Billions Lost Over Tanzania's Escrow Saga
FORMER minority shareholder of Independent Power Tanzania Limited (IPTL), VIP Engineering and Marketing Limited, says it supports investigations that would unearth facts regarding the withdrawal of over 300bn/- from the Tegeta Escrow Account.
This comes hardly two weeks after the National Assembly made eight resolutions regarding the matter, one of which directed responsible state organs to probe and take appropriate action against individuals who allegedly benefited from the funds.
The company, owned by local businessman James Rugemalira, maintains that it paid taxes amounting to 34million US dollars (about 57.8bn/- ) relating to the sale of its interests in IPTL.
It also accused Standard Chartered Bank of Hong Kong of trying to collect about 200m US dollars with respect to IPTL's alleged 84m US dollar debt.
"VIP is aware of the parliamentary resolutions proposed by the Public Accounts Committee and is entirely in favour of investigating and reporting the facts about IPTL," VIP said in a statement, the first since Parliament made the decision on the matter on November 29, this year.
Adding; "VIP is not a party to the agreement concerning the Tegeta Escrow Account and had no role in its creation or the payment of funds from that account and is no longer an IPTL shareholder.
"However, VIP has extensive knowledge of the historical and legal background of IPTL, and has noted that much of the information regarding VIP and IPTL is incorrect, incomplete and/or misleading."
The local company, stressed that the public and the Parliament have been misled into believing false allegations that can only benefit foreign powers, at the expense of Tanzanians.
In the unsigned statement, the company said it was ready to show all its evidence and providing it to all interested parties.
VIP went on to accuse its former shareholder in IPTL, Mechmar of Malaysia of taking advantage of the company and Tanzanian people even before IPTL went into commercial operation in 2002.
"Among other things, Mechmar immediately excluded VIP from all management of IPTL. It then restructured IPTL's debt without authorization and colluded with IPTL's lenders to increase IPTL's debt for its own benefit. The actual amount borrowed was about 84m US dollars.
"Mechmar's actions resulted in a higher power tariff to Tanzanians, and Tanzania Electric Supply Company (Tanesco) was forced to sue IPTL--successfully-- to lower the tariff.
According to the statement, Mechmar also failed to upgrade and expand the IPTL plant, with the provisional liquidator of IPTL later estimating that this cost Tanzanians roughly 11 million US dollars per month.
The Government of Tanzania through Tanesco, paid the independent power producer 200m US dollars between 2002 and 2006, reads part of the statement.
"For many years, VIP looked for a solution to the IPTL problem that would allow the Tegeta plant to expand and upgrade, to run on gas, providing more power at a much cheaper tariff.
"When PAP offered to purchase VIP's shares in IPTL, VIP required it to, as a condition of sale, expand and upgrade the Tegeta plant," the statement reads in part.
The company said it notified all parties which claimed interests in IPTL of its intended sale to PAP-including Tanesco and Standard Chartered Bank (SCB) and eventually made public the full terms of its sale to PAP so that anyone with an objection could do so.
VIP also referred to the September 5, 2013 ruling by the High Court through Justice Utamwa which recognized the sale of IPTL to Pan African Power (PAP)-including the sale of VIP's 30 per cent stake in IPTL.
"Therefore, unless and until the sale of IPTL to PAP is lawfully challenged in Tanzanian courts, IPTL and all its assets belong to PAP as of 5 September 2013.
VIP also maintained in the statement that the funds in the Tegeta Escrow Account did not belong to the Bank of Tanzania or to the Government of Tanzania but had already been allocated to pay for power and capacity charges.
"Tanesco and IPTL settled their disagreements with a considerable discount to Tanesco, saving the power utility substantial amount of money.
Only the agreed amount was paid out of the Tegeta Escrow Account," the company stated. In sum, the efforts to characterize the acquisition of IPTL by PAP as a "scandal" or "corruption" are simply part of a campaign to allow a foreign bank- SCB-to collect a fraudulent debt incurred by a foreign investor at the expense of Tanzanians, it stated in the statement.
It added; "In VIP's view, the real scandal is how foreign companies feel free to use their economic and political power to extract payments to which they are not entitled and to manipulate local politics to work for them.
After a heated debate in the National Assembly following a report presented by the Public Accounts Committee (PAC) on November 29, this year, the House directed the Prevention and Combating of Corruption Bureau (PCCB), police to investigate and take actions against those involved.
The august House also recommended that the PCCB Act should be brought to Parliament for review in order to establish a new body to specifically handle grand corruption and economic sabotage.
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