We will not refund radar cash, says UK

y Christopher Kidanka

The United Kingdom will not compensate Tanzania for the loss incurred in the controversial 28 million sterling pounds (about Sh50 billion) radar purchase deal, its High Commissioner said yesterday.

Speaking in an exclusive interview with The Citizen in Dar es Salaam, the outgoing UK High Commissioner to Tanzania, Mr Phillip Parham, said though his country was aware that the price of the radar had been inflated, it would not entertain Tanzania�s plea for compensation.

Mr Parham, who is leaving next week after serving in Tanzania for three years, said the extra money was paid out as commission and bribes to the officers who were involved in the deal and "they are the ones who should repay the money."

He added: "Britain's Serious Fraud Office (SFO) is investigating the matter and the PCCB (Prevention and Combating of Corruption Bureau) is doing the same in Tanzania, but the two are cooperating. If it is proved that these people were paid the money, they are the ones who should pay it back and not the UK Government."

The envoy's revelation is a blow to the hopes of Tanzanians, including President Jakaya Kikwete, who had indicated that the Government would press for the return to the money paid out in the inflated commission.

Speaking in early 2007, President Kikwete said his Government was following with keen interest the investigations into the fraudulent radar purchase deal and would ask the UK to refund an equivalent of Sh15 billion.

"We are especially interested in two areas. One, we would like to know who was involved in the shady deal. But once this is confirmed we will lodge a formal request for compensation," the President said in response to questions at a meeting he held with senior newspaper editors at State House, Dar es Salaam.

A number of officials, including former Infrastructure minister Andrew Chenge, are being investigated for their alleged roles in the dubious deal.

Mr Chenge resigned following media reports that he was being investigated over the corrupt radar deal. In his spirited defence of himself, he caused a stir and became a talking point countrywide when he referred to $1 million reportedly found in his offshore account as "vijisenti" (pocket change).

The SFO is investigating the Sh50 billion deal involving a UK arms dealer, BAE Systems, which is alleged to have paid some middlemen a staggering $12 million (Sh15 billion).

Britain�s The Guardian newspaper reported last year that Mr Chenge had denied during its own investigations that the more than $1 million (�507,500) found in his offshore account had been paid to him by BAE.

Investigators involved in a three-year inquiry following the controversial deal to sell Tanzania a �28 million radar system traced the money to Jersey accounts reportedly held by Mr Chenge.

But he told the newspaper: "The obvious inference [of the investigation] is that I have received for my benefit 'corrupt payments' from BAE. This is untrue."

The former minister's American lawyer, Mr J. Lewis Madorsky, added: "While the matters in question took place a number of years ago, we can state ... that any and all allegations of illegality, impropriety, misconduct and unethical behaviour made against our client are categorically and vigorously denied".

According to The Guardian, the investigators had said that Mr Chenge could be a valuable witness. The target of their investigation was not him but BAE.

The arms company made the commission payments to a local agent in Tanzania to push through the �28 million radar sale, in an elaborate chain of offshore companies and a Swiss bank.

The SFO investigators also reportedly searched Mr Chenge�s residence in Dar es Salaam, in connection with the claims. He has not refuted the allegation.

According to media reports, a lengthy SFO investigation in the UK discovered that 31 per cent of the deal's contract price had been paid via Switzerland.

BAE Systems transferred the money to its subsidiary, Red Diamond Trading, which is registered in the British Virgin Islands.

Red Diamond then moved the cash to a Swiss account in the name of a Panama company, Envers Trading Corporation. This entity had two Panamanian nominee directors. But it was said to be secretly controlled by a Tanzanian middleman, Mr Shailesh Vithlani.

The SFO and PCCB investigators were checking whether Mr Vithlani passed on any of the money to Tanzanian politicians and officials.

According to President Kikwete, the UK investigation team had been given "all necessary support" by Tanzania's Directorate of Criminal Investigations.

The radar saga, which had earlier caused a storm in the UK House of Commons, took another turn after The Guardian reported that the SFO had confirmed to former British International Development minister Clare Short that it had seen documents showing that the �28 million sale of radar equipment to Tanzania by BAE Systems was corrupt.

Ms Short told a Tory-initiated debate in the House of Commons on the controversial 2002 sale that the issue had split the cabinet.

The newspaper further quoted Ms Short as describing the deal as "squalid", and calling for cross-party support to tighten the rules on arms sales to developing countries.

She also said the Tanzanian Government would have been happy had Britain blocked the deal by refusing to issue an export licence on the grounds that it would hinder the country's development.

During the debate, the report further notes, the current International Development Secretary, Mr Hilary Benn, revealed that as Ms Short's deputy at the time, he had also opposed the granting of the export licence. But he suggested that with hindsight the deal might have been worthwhile.

However, he said it would not be appropriate for him to comment on reports that a payment of $12 million (�6.1m) had been made to middlemen by BAE to clear the deal.