Foreign firm operates illegally for ten years By Costantine Sebastian THE CITIZEN A Norwegian engineering consultancy company has done business in the country illegally for nearly a decade, The Citizen has learnt. Information obtained from reliable sources and available documents show that the firm once operated without the approval of the Engineers Registration Board (ERB) and had neither registered with the Business Registration and Licencing Agency (Brela) nor secured a business licence. The company, which trades locally and internationally as Norconsult, is also being investigated by the World Bank on suspicion of corruption in a donor-funded project in the country. Norconsult AS (NO) was in 1997 found to be engaged in engineering consultancy in various government projects without being registered. ERB directed it to register and was registered as Norconsult Tanzania Ltd in 1998 as a foreign firm, ERB registrar Steven Mlote told The Citizen. However, the board recently established that Norconsult AS had not registered with Brela as of March 26, 2008. This means that it has been conducting business illegally as per Brela regulations, ERB notes in an April 18 memo. Acknowledging the anomaly, a government source said last week that ERB, the Tanzania Revenue Authority (TRA), Tanzania Roads Agency (Tanroads) and Brela were working together on the issue. The institutions, however, are undecided on what action should be taken against the firm, which is a key player in aid extended by Norwegian. While ERB says it is Brela which is required to take legal action against Norconsult, Brela points at the Government without specifying what exactly it is supposed to do. TRA has remained mum on the issue although reliable sources in the authority have confirmed that the company is being investigated for tax evasion amounting to about Sh2.4 billion. It has come to our knowledge that Norconsult AS has neither filed statutory returns nor paid any taxes from 2002 to 2007 despite being registered as a taxpayer with TRA, Tanroads notes in a March 25, 2008 letter. Norconsult Tanzania (NTZ) managing director Francis Kifukwe denied any wrongdoing on the part of the firm and disputed claims that the company was being investigated for tax evasion. He said Tanroads had been misinformed, adding that tax records for both Norconsult AS and Norconsult Tanzania were with the Large Taxpayers Department. Contacted for comment, Brela CEO Esteriano Mahingila said he was personally not aware of any joint scrutiny of the company by the four government institutions. He said, however, that it was beyond comprehension for a company to do business, including with the Government, all those years without proper documentation. Mr Mahingila added that those working with the company could always have asked for its Brela registration, business licence, bank account and other important details relevant to transactions between the parties. He said, however, that a foreign company could operate without the requisite registrations when it had specific exemption from the Government, and gave the example of an organisation undertaking special assignments in the country for a limited duration. Since this is a foreign company, it was supposed to have a certificate of compliance, and not a certificate of incorporation, to be able to operate legally in the country,? Mr Mahingila said, noting that he was not aware that the company was only registered a few weeks ago. Mr Mahingila said those who had been working with the company were supposed to have established whether or not it was registered with the relevant authorities. Until this year, Norconsult AS the operations arm of Norconsult Holding AS was operating without Brela registration, which it, however, obtained within 48 hours on March 26. The company is also said to have been transacting business in the country without a valid licence. Local projects in which the company has been involved in recent years and their values include the Sengerema-Busagara road (Sh35.7 billion), Geita-Sengerema road (Sh39.5 billion) and the Unity Bridge is southern Tanzania. Others are the Rongai-Kamwanga road (Sh14.5 billion), Marangu-Rombo Mkuu road (Sh23.3 billion) as well as the Tarakea-Kamonaga and Mwika-Kilacha roads. The projects also include the World Bank-funded Dar es Salaam Water Supply and Sanitation Project, a joint venture with a local and a Dutch firm that was signed in July 2003. A Norwegian publication, Development Today, which is working closely with The Citizen on the issue, says the $6.7 million project might lead to Norconsult's blacklisting by the Work Bank. What raises the eyebrows of those who have been aware of the company's dubious activities is how it could have taken the relevant public organs and donors for a ride for that long. They question how a company could undertake public and donor-funded projects worth billions of shillings without paying a penny in taxes since 1991 without being detected. These people are said to have a minimum turnover of between $3 million and $4 million annually in the country. If the allegations against the company are true, then it means that many hands have been greased and taxes amounting to billions of shillings not paid, a tax expert consulted on the matter noted. Attempts by this paper since last month to get a reaction from Norconsult AS in Norway failed. According to Mr Kifukwe, the company initially operated in the country as Norconsult International (NI) AS which handled projects funded by the Norwegian government. The company then partnered with him to form Norconsult Tanzania as a branch of the Norconsult Group. Documents he handed over to The Citizen show that NI, which for many years handled the international operations in the group, was a wholly owned subsidiary of NO. A annual general meeting of Nom who date was not given, decided that all the activities in the Norconsult Group, including overseas operations, should be in the name of NO. As a consequence of that decision, the shares of Norconsult (Tanzania) that were owned by NI, have been transferred to NO, the chief executive officer of NO and chairman of the NI board, Mr John Nyheim, wrote to ERB on March 28, this year. These steps imply that NI will no longer be in business in Tanzania. Contracts entered into where the Norconsult Group will be involved, will therefore consequently be either in the name of the parent company NO or the partly owned NTZ, the letter further notes. Mr Mlote said NI had never applied for registration with ERB and therefore had never been registered. The board's record show that NTZ was initially registered as a foreign engineering consulting firm in 1998 with the Norwegians as the majority shareholders. In 2005, it applied to change its registration status from foreign to a local firm after transferring the majority of its shares to Mr Kifukwe. At the same time, the records show, NO applied for registration as a foreign firm. ERB says that NO was offering its services as far back as 1987 and it was after being pressured that it agreed to be registered on June 27, 2005. The company was registered with only one consulting engineer, Mr Peter Easther, a foreigner. All its other 11 directors are also foreigners. Normally, after registration with the board, all firms are required to register with Brela to fulfil business requirements before being allowed to conduct engineering consultancy services in the country,? ERB notes in its April 18 letter.