Escrow kuiadhiri CCM
- Zitto asema ripoti yake haizuiliki
- CAG kuanika madudu wiki hii
26/10/2014 | Na Abdallah Khamis |
HARAKATI za Chama cha Mapinduzi(CCM),kutaka ripoti ya uchunguzi wa akaunti ya Tegeta Escrow, isijadiliwe bungeni huenda zikagonga mwamba, Tanzania Daima Jumapili, limebaini.
Jitihada hizo zinaweza kutoweka baada ya Mdhibiti na Mkaguzi wa Hesabu za Serikali (CAG), kukamilisha uchunguzi wake na anatarajia kuwasilisha ripoti hiyo kwa Kamati ya Bunge ya Hesabu za Serikali inayoongozwa na Zitto Kabwe.
Iwapo ripoti hiyo itawasilisha, inaweza kukipasua Chama Cha Mapinduzi (CCM) na serikali yake ambayo kwa muda mrefu imekuwa ikituhumiwa kwa kulea na kulinda ufisadi
Tanzania Daima Jumapili, lilidokezwa kuwa CCM inahofia ripoti inaweza kuwagusa vigogo, mawaziri na watendaji wa serikali ambao itamlazimu Rais Jakaya Kikwete, kulivunja baraza la mawaziri.
Inaelezwa kwamba, ripoti hiyo huenda ikawagusa baadhi ya mawaziri waandamizi wa serikali na viongozi wa CCM miongoni mwao, ni wale walioanza harakati za kuwania urais katika uchaguzi ujao.
Kufikishwa bungeni kwa ripoti hiyo, kunatabiriwa litakuwa anguko jingine kwa serikali kama ilivyokuwa mwaka 2008 alipongoka Waziri Mkuu Edward Lowassa kwa kashfa ya kutoa zabuni ya kuzalisha umeme wa dharura kwa timu ya Richmond.
Kashfa hiyo ya Richmond ilitengeneza uhasama miongoni mwa makada wa CCM hata kukifanya chama hicho, kipoteza majimbo mengi katika uchaguzi mkuu wa mwaka 2010.
Mbali na Richmond kukitesa CCM na serikali pia uhasama wa makada wake umekijengea makundi yanayotishia uhai wake.
Vigogo wa CCM na serikali yake hawataki ripoti hiyo iwasilishwe bungeni kwasababu itawaweka katika wakati mgumu wa kushinda uchaguzi wa serikali za mitaa utakaofanyika Disemba mwaka huu.
Katika kikao cha Halmashauri Kuu (NEC), ya CCM kilichokaa hivi karibuni mjini Dodoma suala hilo liiibuka ambapo Christopher ole Sendeka, anadaiwa kusimama katika kikao hicho na kueleza wazi kuwa chama chao kinachafuliwa na ufisadi wa IPTL na kwamba fedha hizo zinatumika Dodoma kwenye kampeni za urais.
Madai ya Sendeka, yalizimwa na Mwenyekiti wa CCM, Rais Kikwete, akisema kuwa suala la IPTL waliache kwanza maana wanasubiri ripoti ya uchunguzi unaoendelea hivi sasa.
Hata hivyo wakati hali ikionekana kuwa tete, Mwenyekiti wa Kamati ya kudumu ya Bunge na hesabu za serikali (PAC), Zitto Kabwe,ameshamuandikia barua CAG, kumueleza umuhimu wa ripoti hiyo.
Zitto alisema suala hilo lazima litafika bungeni hata kama CCM hawataki jambo hilo lifike, kwa
sababu kamati yake ndiyo yenye jukumu la kufanyia kazi na kulipeleka huko.
Alisema CAG alitakiwa kutoa taarifa ya uchunguzi huo wiki iliyopita lakini aliomba apeleke taarifa wiki hii.
Tukishakutana na CAG wiki hii, suala hili litajadiliwa kwenye vikao vya Bunge la 17 au 18, kulingana na mpangilio wa shughuli za Bunge, hili haliwezi kukwepeka
Sisi kazi yetu ni kulifikisha bungeni suala hili na wabunge wana uamuzi
hili la kuzuia sidhani kama litafanikiwa alisema Zitto.
Zitto alibainisha kuwa Oktoba 24 mwaka huu, alimuandikia barua CAG akimueleza umuhimu wa ripoti hiyo kwa taifa.
Katika barua hiyo ambayo Tanzania Daima Jumapili, imefanikiwa kuiona Zitto anasema uchunguzi wa ripoti hiyo utaiokoa nchi na mpasuko unaoweza kujitokeza baada ya wafadhili wa serikali kuacha kutoa misaada kwa Tanzania mpaka ripoti ya Tegeta Escrow itakapowekwa hadharani.
Sehemu ya barua hiyo inasomeka Kamati imejulishwa na wizara ya fedha na Benki Kuu kwamba uamuzi wa wafadhili kuzuia misaada ya kibajeti unaathiri sana utekelezaji wa bajeti,
Sharti la kutolewa misaada hiyo ni taarifa hii kutolewa kwa vyombo vilivyoomba, kuendelea kuchelewa kutoa taarifa kutaumiza zaidi wananchi kwa kukosa dawa hospitalini na hata mishahara kukosekanailiandikwa.
Barua hiyo imeongeza kuwa gavana wa Benki Kuu ameijulisha kamati kuwa serikali imeanza kukopa katika soko la ndani na kuathiri uchumi kwa kushindwa na sekta na hivyo kuongeza riba na kusababisha uchumi wa nchi kusinyaa.
Mbali na Zitto, mbunge wa Kigoma Kusini,David Kafulila alisema ripoti hiyo isipowasilishwa bungeni atawasilisha hoja binafsi ya kutokuwa na imani na serikali.
Kafulila alisema anaamini ofisi ya CAG inakabiliwa na shinikizo kutoka kwa vigogo wakubwa serikalini wanaohusika na ufisadi huo.
Alisema uhakika wa jambo hilo unadhihirishwa na muda alioutumia CAG ni zaidi ya ule alioomba bungeni kwamba kazi hiyo ingekamilika baada ya siku 45 na kwamba mpaka jana ni zaidi ya siku 200 zimepita huku ripoti hiyo ikiwa imekaliwa.
Nashangaa PCCB wamemaliza kazi na kwenda kuikabidhi Ikulu badala ya kumfikishia mwendesha mashtaka(DPP), ili aweze kuwachukulia hatua wahusika kwa kufikishwa mbele ya vyombo vya sheria, Hosea anapaswa kuwasilisha ripoti yake bungeni kwa sababu aliagizwa na Bunge na siyo Ikulualisema Kafulila katika ujumbe mfupi wa simu kwa gazeti hili.
Sakata la Escrow liliibuliwa na Kafulila Mei 8 mwaka huu akiwa bungeni mjini Dodoma na kuwatuhumu baadhi ya vigogo wa serikali kuwa nyuma ya uchotwaji wa dola za marekani kiasi cha milioni 122 sawa na shilingi za kitanzania bilioni 200.
Vigogo waliotajwa na Kafulila ni Waziri wa Nishati na Madini, Prof. Sospiter Muhongo na Katibu Mkuu wake, Eliakim Maswi, Waziri wa Fedha Saada Mkuya, Gavana wa Benki Kuu ya Tanzania, Prof. Beno Ndullu, Mwanasheria Mkuu wa Serikali, Frederick Werema na Mkurugenzi Mkuu wa Tanesco, Mhandisi Felchesmi Mramba.
Kafulila alisema vigogo hao wamehusika na ufisadi wa fedha hizo zilizokuwa zimewekwa katika akaunti ya Baraza la Usuluhishi la Migogoro ya Kibiashara (ESCROW) katika Benki Kuu ya Tanzania (BoT).
CC: Tized, Mr Rocky, Fixed Point, Chakaza, Elly B, MziziMkavu, Power to the People, Jasusi, Eiyer, idawa, nguruvi, Mentor, Sikonge, Dingswayo, MANI, tpaul, Bramo, Bulesi Bulldog, Sangarara, MTAZAMO, Erythrocyte, Mag3, Mimibaba, zumbemkuu, Crashwise, amkawewe, Idimi, Ogah, Chakaza, mshana jr, JokaKuu, MWALLA, genekai, PRINCE CROWN, Tuko, Shark, lynxeffect22, samaki2011, MoudyBoka, adolay, Elli, nyabhingi, Janjaweed, S.N.Jilala, MEANDU, Tabby, Candid Scope, August, BONGOLALA, Gefu, Bigirita, Kozo Okamoto, Daudi Mchambuzi
THERE has been a misunderstanding on the dispute involving Independent Power Tanzania Limited (IPTL) and the money, which was deposited in the escrow account at the Bank of Tanzania (BoT). FAUSTINE KAPAMA, interviewed on Friday 17[SUP]th[/SUP] October 2014 at the SOPA Lodge Ngorongoro one of the lawyers, Dr Camilo Schutte, from the Netherlands, who have been defending VIP Engineering and Marketing Limited (VIP) abroad in the saga, on several aspects involving the two issues.
Question: Can you briefly explain what you understand about the disputes involving IPTL?
Answer: Procedurally, the ongoing disputes are very complex. However, the cause of the disputes is a fairly simple one.
IPTL was set up, in 1994, by a Malaysian company called Mechmar, that owned 70%, and a Tanzanian company, VIP Engineering & Marketing, that owned 30%.
IPTL was to build a power plant that would supply electricity to the Tanzanian people through TANESCO at the lowest possible rates.
In order to build the plant, IPTL and TANESCO had agreed that TANESCO would pay a monthly amount for the invested capital, including the loans.
Because it was not yet clear how much the building of the plant would cost, a formula was agreed in 1995: depending on the exact costs of the building the plant the capacity charge would be higher or lower.
It was VIP's role to provide the suitable land and to procure for IPTL the Power Purchase Agreement, the Implementation Agreement, the GOT Guarantee and the Electricity generating licence etc. It was Mechmar's role within IPTL to contract the builder of the plant and to arrange the financing.
A Dutch-Finnish company called Wärtsilä was chosen by Mechmar as the builder. Mechmar's Malaysian banks would provide the financing. Eventually an amount of about
USD 84million was actually drawn down from the Malaysian Banks and that was to be paid back within eight years after the plant would become operational.
However Mechmar had earlier informed TANESCO that the plant would cost around USD 150million so that the capacity charge, according to the formula, would be around
USD 3.6million per month.
TANESCO did not agree with these costs and started an international arbitration against IPTL before an ICSID tribunal in the year 1998. During those proceedings, it became very clear that the costs Mechmar had declared on behalf of IPTL were inflated.
In 2001, the ICSID tribunal concluded that the costs of the plant should be around USD 121million. The rejected excess of about
USD 30million included a dubious USD 10million last minute raise of Wärtsilä's price and not less than USD 6million for houses that had never been built.
However, the ICSID tribunal did not consider it in its powers to investigate and find fraud within IPTL and restricted itself to establishing a new capacity charge of about
USD 2.6million per month.
This way the real and 1[SUP]st[/SUP] dispute between TANESCO and IPTL ended. The plant became operational beginning of 2002. However, the ICSID award triggered the Shareholders internal disputes in IPTL.
VIP demanded that the equity and debt of IPTL be adjusted to the findings of the ICSID tribunal, so that Mechmar would solely be liable for the unjustified excess of about
USD 30million.
Mechmar, backed by its Malaysian banks, refused this and, without VIP's necessary consent, entered into new agreements with its banks to restructure the loans of IPTL.
According to these new agreements, IPTL would pay its debts to the banks at a slower pace, thus very much increasing the interest burden. Further loans of Mechmar to IPTL were included. All this was done ignoring VIP and its Directors in IPTL, thus without VIP's necessary authorisation.
These were all reasons for VIP to petition the winding up of IPTL in 2002 on the grounds of fraud, dead-lock, oppression by the majority shareholder and corporate waste.
VIP requested the High Court of Tanzania to appoint a liquidator who would investigate and sort out which debts were legitimate and which ones not.
At the same time, VIP offered its 30% shareholding to anyone who would investigate and be willing to pay a fair price and continue the IPTL project as was intended: providing cheap power to TANESCO.
Basically, Mechmar and the banks have been successful in blocking VIP's winding up petition in the Tanzanian courts for many years, although a Provisional Liquidator was appointed and reported
prima facie fraud by Mechmar, Wärtsilä and the banks, because they had illegally inflated the capital costs of IPTL.
Eventually, the winding up ended in 2013, because a third party, Pan African Power (PAP), committed before the High Court of Tanzania to pay a fair price to VIP and to comply with the conditions for expanding the IPTL Power Plant Capacity to 500MW, charging TANESCO an affordable tariff of between UScents 6/unit and UScent 8/unit and paying off all legitimate creditors of IPTL.
VIP reserved its rights to sue Mechmar, Wärtsilä and the banks for the damages and losses it had suffered.
Standard Chartered Bank (SCB) had entered the scene in 2005, when it purportedly bought the IPTL loan from the Malaysian banks. I remind you that this is the loan VIP had asked the High Court of Tanzania to investigate because it had been used to inflate the costs of IPTL and it is the same loan which Mechmar and the banks had amended without consent of VIP or the courts in order to increase the debt burden even more on IPTL.
SCB, however, agreed with the Malaysian banks that it would take over the loan regardless whether or not the loan was illegal.
In other words, SCB intended to enforce a loan against IPTL and, if IPTL defaulted, it would enforce the loan against TANESCO and the Government of Tanzania, even if it knew that the loan might refer to a fraudulently inflated debt as was being investigated by the Tanzanian courts.
This is the reason why SCB always fiercely opposed the winding up petition. It has tried to bar the investigation by the Tanzanian courts of the debts in IPTL. This is also the reason, apart from technical legal ones, why VIP has never recognized SCB as a legitimate creditor of IPTL.
This position was later taken over by PAP when it took over IPTL. Also PAP and IPTL dispute SCB's claims and this is the main dispute that is now going on.
Question: We hear so much about the escrow account and I know there are some cases pending regarding the issue. Now, without prejudice to the pending cases on IPTL, what is your position as far as the Tegeta escrow account at the BOT is concerned?
Answer: In order to understand this, we need to explain what an escrow account is. An escrow account is no more than a bank account that is being held by a third party in the interest of two parties that are having a dispute or are realizing a transaction. The money is kept in escrow for the benefit of the party that is appointed when the dispute or the transaction is settled.
The third party is an escrow
agent. He has some limited power but has no ownership or any other beneficiary title over the monies in that account.
This is very important because in this particular case of the escrow agreement that was entered into in the year 2006 between IPTL and the Government of Tanzania, the escrow agent was the Bank of Tanzania.
This did not make the Bank of Tanzania the owner of the monies that were put in the escrow account. The owner of the monies in the escrow account would in the end be determined between the parties in dispute.
All involved parties agree that the largest part of that money in the escrow account was not in dispute, but owed to IPTL. So there was money that belonged to IPTL.
The moment the owner of IPTL, currently PAP, entered into a settlement agreement with the Government, the escrow agent, in this case the Bank of Tanzania, had the obligation to release the monies to IPTL. The Bank of Tanzania had no other option.
So there can be no doubt that the owner of IPTL is also the owner of the escrow account, which is an asset of IPTL.
I understand that it has been suggested in Tanzania that the money held is escrow was public money. Of course it was public money that had been paid by TANESCO to IPTL by way of capacity charges, but after payment it logically became private money and IPTL was fully entitled to it and was entitled to use it in any way it chose to use the escrow money.
So the escrow monies are an asset of IPTL and that means that the parties that are in control of IPTL can dispose of that money. It is the responsibility of the owner of IPTL to determine how he would dispose of that money, whether he would distribute that money to the creditors and how, and that will depend on the question which creditors he recognizes as legitimate creditors.
On the other hand, this money could also be distributed by way of a loan to the owner of IPTL or to third parties or, to the extent that it is profit made by IPTL, it could also be used as a profit distribution to the shareholders.
There are many ways the owner of IPTL can dispose of the monies and use them for whatever legal purposes the owner intends to, which could be including paying old debts, paying for shares and so on.
Question: Can you briefly explain why this escrow account was opened?
Answer: It was opened at the time in 2006 because there was a dispute going on as to what should be done with the money TANESCO was paying to IPTL.
As I said, VIP never agreed to the fact that Mechmar was paying out these monies to the banks because VIP did not agree with the banks' extended claims and the financing of fraudulent debts of IPTL.
TANESCO had also questioned at that point in time how the debt was being restructured within IPTL and whether the paid up equity in IPTL was only TZS 50,000.- as registered with BRELA.
That is the reason why TANESCO said it did not want to pay these capacity charges any longer, as long as the disputes had not been settled in or out of the courts.
That was the point where IPTL on the one hand and the Government of Tanzania on the other hand agreed to open an escrow account into which all the monies that TANESCO owed to IPTL could be put in escrow with the Bank of Tanzania as escrow agent and those monies would remain there until the disputes were resolved.
Question: Now, we understand that IPTL shares have been offered to many parties, including Standard Chartered. If Standard Chartered or any other party had acquired IPTL's shares, would Standard Chartered or any other such party also have been entitled to the monies in the escrow account?
Answer: Yes, definitely. It is correct that VIP offered openly its 30 percent shares in IPTL. There have been many parties that have shown interest in buying the shares.
Indeed the shares had also been offered to Standard Chartered and the same as PAP could now dispose of the monies of the escrow account, if Standard Chartered had purchased the shares of the company, it could have freely disposed of the money in the escrow account. However, Standard Chartered declined buying the shares.
Question: How much and when did VIP pay for its 30% Shares in IPTL?
Answer: By July 1996 VIP had paid USD 13.5million in kind to IPTL for its 30% Shares in IPTL as was allowed by section 43 of the Companies Ordinance Cap 212.
It would like to stress, however, that one of the reasons why VIP petitioned the High Court of Tanzania in 2002 for the compulsory winding up of IPTL was also because Mechmar refused to register VIPs paid up shares in IPTL. This refusal together with Mechmar's intention to register its own contribution to IPTL as debt and not as equity, increased again IPTL's costs to Mechmar's benefit to the detriment of VIP on the one hand and TANESCO on the other hand. This is why TANESCO had also reason to dispute IPTLs capacity charge invoices of about USD 2.6million per month since the year 2006.
Question: How much loss and damages is VIP claiming to have suffered and from whom because of the alleged frauds in IPTL?
Answer: The monetary compensation VIP is claiming from Standard Chartered, Mechmar (now represented by liquidators) and Wärtsilä was calculated at no less than
USD 490.9million in 2013. This has been increasing since.
It is important to bear in mind however that this monetary compensation of not less than
USD 490.9million or not less than
TZS 787billion falls short, if one would take into account what had been the value of IPTL if it had fulfilled the plans that were in place. The power generation capacity would have increased from 100Mw in 2002 to no less than 1000MW by
June 2013. VIP has made a conservative calculation of the losses caused by Mechmar, Wärtsilä and Standard Chartered's wrongdoings.
Question: We have heard a lot from some media that some development partners have withheld their budget support to Tanzania because they think there is something wrong in respect to the withdrawal of money from the Tegeta escrow account. As counsel for VIP, what is your advice to the government of Tanzania?
Answer: I think there is a big confusion and I have seen that the donors and other countries that give budget support to Tanzania have said they want this to be clarified. I can understand this because the information has been confused.
So my advice to the Government of Tanzania would be to resolve the confusion by making sure that the misunderstandings go away and the only way you can do that is by explaining what the facts are.
The facts are that the monies in the escrow account are an asset of IPTL and that the owner of IPTL is at liberty to dispose of those monies in the way and according to the responsibilities of the shareholders and managers of IPTL.
In other words, it is private money and not public money and I think that the big confusion that exists among the donors is that they have the impression that public money is being dispersed, which is not the fact, because it is private money of IPTL.
These are just monies that were subject to resolution of a dispute and it is a very normal and a very common thing to open an escrow account and put those monies for the parties until the dispute is resolved.
Question: Does Standard Chartered Bank have any claim in IPTL?
Answer: Essentially of course, that is for the courts to decide. VIPs opinion is that Standard Chartered has not been able to prove that it is a legitimate creditor of IPTL for any amount.
VIP has also opined that Standard Chartered has been abusing court procedures both in Tanzania and other countries in order to obstruct the development of IPTL at the detriment VIP's property rights.
It was foreseen that IPTL would start as a 100MW power plant that would eventually be developed into a 1000MW power plant which was to provide the less expensive power in Dar es Salaam. All these developments have been blocked since 2002, first by Mechmar and Wärtsilä and then as of 2005 by Standard Chartered.
For these reasons, VIP was of the opinion that Standard Chartered has no legitimate claims in the company and on the contrary that Standard Chartered has inflicted a lot of losses and damages on IPTL and VIP, and through IPTL and TANESCO, on the general public of Tanzania.
Question: How about the escrow account, because we hear that all what is being said is because of money that was in the escrow account at the Bank of Tanzania to which Standard Chartered had some claim? That is why Standard Chartered is moving here and they are claiming that they have some rights in those monies.
Answer: Let me summarize some numbers just for you to understand what Standard Chartered is claiming from IPTL and why it seems obvious that what they are claiming is excessive, if not completely illegitimate.
Mechmar took a loan of 84million US dollars for IPTL. That loan, together with a purported subordinated loan of Mechmar to IPTL, was provided in the second half of 1997 and was abused by Mechmar to pay purported costs for building the power plant, but which were not for IPTL's benefit but for Mechmar's benefit as I explained before.
The 84million US dollar loan was to be paid off within no more than eight years as of the date the power plant became operational, which was the beginning of 2002. This would and could be done entirely out of the USD 2.6million per month capacity charges IPTL was to receive from TANESCO.
Those capacity charges would be used to pay off the loans plus interests, the operational costs (a relatively small amount) and the rest would be used for distribution of dividends to the shareholders.
Already during the maximum eight year period that it would pay off the 84million US dollars loan, IPTL was also to start distributing dividends to the shareholders.
Indeed, the capacity charge of around 31million dollars per year should have been more than sufficient to cover the real costs of the plant.
The Provisional Liquidator of IPTL who was appointed by the High Court of Tanzania in 2008, reported in 2009 that only in the period from 2002 to around 2006 or 2007, IPTL (then factually controlled by Mechmar without corporate authority) had already received around 190million US dollars from Tanesco.
Out of that amount, according to the statements of Mechmar's directors in IPTL to the Provisional Liquidator, 56million US dollars had been paid to the banks to service the 84million dollar loan. Not a single cent of dividend was paid since 2002 up to date, at least not to VIP.
Yet, SCBHK claims that IPTL still owes around 150million US dollars to SCBHK in connection with the loan it claims to have taken over.
Now, you will understand that this raises a number of serious questions.
How is it possible that the 84million dollar and any interests accrued had not been paid off entirely by the Mechmar directors who received 190million dollars between 2002 and 2006?
Who else did the Mechmar directors transfer the moneys to, if not to the banks?
Why would the banks have allowed that?
How is it possible that Standard Chartered can now claim 150million dollars on an 84million dollars loan, which according to Mechmar had been serviced for at least 56million dollars a long time ago?
How is it possible that Standard Chartered is now claiming that it is entitled to the escrow money and not only the monies that are factually in the escrow, but even to more than that, because we know the escrow was around 122million dollars?
That means that, if Standard Chartered's claims are not contested in court, they will have a very questionable claim of 150million dollars awarded on top of the at least 56million dollars, if not much more, they already received before 2007. That is more than 200million dollars on a 84million dollar loan.
They will then first try to enforce the 150million dollar claim against IPTL and, if IPTL does not pay, which is very probable with such an amount, then they will hold the Government of Tanzania liable to pay this illegitimate and excessive claim under the 8[SUP]th[/SUP] June 1995 Got Guarantee.
This is why VIP cannot accept that Standard Chartered asserts any claims against IPTL or its assets, such as the escrow monies, as long as Mechmar and Standard Chartered have not fully accounted for their financial behaviour when they were in control of IPTL.
It is for the High Court of Tanzania to investigate the period they were extracting and receiving monies out of IPTL and settling purported and/or unauthorized debts of IPTL. This procedure is now pending in Tanzania.
Question: Now, you have mentioned there are several cases which are pending in the IPTL issues outside Tanzania. Can you briefly give the status of those cases at the moment?
Answer: As far as we are aware, we know that there is an ICSID Arbitration going on in which Standard Chartered is claiming that TANESCO should pay directly to Standard Chartered what they say IPTL owes to Standard Chartered, the same 150million dollars.
We know that the ICSID Tribunal issued an interim order in February this year, in which award the Tribunal said it was not for the Tribunal to determine how much IPTL owes to Standard Chartered, because IPTL was not a party to these proceedings and this was for the Tanzanian courts to determine.
The Tribunal also said that it was absolutely not clear on what basis Standard Chartered claimed this amount of now 150million US dollars.
Another proceeding is the case VIP had started against Standard Chartered in New York in 2013 in order to recover the damages and losses VIP had been suffering because of Standard Chartered's wrongful interference with IPTL's and VIP's property rights.
Standard Chartered first asked the New York Court to refer the dispute to the Tanzanian courts, because they were the only appropriate courts to deal with this dispute according to Standard Chartered. After the New York court agreed and referred the case to Tanzania, VIP instituted its claims against Standard Chartered before the High Court of Tanzanian on 13[SUP]th[/SUP] November 2013.
Now, in the US, Standard Chartered is claiming that the New York judge should not have referred the case to Tanzania. It is not clear what else they want. In Tanzania they also contested the jurisdiction of the Tanzanian court. However the Tanzanian High Court plainly rejected their objection in June of 2014 and declared itself fully competent to hear the case.
There is a third case going on and that is the case by way of a counter claim. Standard Chartered, instead of filing its counter claim in the Tanzanian proceedings which VIP had already started since 13[SUP]th[/SUP] November 2013 started fresh proceedings in London in March/April 2014 at the High Court Commercial Court against VIP, IPTL and PAP.
In those London proceedings Standard Chartered is claiming
150million dollars and they are asking for a number of injunctions. They say they are entitled to the escrow monies
and that the English court should overrule Tanzanian court decisions.
The reason why they are saying they want the English Court to be involved is because they say they do not trust any more the Tanzanian courts and now in their later submissions they have even been saying, without any form of specification,
that everything is generally corrupt in Tanzania, including the Judiciary and the Government.
Finally, Standard Chartered recently commenced again another set of actions against VIP, this time in Holland, the Netherlands, where they also started fresh proceedings. Most recently, they have said that their claims in Holland are no longer on foot. But we will have to see what will be happening in Holland.
Question: But you mentioned something about some party or Standard Chartered not trusting the judicial system in Tanzania. In your opinion as counsel for VIP, do you trust the judicial system of Tanzania?
Answer: I have been following and advising VIP very closely at least since not less than eight years now in this case. So I have seen how the Tanzanian courts have been acting.
First of all I would like to say that VIP has had some very serious setbacks in the Tanzanian courts. VIP has had to detail and prove every single claim and request it made in the Tanzanian courts. Standard Chartered and the other parties opposing VIP's winding up petition succeeded in avoiding a winding up order after more than eleven years of litigation. If there was any bias in the Tanzanian judiciary, which as far as I have been able to see there was not, it was certainly not a bias in favour of VIP.
I think the Tanzanian courts are very cautious and prudent. This is what I have seen. At least a dozen of different judges at the High Court and many justices at the Court of Appeal in different chambers have made some decision in this matter.
Alleging that all those judges were biased or corrupt is frankly rather absurd.
Standard Chartered has raised a bias issue in the High Court of Tanzania only once. The Tanzanian judge took that extremely seriously and, after due consideration, withdrew himself, not because he found there was any merit to Standard Chartered's complaint, but only because the judge wanted to avoid giving Standard Chartered any excuse for criticizing the judgment the High Court of Tanzania would hand down. I do not think that any European judge would have been so lenient with a completely unsubstantiated accusation of bias.
I have also seen that the Tanzanian courts have been struggling with the case and how to deal with it in a timely manner. That is not easy, because the case is being made complex by the many lawyers of the many parties involved and the myriad of actions commenced in the Tanzanian courts by Standard Chartered. All these actions the Tanzanian courts had to deal with in detail, and they have done so. It is also therefore that Standard Chartered's complaints about the Tanzanian judiciary do not seem fair to me: they make use of the Tanzanian judiciary, but refuse to abide by Tanzanian decisions they dislike. That is an unacceptable form of cherry picking.
I have no reason and actually I have seen nothing myself that justifies any complaint that anything inappropriate has happened with any of the procedures that have been ongoing or are going on in Tanzania.
But let's see. Even if you do not trust a certain judge and have a reason to complain, which is always possible, that does not give you an excuse to skip the legal remedies and the internal mechanisms of the legal system in which the judge functions. Those remedies are there to correct any flaws and impurities in that legal system. You should appeal, you should ask for revision, you should use the other legal remedies available in the system.
What you cannot do is skip those remedies and complain before a foreign court.
Standard Chartered has been making extensive use of the legal remedies it had available in Tanzania and they have prevailed over VIP in a number of very important instances over the last years. The fact that they have not always prevailed and may not always prevail, does not justify calling the Tanzanian courts unfair or corrupt.
Anyone who criticizes a court for being unfair or corrupt, should be extremely certain of his statement and should provide overwhelming proof, because it is one of the most serious accusations one can make. It goes right to the heart of a country's Constitution.
If the accusations are being made by an advocate, who is an officer of the court, he or she must be put to an even stricter test: lawyers have a tremendous responsibility not to raise unfounded doubts as to the credibility of the judicial system they are part of. If a lawyer has good reasons to believe that there is corruption, it is his duty to report this to the competent authorities, either by filing the appropriate appeals or by reporting it to the anti-corruption authorities.
Therefore, what I do not find acceptable is that Standard Chartered's lawyers in London are saying before the London High Court that its fellow High Court in Tanzania is not fair and corrupt.
First, because none of these complaints were ever raised before in Tanzania with the Court of Appeal of Tanzania or any other competent authorities.
Secondly, because none of the accusations is particularized with specific facts and concrete proof that can be tested. Such accusations are inadmissible in any serious court.
Last but not least, because it is by no means acceptable that the English courts are asked to sit as some court of appeal or Supreme Court of Tanzania. Standard Chartered or anyone else cannot claim any form of superiority or supremacy of the English courts over the Tanzanian courts.
In sum, I trust the Tanzanian courts and I have not seen anything that justifies questioning the trust and respect the parties in this matter and their lawyers owe to the Tanzanian courts.
Question: If someone comes saying that what has been done here within the Judiciary is tainted with corruption, what can you say about that?
Answer: As I have explained above, accusing the judiciary of any country of corruption is extremely serious. The person who says that or claims that should be put to strict proof and the first test should be that he must specify his accusations with facts: who, what, when, where and how?
What is absolutely unacceptable in a court of law is that a party states in general terms that the judiciary of another country is corrupt. What is even more unacceptable is that such a party declines specifying or proving anything by arguing: Honourable foreign Judge, we all know that the courts of that country are corrupt. Say no more.
You have to specify and give facts to the courts and authorities that have competence over that judge: tell them who, what, when, where and how? If you cannot specify those points I think you must remain quiet because you will be damaging yourself.
Question: VIP claims that it sold its shares in the public interest. Can you explain what VIP means by that?
Answer: As I said before, VIP publicly offered its shares from the very first moment that it asked for the winding up of IPTL in 2002. However, a buyer would have to meet certain conditions.
First, of course, the buyer would have to offer a fair price. But at least as important, the buyer would also have to commit to the purposes of IPTL: to provide plenty of cheap power to Tanzania.
Therefore the buyer would have to commit to expanding the power plant, to make sure the plant would convert to using inexpensive gas from Tanzania's own natural resources instead of expensive foreign diesel, and to delivering power against certain reasonable tariffs.
In other words, VIP did not and would not accept a buyer who would use the power plant as a tool to raise the power prices and squeeze out the Tanzanian consumers to pay unjustified cost excesses and profits.
Eventually, PAP declared its willingness to commit to these conditions that would guarantee the public interest. The conditions were explicitly laid down in the Tanzanian court order of 5 September 2013, confirming that VIP could sell its IPTL share to PAP who, as already stated, committed to expand the IPTL Power Plant Capacity to about 500MW, charge TANESCO a tariff of between UScents 6/kwh and UScent 8/kwh, and pay off all legitimate creditors of IPTL.
Fortunately, we already all know that according to a comparative tariff table prepared by TANESCO, IPTL has the cheapest capacity charges as compared to other providers such as Symbion, Songas and Aggreko. This is what VIP means, when it says that the sale of its shares to PAP was in the public interest. PAP has fully committed to the terms and spirit of the IPTL Power Purchase Agreement (PPA) signed on 26[SUP]th[/SUP] May 1995 between IPTL and TANESCO Agreement.
Question: We hear negative information about VIP despite the fact that what the company did was for the public interests. But we are not told about Mechmar, which is also suspected of having a hand of all what is happening now in the IPTL Saga. Why not?
Answer: I think this is a very good question. There is a formal answer and an informal answer to it.
The formal answer is that it is true that Mechmar was at the origin of all disputes that are pending. However, Mechmar formally does not seem to exist anymore. Two years ago, Mechmar was apparently declared in liquidation by the Malaysian courts. That means that the Mechmar entity as such is not operating, at least not independently.
There is also an informal answer. That is that Standard Chartered has in fact (albeit not formally) taken over Mechmars position. Standard Chartered is acting against IPTL, the Government and VIP also under the guise of the Mechmar Liquidators.
To give an example: whereas Standard Chartered has commenced fresh proceedings in London, claiming that it sued VIP and IPTL in London because the courts in Tanzania are not reliable, their own lawyers in Tanzania are acting in the Tanzanian courts and suing VIP and IPTL in Tanzanian courts on behalf of the Mechmar Liquidators.
So this means that the interest of Mechmar has been completely confused with the purported interest of Standard Chartered in IPTL.
That is the best explanation why the name Mechmar is not so much mentioned any more and you will hear much more the name of Standard Chartered.
Question: Some media have reported that Standard Chartered successfully attached assets of VIP in Holland, the Netherlands. As counsel representing VIP in that country, what do you say about these claims?
Answer: I can confirm that there was an
attempt to attach assets of VIP in the Netherlands. But any information that that attempt was successful is not truthful.
I saw an interview of the Dutch Ambassador who was made to believe that those attachments had been successful. But there are no VIP assets in Netherlands that were actually attached.
I am wondering where that information could come from. Indeed Standard Chartered had commenced proceedings in the Netherlands too, but now they have announced that their claims are no longer on foot.
So also from that perspective, I really do not understand from what source and why it could be announced in the Tanzanian media that anything has been attached in the Netherlands or that Standard Chartered has been successful in any way whatsoever in the Netherlands against VIP.
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