- Feb 27, 2006
Bandugu, Nimesoma kwenye gazeti la This day nikaona ni share na nyinyi:
SERIOUS questions are being raised about the contract signed between the government and Cotecna for the scanning and destination inspection of all containerized cargo imported into the country.
Experts say the contract between the Tanzania Revenue Authority and Cotecna Inspection S.A is lopsided in favour of the foreign investor.
Under the terms of the contract, any dispute arising between the Swiss company and the government cannot be resolved in Tanzanian courts of law. Like the infamous IPTL contract between the government and private investors once upon a time, such disputes would have to be automatically referred to international arbitrators.
Specifically, the International Centre for the Settlement of Investment Disputes (ICSID) has been singled out as the would-be arbitrator.
The same London-based ICSID was used for the arbitration of the quagmire between the Tanzania Electric Supply Company Limited (TANESCO) and IPTL that cost the government hundreds of millions of shillings in legal costs and travel expenses to and from London.
Furthermore, under the contract, Cotecna has been exempted from paying Value Added Tax (VAT) in the delivery of services. Surprisingly, the main contract, which came into effect on January 1, 2004, was not signed by the principal officers of TRA and Cotecna.
Instead, the document was signed by the Commissioner for Customs and Excise, Mr George Lauwo, on behalf of TRA, and Mr Verne Kulyk, General Manager of Cotecna Inspection S.A Tanzania branch.
Among other lucrative emoluments which the Swiss company is entitled to for the destination inspection services rendered by its local subsidiary, Tiscan Limited, include free office space, salary to its employees, paid-up residence permits and work documents and free space at the port for the $4.5 million (over 5.4bn/-) special scanning truck.
According to the contract, the company also gets paid a Destination Inspection Services (DIS) at 0.82 per cent tax inclusive fee of the assessed FOB (free on board) value of goods subject to the DIS as per reports of findings (ROFs) issued.
However, importers are charged 1.2 per cent, raising questions over the difference in the remaining 0.4 per cent.
The scanner system started working on July 1, 2004 but the company started charging importers the DIS fees in January of the same year -- which means that the $4.5m scanning truck was actually bought from money charged to Tanzanian importers, said one source close to the import and export business.
The company was until last year charging $11 (approx. 13,200/-) per single bill of entry (SBE) issued, but complaints from importers forced authorities to reduce the rate to $5 (approx. 6,000/-).
Industry sources allege that the Swiss company is earning a whopping $60 million (approx. 72bn/- ) per annum from its activities in the country.
According to the contract, which legal experts describe as lopsided in favour of the foreign investor, the payments, which are made monthly in US dollars, are remitted by TRA to Cotecna?s Swiss bank account in Geneva.
Section 5.3 of the contract states: The Company will present a monthly invoice to the Authority on the 5th working day of each month. After review by the Authority, the invoices are settled promptly, latest 30 days after submission of the invoice, through normal banking channels and payments made to the account of the Company. All payments under this contract shall be made in US Dollars to the account of the Company: Union Bank of Switzerland/Geneva/Account No. 0240-257.556.60Q.
The contract has conflicting dates of expiry, which include seven years as indicated in Section 2.3, while in Appendix 5 the contract expires in five years? time from the commencement date.