A local story becomes a national scandal and ousts a prime Minister

In 2005, while working at The Citizen newspaper, I read in its local Kiswahili sister paper, Mwanachi, that parliamentary energy and minerals committee chair, Njeru Kasaka, had ordered the ministry of energy and minerals (MEM) to give a contract to build a 1000-kilometre Dar es Salaam–Mwanza oil pipeline back to a Tanzanian company, Africommerce International Limited. Africommerce founder and CEO, Elisante Muro, had complained to the parliamentary committee that his company had invested over US$3 milllion in a feasibility study and even marketed the pipeline project to the landlocked neighbouring countries of Burundi, DR Congo, Rwanda and Uganda, when the project was snatched away by MEM and given to a US-based firm, Richmond Development Company LLC (RDC). After hearing from both sides, including Minister for Energy and Minerals Daniel Yona, Kasaka’s committee concluded that the project should be returned to Muro’s Company, which should find a strategic partner to implement the multi-million dollar project. I decided to follow up by getting in touch with Muro, who gave me a briefing of all that transpired and gave me a tip that Richmond was not an established energy company at all, but a briefcase firm controlled by some crooked politicians.

I used my internet searching skills to find out more about RDC, and found the company’s website full of false claims. The company, jointly owned by a Tanzanian businessman based in Texas and his Pakistani friend, said that it was constructing the 60,000-seater national stadium in Dar es Salaam and also that it owned the Dar–Mwanza oil pipeline project.

The national stadium was a Chinese-funded project, implemented by a Chinese contractor. The Dar–Mwanza pipeline was also under dispute, so it was inaccurate to claim it belonged to the RDC. In response to emailed questions, one of the RDC directors, a Pakistani economist named Mohamed Huque, warned me and my newspaper to stop following up the story and threatened that his company would take legal measures against us. I wrote the story and it was published in The Citizen. When President Jakaya Kikwete took over from Benjamin Mkapa after the 2005 general election, Kikwete picked his long-time political ally, Edward Lowassa, as his prime minister despite resistance by some ruling party heavyweights who regarded Lowassa as corrupt. Kikwete’s administration was greeted by the worst droughts in the country’s history when electricity generated by water plummeted by over 50 per cent and the country started experiencing daily 12-hour power cuts. With World Bank and other donors, it was agreed that the energy sector, monopolised by the state utility Tanesco, would be partly liberalised with independent power producers allowed to generate electricity and sell it to Tanesco. By January 2006, when Tanesco selected private companies to sell it electricity, RDC got the largest share of 100MW for $US192 million. When I saw the company included on the list, I sensed foul play and chose to follow up the story by talking to different stakeholders including Yona himself, Africommerce’s Muro and his technical director, Dr Athumani Mfutakamba, and then went back to Mohamed Huque, who was now even more threatening. I now worked for ThisDay newspaper.

established that RDC was a shell company with no premises in Texas but run out of a simple internet shop in Dar es Salaam. It had top-level connections to the then ruling party treasurer, Rostam Aziz, whose Caspian Construction Limited shared offices, bank account number and local directors when it registered locally as Richmond Development Tanzania Limited. When in 2007 RDC failed to import the power-generating turbines as required by the contract and instead sold its contract to Dubai-based Dowans Holdings Limited, it became a national scandal. The parliamentary Speaker, Samuel Sitta, appointed a probe team led by Dr Harrison Mwakyembe to establish who was behind RDC and how, despite violating the 2005 contract, they were allowed to sell it to another company.

Lowassa resigned as Prime Minister. When we were doing the story, there were a lot of monetary offers to abandon it and also not to cooperate with the parliamentary committee. Millions of shillings were promised to us by people allied to Rostam Aziz and Edward Lowassa. Threats were also issued and our publisher, Reginald Mengi, advised us to be careful when going out, avoid being alone and suggested that we should apply for gun registrations to allow us to carry a weapon, if necessary. Some of my fellow journalist got guns, but I declined. What was important was that the publisher was very supportive and when the story became a national issue, all media outlets took up the matter so it was not easy to target one media house. Likewise, at my newspaper, we were working as a team, so the risk was spread.

Msabaha ‘dives’ for cover over suspect pipeline deal
Finnigan wa Simbeye, ThisDay, January 2006

Rejected only the other day, an American company is back with a lucrative deal, apparently all signed and sealed, to supply power to the national electricity grid, ThisDay can reveal. At first attempt, the Third Phase government rejected a bid by Messrs Richmond Development Company (RDC) to secure a TZS650-billion pipeline project. But the same firm has just scooped the lucrative deal. ThisDay can now reveal that the RDC failed to win the tender for the oil pipeline project floated by the Third Phase government on grounds that it had submitted ‘a poor project implementation proposal’.

But to the surprise of stakeholders in the construction industry, heightened by a highly suspect move, the same company recently received a bond worth $100 million (about TZS130 billion) from the CRDB Bank, with which it has just secured a contract from TANESCO to supply 100 megawatts of power to the national electricity grid.

‘When the Third Phase government was about to end its tenure towards the end of last year, we had rejected Richmond’s proposal,’ former energy minister, Daniel Yona told ThisDay. He added: ‘As to what is happening now, you had better contact the current minister (Dr Msabaha).’ When contacted for comment, Dr Msabaha dithered: ‘You better come to my office; I don’t give interviews over the phone.’ But when ThisDay visited the minister’s office, his aides demanded a written questionnaire. The US company, based at Houston, Texas was about to win the lucrative oil pipeline project which was initiated by a local company, Africommerce International Limited (AIL), but it failed in its bid after it allegedly failed to submit a satisfactory proposal on how to implement the project. The former minister dismissed allegations that the US firm had won the bond through his ‘influence-peddling’ by virtue of his membership to the CRDB Board. ‘Those reports are absolutely untrue, I first knew Richmond during my tenure at the ministry when they approached us with a view to taking over the Dar es Salaam–Mwanza oil pipeline project,’ Yona insisted.

The AIL which initiated the project in the 1990s had sunk over TZS3 billion by last year when the former energy and minerals minister decided that the company had failed to deliver over the years. After a long silence, Richmond resurfaced in the local media last week when press reports revealed that the company had secured a last-minute bond from CRDB after failing to do as a pre-condition to import 20MW General Electric gas turbines to supply power to Tanesco. The RDC is one of the four private power-generating companies awarded a tender last week to supply Tanesco with energy. But reports said the US firm had failed to import a 20MW gas turbine early this month due to failure to raise a bank guarantee but which the CRDB finally provided. At a news conference last week, Minister for Energy and Minerals Dr Ibrahim Msabaha – who served as deputy to Mr Yona during the last five years of President Benjamin Mkapa’s administration – confirmed that CRDB had ‘rescued’ the American company in its desperate bid to clinch the Dar es Salaam–Mwanza oil pipeline.

Investigations by ThisDay have since established that RDC had earlier failed to secure a bank bond both at home in the US and locally because of stringent US bank demands on credibility and project viability of the loan seeker. On its website, the RDC which is jointly owned by businessman Mohammed Gire and economist Dr Mohammed Huque, does not give any details of its finances other than giving a general notice on projects covered. ‘RDC team has brought to financial close several projects totalling some $500m (approx. TZS650 billion). RDC’s current development includes civil constructions, oil pipelines and 200MW Power Plant, and a 200,000 bpd Refinery Project in Brazil,’ the company says on its website. Without naming where the projects are specifically located, the RDC further claims it is undertaking an ‘oil pipeline’ project and a ‘60,000-seat national stadium’ project; both projects located within East Africa, according to the website.