Government to sue Norconsult
By Tom Mosoba and Mkinga Mkinga
THE CITIZEN
The Government yesterday said it will sue the Norwegian engineering consulting firm, Norconsult, following its abrupt decision to pull out of Tanzania following corruption allegations.
Tanzania Roads Agency (Tanroads), the Government's arm dealing with infrastructure projects in which Norconsult was involved, revealed that company still had some binding contracts.
Tanroads executive director Ephraem Mrema told The Citizen that the Government would have no option but to sue Norconsult should it leave before fulfilling all its contracts.
''They have not officially informed us of the decision to close their offices.
We have read about it on their company website and in your newspaper,'' said Mr Mrema.
Norconsult's global president, Mr John Nyheim, announced on Sunday that the company was closing its Dar es Salaam office, accusing its local partner, Norconsult Tanzania Limited, of engaging in corruption.
But nearly a week since Norconsult's announcement that it would wind up its Tanzanian operations, government officials said yesterday that they had not received any communication on the reported pullout by the firm.
However, a top official at the Norwegian embassy in Dar es Salaam confirmed in an email to The Citizen that they had been informed that Norconsult was closing shop.
''Yes, we were notified yesterday (Monday).
It is sad that a relatively large consultancy business with competence has to close after 40 years of operation,'' said Ms Kristin Sverdrup, deputy head of Mission at the Royal Norwegian Embassy.
According to Mr Mrema, Norconsult should have informed Tanroads of their decision to cease operations in Tanzania, as stipulated in their contract.
He said the company was implementing five major infrastructure development projects.
He listed the road projects as Marangu-Rombo Mkuu, Usagara-Geita, Tarakea-Kamwanga and the Unity Bridge on the Tanzania-Mozambique border.
The firm was also doing a feasibility study and design for the Nzega-Tabora road.
On whether the projects would be disrupted, Mr Mrema said Norconsult had its employees on site.
''They will have to tell us who will take over these assignments when they move out,'' he said.
Infrastructural experts argued that should the company abandon the projects, they would be forced to suspend them for a while to call for fresh bids for consultancy services.
Mr Mrema could, however, give no firm confirmation, only reiterating that they were still working with Norconsult.
Ms Sverdrup said the pullout would not adversely affect the Norwegian Government's bilateral relations with Tanzania.
''Norcounsult is a private company.
Their closure will not have any affect on Norwegian bilateral development cooperation with Tanzania.
The Embassy has no direct contractual arrangements with Norconsult,'' she said.
The embassy, she added, had not aware of any corruption allegations against Norconsult until the statement that was released by the mother company in Norway.
The deputy minister for Infrastructural Development, Dr Makongoro Mahanga, also said the law would be left take its own course over the Norconsult contracts.
''I don't want to say anything at the moment as it is too early for concrete action.
If they have decided to close their offices and move out, we will have to look at what their contracts say,'' Dr Mahanga said.
According to the statement that announced the firm's decision to quit Tanzania, audits done over the past one year had revealed embezzlement of up to Sh332 million in irregular payments at Norconsult's offices in Dar es Salaam.
The decision to cancel Norconsult's lucrative contracts in Tanzania, however, was curiously taken after The Citizen exclusively reported two weeks ago how the Norwegian company had operated for a decade without any form of official registration.
Norconsult AS, has since 1998, run business as Norconsult Tanzania Limited, but did not obtain official registration from the Business Registration and Licensing Agency until this year, according to confirmation by the Engineering Registration Board.
That anomaly did not, however, prevent Norconsult from executing huge projects overseen by the Government, the World Bank and the Norwegian Embassy.
It has over the years been one of the major engineering consultancy firms in Tanzania.
Other projects, in which the company has been involved in recent years, 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.
Others include the World Bank-funded Dar es Salaam Water Supply and Sanitation Project, a joint venture with a local company and a Dutch firm that was signed in July 2003.
A Norwegian publication, Development Today, which is working closely with The Citizen on the investigation, says the $6.7 million project might lead to Norconsult's blacklisting by the Work Bank.
Other reports also say that Norconsult was being investigated for alleged tax evasion amounting to Sh2.4 billion.
Norconsult AS's local partner and managing director, Mr Francis Kifukwe, would not comment despite several attempts by The Citizen to seek for his views.
In the statement announcing the company's withdrawal, Mr Nyheim said Norconsult AS was perturbed by its operations in Tanzania, which he said did not measure up to the company's international code of ethics and contracts.
''We do not accept any kind of misconduct or corruption.
As a consequence, we cease our activities in Tanzania,'' said Mr Nyheim.
''Internal and external reviews of the activities of Norconsult's partly-owned subsidiary in Tanzania have revealed activity that is not in accordance with the company's Code of Ethics and contracts.''
He said the misconduct was revealed through Norconsult's own internal review followed by an external review by PriceWaterhouseCoopers (PwC).
Mr Nyheim gave examples through which a total of Sh332 million was believed to have been corruptly obtained from its local operations.
''It has been established that in the past several irregular cash payments have been made from Norconsult's partly-owned subsidiary in Tanzania, NTZ, totalling NOK (Norwegian Kronor) 650.000 (Sh156 million),'' he said.
Last year, $146 500 (Sh176 million) was paid out in cash from the project office in Dar es Salaam, with only petty cash receipts as documentation.
This case apparently involved Norconsult's participation in the World Bank funded Dar es Salaam Water and Sanitation Project (DAWASA).
What has raised eyebrows is how the company could have taken the public organs for a ride for so long.
The second question is how it was able to 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.
If the allegations against the company are true, then it means that hands may have been greased and taxes amounting to billions of shillings not paid,'' a tax expert told The Citizen.