Sunday, 23 September 2007

BAE contribute to Tanzania's debt

by Deus Kibamba of the Tanzanian Gender Networking Programme

Another scandal is rooming in a country so poor that resources are hardly available for social services even as key as education, health and water. In the new row, involving a well established UK bank and BAE, the UK’s biggest arms supplier, Tanzania was robbed off $ 12 million (more than 15 billion Tanzanian shillings) being the amount secretly paid out as commission to middlemen in the deal.

In this deal, BAE Systems allegedly inflated the price tag of a controversial military air traffic control radar system from an estimated $ 28 million to $40 million representing a figure close to 30% of inflated costing of the contract value in a single deal. This appears to be one of the most serious corruption cases that faces Tanzania today.

Even more controversially, sources link outgoing British premier Tony Blair with the deal, prompting the government of Jakaya Mrisho Kikwete in Tanzania to propose a compensation demand from the UK if it was proved that the military radar system the UK sold to Tanzania was overpriced. It is said that despite the World Bank’s opposition to the deal, following its own research that showed the BAE radar system was unsuitable and that a similar system as cheap as $10 million would be more suitable, the then UK prime Minister, Tony Blair and Foreign Secretary Jack Straw continued and backed the sale amid informed opposition from Gordon Brown, then Chancellor of the Exchequer and Claire Short who was Minister for International Development. The UK’s Serious Fraud Office has for some months now been carrying out an investigation into the public row, which has sparked serious parliamentary and public debates in Tanzania.

Within Tanzania, the former president Benjamin William Mkapa and some aides are under serious public pressure. Despite agitation by civil society against the purchase, Mkapa was said to be pushing for it. His then Minister of Finance Basil Pesambili Mramba was quoted commenting on the purchase of the radar equipment to point that if the deal meant it, Tanzanians would rather eat grass than stop the purchase of the radar and another tender for the acquisition of a presidential gulf-stream jet. All this was between 2001 and 2004.

To acquire the radar, Tanzania had to borrow money from the Barclays Bank to finance the purchase. Reports have it that there are countries that acquired same type of the system at a cost less by 45 percent. These include Saudi Arabia, Indonesia and Turkey. Without the purchase’s defence from the highest circles of the UK government many people believe Tanzania would not have entered into the flawed transaction. This amount enters into an already huge debt of more than $7.2 billion that Tanzania owes the world despite a debt relief under HIPC. How different is this from the traditional odious debts that Tanzania would wish to denounce?

According to the UK’s Guardian newspaper in January 2007, there has been admission by the middlemen that BAE secretly paid the $12 million ‘bribe’. The Bank of Tanzania reports the figure for Debt servicing as amounting to 9.8 million dollars in the quarter ending in December 2006. This raises lots of serious governance questions both in the UK and Tanzania especially the fact that the British Aerospace System is a British government owned firm. What is the relationship between Tanzania and the UK in as far as trade is concerned?

One thing is clear that the war against poverty that Africa is waging is next to impossible if international corruption can not be curbed. Tanzanians now are having to spend huge sums to service ‘odious debts’ at the expense of education, health and water, to name only a few necessary social services for Millennium goals to be realized come 2015. The people of the UK must support Tanzanians in shaming such deals!

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