...As Tanzania gets a refund of $28m (Sh37.8billion)
Former president Benjamin Mkapa
In the wake of British Aerospace Engineering System's agreement on Friday to pay back $400million (Sh540billion) in fines after admitting that its arms deals, including the controversial radar sold to Tanzania, was marred by corruption, many in Tanzania are left wondering whether those who negotiated the dubious deal during the third phase regime will now be prosecuted, and how much money will be paid back to the Tanzanian people.
In its comprehensive investigation, UK's Serious Fraud Office named Andrew Chenge, Sailesh Vithlani, Tanil Somaiya, and Dr Idris Rashidi as the key suspects linked to suspicious payments amounting to $12million doled out by the BAE System broker in Dar es Salaam.
On Friday the British arms firm accepted guilt and agreed to pay penalties in the US and the UK totalling several hundred million dollars to settle the long-running corruption allegations against it.
Under the deal, announced simultaneously in London and Washington, BAE will pay $400m (£255) in the US and $47m (£30m) in the UK.
In the US, the company will plead guilty to offences of false accounting to settle bribery allegations made over the enormous Al Yamamah arms deals with Saudi Arabia stretching back more than 20 years, as well as corruption allegations over arms deals in central Europe.
The deal with the SFO in the UK covers one arms contract only, under which overpriced military radar was sold to Tanzania. The SFO said some of the cash would become "an ex gratia payment for the benefit of the people of Tanzania".
According to details from the SFO's investigation, the actual price of the military radar sold to Tanzania at that time was $12million, but Tanzania paid about $40million - with the extra $28million going into the pockets of those involved, both government officials and private individuals.
Under the new deal between the SFO and BAE System announced on Friday, Tanzania may get a refund of $28 million (Sh37.8 billion) an amount that could pay for 9,500 students to pursue their undergraduate studies for two years or provide 7.4 million families with treated mosquito nets at a cost of Sh5,000 per net.
In 2006, the UK investigators established that BAE System had secretly paid a $12m commission into the Swiss bank account of Sailesh Vithlani in a deal that led to Tanzania, one of the world's poorest countries, buying a military radar system with only nominal justification.
The back-door payment to the Tanzanian middleman represented 30 percent of the contract value. Tanzania had to borrow to finance the deal, which critics said was unnecessary and overpriced.
Tony Blair supported the 2002 sale but former UK minister for international development Clare Short says she and the chancellor at the time, the UK's current Prime Minister Gordon Brown, opposed it.
Vithlani's 2006 admission that he had brokered the shady deal led Short to call for BAE's prosecution if the allegations were proved true. She said the prime minister had been personally responsible for forcing the licence for the Tanzania deal through the cabinet.
"No 10 insisted on letting this go ahead, when it stank," she said. "It was always obvious that this useless project was corrupt."
Reacting to BAE's agreement to pay back the money, the Prevention and Combating of Corruption Bureau (PCCB) Chief Edward Hosea said, "This is a great achievement in fighting grand corruption because it goes beyond the court battle by enabling the victim to get the refund of the stolen monies."
"But that doesn't mean that we are going to drop our charges because the agreement has been reached according to UK laws," Hosea told The Guardian on Sunday. "In Tanzania the case is still going on."
Moment of truth, shame
For Benjamin Mkapa - who strongly defended the purchase of the radar during his presidency even after Short told him in Dodoma in 2001 that the deal had been corrupt - it is a moment of shame.
But for President Kikwete, BAE's admission of guilt is a political victory, because in 2006 he publicly demanded compensation from the firm for overpricing the radar.
Meanwhile for Blair, who is currently heavily under fire in his country for his secret unconditional commitment to the war in Iraq, the BAE investigation is yet another damning example of how multinational companies export corruption to Africa- and their governments have been complicit in it.
Blair was at the centre of the controversy over the BAE radar deal with Tanzania, just as he was with the Saudi arms contracts. Short and fellow cabinet member Robin Cook had tried to stop the sale of the radar, but as prime minister, Blair overruled them and insisted that the deal had to go through.
Reacting to the BAE System's move to pay its fine, Short said on Friday, "Every way you looked at it, it [the deal] was outrageous and disgraceful. And guess who absolutely insisted on it going through? My dear friend Tony Blair, who absolutely, adamantly, favoured all proposals for arms deals."
Short further added, "It was an obviously corrupt project…Tanzania didn't need a new military air traffic control, it was out-of-date technology and they needed a civilian air traffic control system and there was a modern, much cheaper one. Everyone talks about good governance in Africa as though it is an African problem, and often the roots of the ‘badness' are companies in Europe."
The World Bank and the International Civil Aviation Organisation judged that the 2001 purchase was unnecessary and overpriced.
For key suspects involved in the Tanzanian deal, BAE's admission of guilt is the culmination of six years of denial on both sides, as well as a political cover-up here in Tanzania intended to help some of them to avoid prosecution. At least four Tanzanian suspects were being investigated by both the SFO and the PCCB. They include former Attorney General Andrew Chenge, former Central Bank governor Idris Rashidi, Sailesh Vithlani and his close partner Tanil Somaiya.
Other suspects from the UK are Michael Peter Rouse, Sir Richard Harry Evans, Michael John Turner, Julia Adgridge and two senior officials from BAE System. It is believed that there are still more names from the previous regime that were part of the team that pocketed $12m in kickbacks from the deal.
According to the SFO, the kickbacks were paid to Tanzania's top officials in advance to move the negotiation process along smoothly.
Chenge was forced to resign in 2008 after investigators discovered more than £500,000 in a Jersey bank account he controlled but, he strongly denied the money had come from BAE. Now, with the truth finally surfacing, the big question is: Will Tanzania let the suspects off the hook after recovering its stolen billions?
Though the PCCB Chief on Friday ruled out any possibility of dropping the case, at the local level there has been a secret campaign to ensure that those implicated in the radar deal are saved from the arm of the law.
Last November, minister in charge of good governance Sofia Simba, who deals with the PCCB under her docket, tried unsuccessfully to clear Chenge of any wrongdoing when she claimed in Dodoma that the SFO had already written a letter absolving the former AG-claims vehemently denied by the UK government.
Early in 2008, the UK investigators that Chenge had received $1.5m (2.1bn/-) in kickbacks from the deal through a slush fund he set up in the UK island of Jersey.
According to a draft report written by the SFO and seen by The Guardian on Sunday, Chenge received payments through six credit transfers between June 19, 1997, and April 17, 1998, while he was serving as Attorney General.
The billions were paid to account No.59662999 owned by Franton Investment Limited through Bank Code No 204505 of Barclays Bank Plc, according to the draft report, a final version of which was sent to the Director of Public Prosecutions.
The SFO also established that Chenge owns Franton Investment, a registered company that appears to have been established primarily to enable the transfer of the dirty money. According to information provided by the Jersey Authority, the $1.5m was transferred from a Frankfurt branch of Barclays Bank to Chenge's account at a Jersey branch.
For example, the SFO established that on September 20, 1999, Chenge personally authorised the transfer of $1.2m from the Franton account to Royal Bank of Scotland International in Jersey. In May 1998, Chenge also authorised the transfer of $600,000 to an account owned and operated by Langley Investments Ltd. The account was officially operated by former Central Bank Governor Dr Idris Rashidi.
Rashidi is former managing director of the troubled Tanzania Electric Supply Company Ltd (Tanesco). The SFO report concluded that both Rashidi and Chenge were key figures in the corrupt radar deal, but they were acting with the full support of top officials from the third phase regime.
SOURCE: GUARDIAN ON SUNDAY
Former president Benjamin Mkapa
In the wake of British Aerospace Engineering System's agreement on Friday to pay back $400million (Sh540billion) in fines after admitting that its arms deals, including the controversial radar sold to Tanzania, was marred by corruption, many in Tanzania are left wondering whether those who negotiated the dubious deal during the third phase regime will now be prosecuted, and how much money will be paid back to the Tanzanian people.
In its comprehensive investigation, UK's Serious Fraud Office named Andrew Chenge, Sailesh Vithlani, Tanil Somaiya, and Dr Idris Rashidi as the key suspects linked to suspicious payments amounting to $12million doled out by the BAE System broker in Dar es Salaam.
On Friday the British arms firm accepted guilt and agreed to pay penalties in the US and the UK totalling several hundred million dollars to settle the long-running corruption allegations against it.
Under the deal, announced simultaneously in London and Washington, BAE will pay $400m (£255) in the US and $47m (£30m) in the UK.
In the US, the company will plead guilty to offences of false accounting to settle bribery allegations made over the enormous Al Yamamah arms deals with Saudi Arabia stretching back more than 20 years, as well as corruption allegations over arms deals in central Europe.
The deal with the SFO in the UK covers one arms contract only, under which overpriced military radar was sold to Tanzania. The SFO said some of the cash would become "an ex gratia payment for the benefit of the people of Tanzania".
According to details from the SFO's investigation, the actual price of the military radar sold to Tanzania at that time was $12million, but Tanzania paid about $40million - with the extra $28million going into the pockets of those involved, both government officials and private individuals.
Under the new deal between the SFO and BAE System announced on Friday, Tanzania may get a refund of $28 million (Sh37.8 billion) an amount that could pay for 9,500 students to pursue their undergraduate studies for two years or provide 7.4 million families with treated mosquito nets at a cost of Sh5,000 per net.
In 2006, the UK investigators established that BAE System had secretly paid a $12m commission into the Swiss bank account of Sailesh Vithlani in a deal that led to Tanzania, one of the world's poorest countries, buying a military radar system with only nominal justification.
The back-door payment to the Tanzanian middleman represented 30 percent of the contract value. Tanzania had to borrow to finance the deal, which critics said was unnecessary and overpriced.
Tony Blair supported the 2002 sale but former UK minister for international development Clare Short says she and the chancellor at the time, the UK's current Prime Minister Gordon Brown, opposed it.
Vithlani's 2006 admission that he had brokered the shady deal led Short to call for BAE's prosecution if the allegations were proved true. She said the prime minister had been personally responsible for forcing the licence for the Tanzania deal through the cabinet.
"No 10 insisted on letting this go ahead, when it stank," she said. "It was always obvious that this useless project was corrupt."
Reacting to BAE's agreement to pay back the money, the Prevention and Combating of Corruption Bureau (PCCB) Chief Edward Hosea said, "This is a great achievement in fighting grand corruption because it goes beyond the court battle by enabling the victim to get the refund of the stolen monies."
"But that doesn't mean that we are going to drop our charges because the agreement has been reached according to UK laws," Hosea told The Guardian on Sunday. "In Tanzania the case is still going on."
Moment of truth, shame
For Benjamin Mkapa - who strongly defended the purchase of the radar during his presidency even after Short told him in Dodoma in 2001 that the deal had been corrupt - it is a moment of shame.
But for President Kikwete, BAE's admission of guilt is a political victory, because in 2006 he publicly demanded compensation from the firm for overpricing the radar.
Meanwhile for Blair, who is currently heavily under fire in his country for his secret unconditional commitment to the war in Iraq, the BAE investigation is yet another damning example of how multinational companies export corruption to Africa- and their governments have been complicit in it.
Blair was at the centre of the controversy over the BAE radar deal with Tanzania, just as he was with the Saudi arms contracts. Short and fellow cabinet member Robin Cook had tried to stop the sale of the radar, but as prime minister, Blair overruled them and insisted that the deal had to go through.
Reacting to the BAE System's move to pay its fine, Short said on Friday, "Every way you looked at it, it [the deal] was outrageous and disgraceful. And guess who absolutely insisted on it going through? My dear friend Tony Blair, who absolutely, adamantly, favoured all proposals for arms deals."
Short further added, "It was an obviously corrupt project…Tanzania didn't need a new military air traffic control, it was out-of-date technology and they needed a civilian air traffic control system and there was a modern, much cheaper one. Everyone talks about good governance in Africa as though it is an African problem, and often the roots of the ‘badness' are companies in Europe."
The World Bank and the International Civil Aviation Organisation judged that the 2001 purchase was unnecessary and overpriced.
For key suspects involved in the Tanzanian deal, BAE's admission of guilt is the culmination of six years of denial on both sides, as well as a political cover-up here in Tanzania intended to help some of them to avoid prosecution. At least four Tanzanian suspects were being investigated by both the SFO and the PCCB. They include former Attorney General Andrew Chenge, former Central Bank governor Idris Rashidi, Sailesh Vithlani and his close partner Tanil Somaiya.
Other suspects from the UK are Michael Peter Rouse, Sir Richard Harry Evans, Michael John Turner, Julia Adgridge and two senior officials from BAE System. It is believed that there are still more names from the previous regime that were part of the team that pocketed $12m in kickbacks from the deal.
According to the SFO, the kickbacks were paid to Tanzania's top officials in advance to move the negotiation process along smoothly.
Chenge was forced to resign in 2008 after investigators discovered more than £500,000 in a Jersey bank account he controlled but, he strongly denied the money had come from BAE. Now, with the truth finally surfacing, the big question is: Will Tanzania let the suspects off the hook after recovering its stolen billions?
Though the PCCB Chief on Friday ruled out any possibility of dropping the case, at the local level there has been a secret campaign to ensure that those implicated in the radar deal are saved from the arm of the law.
Last November, minister in charge of good governance Sofia Simba, who deals with the PCCB under her docket, tried unsuccessfully to clear Chenge of any wrongdoing when she claimed in Dodoma that the SFO had already written a letter absolving the former AG-claims vehemently denied by the UK government.
Early in 2008, the UK investigators that Chenge had received $1.5m (2.1bn/-) in kickbacks from the deal through a slush fund he set up in the UK island of Jersey.
According to a draft report written by the SFO and seen by The Guardian on Sunday, Chenge received payments through six credit transfers between June 19, 1997, and April 17, 1998, while he was serving as Attorney General.
The billions were paid to account No.59662999 owned by Franton Investment Limited through Bank Code No 204505 of Barclays Bank Plc, according to the draft report, a final version of which was sent to the Director of Public Prosecutions.
The SFO also established that Chenge owns Franton Investment, a registered company that appears to have been established primarily to enable the transfer of the dirty money. According to information provided by the Jersey Authority, the $1.5m was transferred from a Frankfurt branch of Barclays Bank to Chenge's account at a Jersey branch.
For example, the SFO established that on September 20, 1999, Chenge personally authorised the transfer of $1.2m from the Franton account to Royal Bank of Scotland International in Jersey. In May 1998, Chenge also authorised the transfer of $600,000 to an account owned and operated by Langley Investments Ltd. The account was officially operated by former Central Bank Governor Dr Idris Rashidi.
Rashidi is former managing director of the troubled Tanzania Electric Supply Company Ltd (Tanesco). The SFO report concluded that both Rashidi and Chenge were key figures in the corrupt radar deal, but they were acting with the full support of top officials from the third phase regime.
SOURCE: GUARDIAN ON SUNDAY