally admitted that they at one time or another had legal authority to represent Envers Trading Corp., which operated from a Dar es Salaam address associated with Merlin International Limited, a local company established by Somaiya and Vithlani as joint directors.
As agents who represented Envers Trading Corp. in Tanzania, both Vithlani and Tanil are seen as key suspects with detailed knowledge of the names of government officials who received bribes and the amount of money paid out to each individual. While Somaiya has denied any criminal wrongdoing, Vithlani skipped the country after an arrest warrant was issued against him by a Dar es Salaam court, and is now reportedly hiding out in a European location.
The SFO investigation has good grounds to believe that the role of the $12m paid by BAE to Envers Trading Corp. was to facilitate secret payments to Tanzanian public officials in positions of influence in the radar contract negotiations, which were concluded in 2002.
Andrew Chenge
Tanzanias attorney general from 1995 to 2006. During this period as chief legal advisor to the third phase government of ex-president Mkapa, it is understood that Chenge became directly involved with numerous aspects notably the financing - of negotiations for the purchase of an air traffic control system for the Dar es Salaam international airport.
Reaching agreement for the financing of the radar equipment at a time when Tanzania was part of the Highly Indebted Poor Country (HIPC) debt relief initiative, was a key condition precedent to the viability of the deal. Without Chenge as AG being on board, the financing package for the radar transaction could not have been approved. He was personally in charge of negotiations for the sale agreement between the government and BAE Systems.
At the height of the negotiations, Chenge received a highly suspicious payment of $1.5m (approx. 2bn/-) in an offshore bank account in the island of Jersey, UK.
Apart from finally approving the contract, Chenge made several concessions in favour of BAE Systems, including allowing English law to govern the financing of the radar deal. This gave comfort to the financial backers, Barclays Bank, since if Tanzania defaulted on payment, litigation would be realistic and recovery of funds could occur in the UK under English law.
Vithlani sent to Barclays Bank the copy of a legal opinion on the radar transaction made by Chenge to the Tanzanian government on September 15, 1999. In the legal opinion, Chenge defended the radar transaction and stated that the financing agreement would not cause Tanzania to become ineligible for funds made available by the International Monetary Fund (IMF) or other multinational agencies.
The SFO concluded that there are reasonable grounds to believe that in taking this stance, Chenge was putting the economic interests of Tanzania at risk.
Idris Rashidi
Currently serving as managing director of the state-run Tanzania Electric Supply Company (TANESCO), Rashidi was governor of the Bank of Tanzania from 1993-98, and was in this capacity another important figure in the negotiations that led to the radar contract being signed. In particular, he was a key element in the negotiations over the financing of the radar, without which there would have been no contract.
According to SFO investigators, Rashidi received a payment of $600,000 (approx. 800m/-) from Chenges Jersey account in May 1998 - the same year his tenure as BoT governor came to an end.
British investigators have described both Chenge and Rashidi as pivotal persons of influence over the success of the radar contract. The late Dr Daudi Ballali, who succeeded Rashidi as BoT governor, is also reported to have played a key role in the financing of the radar transaction, which was concluded in 2002.
In another development, a senior British MP was warned by the SFO that he might be the target of a bugging operation involving BAE Systems.
Liberal Democrat front bencher Norman Lamb was advised by an SFO investigator they should meet in a public place rather than his parliamentary office to avoid their conversation being secretly monitored.
Lamb, who has been pursuing BAE over corruption allegations in the Tanzanian radar deal since 2001, wrote to the SFO expressing concern that such monitoring might be taking place.
In a letter to SFO investigator Carl Brown, Lamb said he was ??horrified?? by any suggestion that outsiders might be attempting to bug an MP??s private conversations.
Lamb has handed over to the SFO a file of confidential correspondence and research relating to allegations that BAE bribed Tanzanian officials over the military air traffic control system.
Meanwhile, latest reports from London suggest that BAE is now pressing the Serious Fraud Office to reopen talks on a possible settlement over corruption allegations in a last-minute bid to head off a damaging court case.
Britains biggest arms manufacturer saw its share price fall two days in a row last week as investors reacted negatively to the SFOs decision to seek formal permission to start legal proceedings against the company.
BAE declined to comment, but insiders said the company still hoped for a negotiated deal even though it was insisting it had done nothing wrong.
The SFO said last Thursday that it would seek the UK attorney generals consent to prosecute BAE Systems for offences relating to overseas corruption.
The move follows a six-year investigation into BAE business dealings in Tanzania and elsewhere
