Norwegian firm quits Tanzania over corruption

May 7, 2008: A leading engineering consulting firm has pulled out of Tanzania over corruption.

The Norwegian firm, Norconsult AS, has also sacked its Tanzania managing director after audit reports by PricewaterhouseCoopers linked its business to corruption.

“We do not accept any kind of misconduct or corruption. As a consequence, we cease our activities in Tanzania,” said the global president, Mr John Nyheim.
The firm was in charge of government and donor funded projects running into billions of shillings.

Mr Nyheim said the audits done over the last one year revealed that about Sh332 million had been used in irregular payments adding that the company failed to adhere to the international code of ethics.

“It has been established that in the past several irregular cash payments have been made from Norconsult’s partly owned subsidiary in Tanzania, totalling about Sh156 million (Norwegian Kronor 650,000),” he said.

He also noted that last year, Sh176 million ($146,500) had been paid out from the project office in Dar-es- Salaam, as petty cash. This transaction involved a World Bank water and sanitation project. The Bank sighted the anomaly and sought an audit for the project, an investigation that unearthed more irregularities.

However, the Norconsult boss absolved his company from blame saying none of its employees took part or was aware of the reported irregular payments at the Dar-es- Salaam office.

The decision to halt its lucrative contracts in Tanzania comes after The Citizen, a publication of the Nation Media Group, reported that the Norwegian company had been operating in the country for a decade without official registration.

The Engineering Registration Board confirmed the report saying the firm did not obtain official registration from the Business Registration and Licensing Agency until 2008.

Norconsult AS’s local partner and managing director, Francis Kifukwe declined to comment. Mr Nyheim said the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime had been notified about the embezzlement and is expected to take legal action.

Norconsult does a full review of all international activities to detect misconduct emphasising that its aim is to help bodies like the World Bank fight corruption.

“Norconsult is also reviewing the internal procedures for evaluation of co-operating parties, bidding, contracting, execution, financial control and accounting in order to prevent corruption in connection with our assignments,” Mr Nyheim said.

The shutting down of the Tanzanian office by a firm that has several offices spanning across several countries is likely to unearth more corruption cases in the region.

Tanzanian authorities are reported to have started probing the Dar office of Norconsult for tax evasion amounting to Sh2.4 billion for the period between 2002 and 2007.

“It has come to our knowledge that Norconsult AS has neither filed statutory returns nor paid any taxes from 2002 to 2007 despite being registered as a taxpayer with TRA,” Tanroads notes in a March 25, 2008 letter.

Local projects in which the company has been involved in recent years include the Sengerema-Busagara road (Sh35.7 billion), Geita-Sengerema road (Sh39.5 billion) and the Unity Bridge is southern Tanzania. Others are the Rongai-Kamwanga road (Sh14.5 billion), Marangu-Rombo Mkuu road (Sh23.3 billion) as well as the Tarakea-Kamonaga and Mwika-Kilacha roads.

The projects also include the World Bank-funded Dar es Salaam Water Supply and Sanitation Project, a joint venture with a local and a Dutch firm that was signed in July 2003.

A Norwegian publication, Development Today, says the $6.7 million project might lead to Norconsult’s blacklisting by the Work Bank.

What raises the eyebrows of those who have been aware of the company’s dubious activities is how it could have taken the relevant public organs and donors for a ride for that long. They question how a company could undertake public and donor-funded projects worth billions of shillings without paying a penny in taxes since 1991 without being detected.

“These people are said to have a minimum turnover of between $3 million and $4 million annually in the country. If the allegations against the company are true, then it means that many hands have been greased and taxes amounting to billions of shillings not paid,” a tax expert consulted on the matter noted.

Tanzania on a mission to wipe out Kenya’s flamingoes

By Ken Opala Daily Nation

Kenya’s multi-billion shillings tourism industry faces major test as Tanzanian authorities plan a soda ash project that could eliminate the flamingos in the region.

The plans have sent world conservationists into a spin.

A number of them attending a key international environment meeting here in the Norwegian coastal city of Trondheim are busy lobbying global action against the project that seeks to mine soda (used in the making of glass) from Lake Natron, considered the cradle of a type of flamingo that is endangered.

This writer was able to see a number of petitions signed by conservationist seeking to block the project on grounds that, if implemented, it will kill “the world’s greatest ornithological spectacle”, even as it damages livelihoods that are intricately linked to the Rift Valley tourism industry.

Dr Hazell Shokellu Thompson, the head of Birdlife Africa Partnership Secretariat, says his organisation has listed the services of two lawyers (a Kenyan and Tanzanian) to look at the possibility of moving to the East African Court of Justice sitting in Arusha, Tanzania, to block the envisaged project.

“We are meeting this Friday to look at that possibility,” he told this writer by the sides of the UN/Norway Government Trondheim Conference.

“We have already contacted our lawyers in both the countries.”

Dr Thompson was one of the speakers at the conference.

Others from Kenya included Unep’s Bakary Kante, Walter Jami Lusigi (a senior adviser to the World Bank in Washington), and Lucy Mulenkei (a minority rights activist)

In one of the petitions, the Wildlife Conservation Society of Tanzania (WCST) and the Birdlife Africa Partnership, say Lake Natron Resources Ltd, a company jointly owned by the Tanzania Government and TATA Chemicals Ltd. of Mumbai, India is proposing the development of a soda-ash facility at Lake Natron.

According to the conservationists, this development could “bring about changes in the lake’s chemical composition, affecting the cyanobacteria on which the flamingos feed”.

BirdLife Africa argues that all the three million Lesser Flamingos in the region, from Djibouti down through Tanzania to Malawi, were hatched at Lake Natron

“New roads and railways, and an influx of settlers into an otherwise pristine area (with a low population of Maasai pastoralists), will cause substantial disturbance. Following the people will be scavenging birds such as Marabou Storks, associated with mass desertion of flamingo nests elsewhere.”

The salty Lake Natron is close to the Kenyan border and is very shallow, just three metres deep, although this depth varies from one end to the other.

Its bed is covered by the salt crust that runs through Kenya’s Lake Magadi, in the north.

Magadi is the world’s largest soda ash mine, and is just kilometres from Lake Natron.

“It is likely that the proposed plant would lead to a collapse of the lesser flamingo population in East Africa,” says Dr Thompson.

The Nation has gathered that the Tanzanian National Environment Management Council (NEMC) planned to meet to discuss the project’s likely harm to both the environment and the livelihoods of the local people.

A UN official attending the Trondheim conference confirmed he planned to visit the area of conflict soon.

Flamingos are a major tourism attraction in Kenya. Thousands of tourists visit the Rift Valley lakes of Naivasha, Nakuru and Bogoria to view the pink spectacle of these migratory birds.

Lake Nakuru alone generates some $15 million (about Sh1.05 billion) annually.

Yet the birds have faced constant threat from pollution, but the latest threat could be one of their biggest dangers of all, say conservationists.

The flamingos are attracted to the lake because it offers a reliable food supply and freshwater, even as it acts as a protection against most predators, conservationists argue.

According to documents by BirdLife Africa, the lesser flamingo stands between four and five feet high but is the smallest of the six flamingo species.

It has long pink legs and a long neck. Its large body is rose-pink, the colour coming from pigments in its main food. The birds eat by holding their bills upside down in the water.

They are found throughout Africa south of the Sahara, and from the Arabian Peninsula to Pakistan. They occasionally migrate to areas bordering the Mediterranean.

According to estimates, there are about 3.25 m lesser flamingos in the world of which around three-quarters, about 2.5 million, are found in East Africa.

“Lesser Flamingos are extremely sensitive to environmental disturbance, particularly when breeding. They easily abandon colonies,” says Dr Thompson.

Flamingos live until they are about 40 years old but only breed every five or six years. Non-breeding birds do not return to breeding sites until they are ready to breed again.

Tanzania will not be bulldozzed by pundits into quiting SADC for COMESA

I recieved some serious bashing from N.Chiume, currently based New York because of my previous post(Tanzania diminishes chances of regional intergration), that he called a smokescreen that lays blame on the shoulders of Tanzania when it comes to EAC intergration. He raised some very pertinent issues that will deepen anyone's understanding about Tanzania and it's association with South Africa and SADC. Chiume is of the opinion that Kenya(ns) are out to deliberately soil Tanzania's name by publishing malicious articles through the media. He pointed out one case about KBC (Kenya Broadcasting Corporation) which he calls "Gorvernment owned media" that claimed Tanzanians had overwhelimingly rejected the proposed East African Federation. Below is what Chiume had to say in verbatim.

"I'm glad to be here. First, let me apologise for any distress that I may have caused you by certain choices of my words. It just shows the level of frustration people like myself feel whenever we read an article that carelessly misrepresents the facts with a pretext of "open[ing] up the issue for debate". It just makes it hard to have a constructive debate, that indeed we should all have, if we don't address the untruths from the offset.

Case in point, there was an article last week in Kenya Broadcasting Corp (KBC) website(which if I'm not mistaken, is still a Government owned media institution), twisting the results of the poll in Tanzania asking wether we should fast-track EAC or not. KBC reported that the overwhealing results against such a move meant "Tanzanians say no to EA federation". It went further claiming that Tanzanians "have rejected the plan for the East African political federation" while we all know that the referendum on this subject is still in the offing. Perhaps you can help me understand the motives a Government institution like KBC have in publishing such a misleading article?

Fact is, Tanzania has shown tremendous commitment to EAC, from hosting the HQ in Arusha, to building institutions like EAC Judiciary and Legislature, to negotiating and implementing the Custom Union despite the fact that its also a SADC member. Your claim that Tanzania's membership in SADC makes her "stand on EAC issues..always opposite the rest of the [EAC] members" are therefore absolutely baseless.

Asking Tanzania not to have "strong ties" with southern Africa is similar to asking Europe not to have strong ties with America! Tanzania is a founding member of SADC, and of SADCC, its predecessor. Our history, our engagement and our attachment to southern Africa since the days of Frontline States and prior to that cannot be lightly severed.

Therefore, there is nothing sinister that "raises questions" about Tanzania's friendship with South Africa - anybody who knows her history will appreciate it. If you can make an argument like that, then I could equally claim that Kenya's one foot in COMESA and another in EAC "raises questions" in the eyes of non-EAC members of COMESA, such as Zambia, Sudan or Eqypt because it shows Kenya's not commitment to COMESA! In that case, Kenya could equally be described as "an undecided country" that "is unstable in all its ways".

What is universally recognized is that as SADC moves towards becoming a trade bloc with custom union, then a common market etc (as opposed to a grouping for coordinating common economic projects); and as COMESA moves from a free-trade area to custom Union etc, countries like Tanzania - and so many others including Kenya and Uganda, will have to make the tough decision on how they can continue membership in increasingly conflicting organizations.

I'm saying this because one of the biggest misconception that individulss like yourself perpetuate is that somehow it will be hunky dory if and when all EAC members belonged in COMESA! It is as if no conflict will emerge out of EAC custom union with those of a future COMESA custom union.

Competition from Kenya isn't "mere BIG words". It does pose serious threat to the future of manufacturing in TZ. And its not true that these concerns have never been brought to the table by TZ. Case in point, the successful agreement in delaying implementing certain taxes within the EAC custom union to give manufactures in TZ some time to adjust to the new trade environment.

As we progress into common market, single currency and a political federation, these concerns are clearly being accelerated and reflected in the results of the fast-tracking poll in Tanzania. There is too much of selling of the positives of intergration and little in terms of addressing the adverse effects of it. For instance, Tanzania could well be forced with the reality of ceading the dominance of manufacturing to Kenya but that will only be okay of she is able to identify and begin to focus right now in alternative sectors that will bring them competitive advantage in the future, for example, in service economy. Hence, we will require economic programs to subsdize the manufacturing that will decline and to build up the service economy. The people in TZ are pressuring their Govt for answers to such issues, and are observing the gradual benefits that come with intergration before they can make a judgment that full EAC intergration will truly be benefitial to their daily livelihoods, not simply empty promises. The aim is not to ignore globalization but to ensure it really works for them.

The issue of belonging to multiple regional groupings is not uniquely Tanzanian. How come you never raised the conundrum that Kenya will face with the anticipated COMESA Custom Union while its already a member of EAC Custom Union?

Its quite absurd to imply Tanzania doesn't belong in Southern Africa (hence not a natural member of SADC) while at the same time urging it to join COMESA, a grouping with southern African countries further south of Tanzania like Malawi, Zambia and Zimbabwe! The next thing you will claim will probably be that Swaziland belongs in COMESA more than it does in SADC!

Tanzania happens to have strong links with southern Africa, as much as it has with Eastern Africa. To ask her to abandon its long standing relationships in favor of EAC only is just idiotic to say the least. We want to do business with as much neighbours as possible and South Africa has been a positive economic force in Tanzania, challenging the dominance of Kenya in the country. It appears that these constant concerns about Tanzania belonging in SADC are a manifestation of Kenya's nervousness towards South Africa coming to compete in its backyard through Tanzania.

Tanzanians will not be bulldozzed by pundits like yourself. The people of Tanzania have a right to know precisely how they will benefit from EAC Federation and its economic integration. The issues of job loss, land grabbing, political stability etc are very relevant to them. They have refused fast-tracking the Federation because the idea is unrealistic (in terms of implementing it within 5 years) but not because they are not in favor of the Federation. Most Tanzanians see it as something achiaveble by year 2020.

The debate we need is not why Tanzanians are ambivalent about EAC, but what can be done to address their concerns. Economic and targeted programs should be suggested to help countries like Tanzania whose economy will be negatively impacted, at least in the short-term. Such things will help to calm the jitters towards a noble idea of economic and political integration."