Kenyan businessman in $183m scandal involving senior govt officials in Dar

IN SUMMARY

• Tanzania’s Public Accounts Committee has called for the immediate arrest and prosecution of Harbinder Singh Sethi, the owner of Pan African Power Solutions, over the irregular withdrawal of $183 million from an escrow account.
• A search in newspaper archives reveals a man, described as a businessman or “tycoon,” who rubbed shoulders with the powerful elite during Kanu’s rule in the 1980s and 1990s.
• The scandal could severely dent the ruling party, Chama cha Mapinduzi’s popularity.

A businessman with close ties to senior members of Kenya’s first ruling party Kanu, is at the centre of a $183 million scandal in Tanzania that is threatening to bring down senior government officials and leave a blot on President Jakaya Kikwete’s legacy.

Tanzania’s Public Accounts Committee has called for the immediate arrest and prosecution of Harbinder Singh Sethi, the owner of Pan African Power Solutions, over the irregular withdrawal of $183 million from an escrow account. The committee has also recommended that the country’s prime minister take political responsibility for the scandal and that some two Cabinet ministers, who include former executive director of UN-Habitat Anna Tibaijuka be relieved of their duties.

Last week, Attorney-General, Fredrick Werema, resigned after the committee observed that he failed to advise the state appropriately on the matter. It is a matter of time before the country knows whether more heads will roll and if some government officials will be prosecuted for causing the country to lose the colossal sum of MONEY.

Prof Tibaijuka said she will not resign for receiving $1 million from VIP Engineering and Marketing Ltd — which owned a 30 per cent stake in Independent Power Tanzania Ltd — after it sold its stake in IPTL to Pan African Power Solutions (PAP). She insists it was a donation.

“The MONEY I received from Rugemalira [IPTL owner] isn’t corrupt MONEY; it was given to me for the construction of a girls school known as Barbro Johanson Girls Model Secondary School and other notable people have donated money to the school,” said Prof Tibaijuka.

Parliament resolved that the government freeze the accounts of all people who received money from the owner of VIP Engineering, James Rugemalira, on realisation that it was fraudulently withdrawn from the escrow account, part of which has been proved to be public money.

Mr Sethi has moved to court to quash the implementation of the committee’s recommendations. According to the report, tabled in parliament by committee chairman Zitto Kabwe last month, Sethi, the executive chairman of PAP, inappropriately transferred 70 per cent shares in the IPTL from its previous owners Mechmar Corporation, to Piper Links INVESTMENTS Ltd, then transferred them to PAP using forged certificates.

READ: Tanzania taxman reverses ‘fraudulent’ takeover of firm as escrow row heats up

After acquiring the Mechmar shares and the 30 per cent of the minority shareholder in IPTL, VIP Engineering and Marketing Ltd, Mr Sethi withdrew $183 million from the Tegeta escrow account. The committee further directed the government to return the funds withdrawn from Bank of Tanzania to state coffers. It also recommended that the banks that were used to move the escrow MONEY — Stanbic and Mkombozi — be sanctioned over MONEY laundering.

The scandal could severely dent the ruling party, Chama cha Mapinduzi’s popularity. Already, CCM’s decline in performance in the local government elections from 92 per cent of the vote in 2009 to 75 per cent last week has been linked to voters being unhappy with the way the government has dealt with the scandal.

While the scandal may seem like a domestic matter for Tanzanians, it will not escape the interest of Kenyans who knew Mr Sethi in his heyday.

A search in newspaper archives reveals a man, described as a businessman or “tycoon,” who rubbed shoulders with the powerful elite during Kanu’s rule in the 1980s and 1990s.

His contribution of large sums of money during the then common harambees (fundraisers) is documented in newspaper stories. The Daily Nation of May 9, 1996 reports him donating Ksh200,000 ($2,210) to then president, Daniel arap Moi for the National Youth Development Programme. Barely a month later, on June 7, he is reported to have given Kenya Football Federation officials Ksh300,000 ($3,315).

According to newspaper reports, Mr Sethi was born and raised in Iringa, a small town in Tanzania’s Southern Highlands. Aged 19, Sethi and his two elder brothers Nota Singh and Manjit Singh, registered Ruaha Concrete Co Ltd, on November 1977.

Mr Sethi moved to Nairobi in the 1980s, where he is reported to have worked closely with the son of a prominent Kanu politician. He is also reported to be a close friend of a former powerful politician with whom he has INVESTED in electricity generation.

Source:theeastafrican.co.ke/