Tanzania has threatened to bar all charitable organisations from the UK from operating in its territory should British Aerospace Defence Systems Ltd (BAE) pay a £30 million ($50 million) settlement to charity and not into the state coffers.
The payment is part of a deal reached in February 2010, in which the Serious Fraud Office (SFO) investigators agreed to a £30 million settlement with BAE, a defence contractor for failure to keep proper accounting records of a radar sale.
Last December the Southwark Crown Court, fined BAE Systems Plc £500,000 for failure to keep adequate accounting records in relation to a defence contract for the supply of an air traffic control system to Tanzania.
This is part of a global agreement BAE Systems reached with the SFO and the US Department of Justice concerning contracts in a number of countries.
However, the British government has been adamant claiming that the money would be put to good use if channelled through charitable organisations from the UK in Tanzania.
While Tanzania wants the funds to be paid to public coffers, BAE insists the deal allowed it to pay the balance to charity which could still benefit Tanzania’s households.
“If the UK goes ahead or sticks to its original plan to reimburse money stolen from our government, through their own charitable organisations in the country, then we shall ban all such organisations that originate from Britain,” Bernard Mmembe, minister for foreign affairs and international cooperation, said.
Some of the UK charitable organisations working in Tanzania include Oxfam , Save the Children, Action Aid, Care Tanzania, Plan International, Engender, Pathfinder and Intra Health. It is obvious that a decision to bar them from operating in the country, would have an impact on many sectors.
“These people are trying to exonerate themselves in the graft scandal and pass the buck, for the world to believe that Tanzania is so corrupt it cannot be trusted,” said Mr. Mmembe.
According to the minister, Tanzanian and British governments had earlier agreed to spend the money on various projects in education sector including procurement of textbooks, reference books for 12 subjects in primary schools. The money, he added, was also supposed to be spent on procurement of desks, construction of teachers’ houses and school latrines.
BAE agreed to pay an ex-gratia payment for the benefit of the people of Tanzania of £30 million less any fine imposed by the Crown Court. Additionally, BAE was ordered to pay £225,000 costs to the SFO.
A contract for the supply of a radar defence system for Dar-es-Salaam International Airport was agreed in 1999 following negotiations that had been conducted since 1992 initially by Siemens Plessey Systems which was acquired by BAE in 1998. The value of the contract was $39.97 million.
BAE’s practice was to engage advisers to help with its marketing. These advisers were either classified by BAE as ‘overt’ (that is they operated openly as BAE’s in-country representatives), or ‘covert’. The latter operated in circumstances where there was a need for confidentiality.
In order to maximise confidentiality with regard to its use of covert advisers and the making of payments to them, BAE set up Red Diamond Trading Company, incorporated in the British Virgin Islands.
In Tanzania a local businessman, Shailesh Vithlani, was recruited at an early stage (initially by Siemens Plessey Systems) to advise BAE on its negotiations with the government on the radar contract.