Scandal...This is How Sh12 Bilion Bribery was Pushed Through

A meeting in the US between the then Tanzania Revenue Authority (TRA) boss Harry Kitilya and socialite Shose Sinare began the events that would lead to the Sh12 billion bribery scandal now at the centre of a government investigation, it has emerged.

Mr Kitilya met Ms Sinare, who was a senior employee at Stanbic Bank ,during a spring meeting of the International Monetary Fund (IMF) in Washington in April 2012, and has a conversation on government financing.

The two later took their chitchat to a serious level, playing key roles in securing a $600 million foreign loan for the government and opening a  can of worms over mega corruption in the country.

After the Washington meeting in which both attended as part of a government delegation, Ms Sinare boasted to fellow staff that Mr Kitilya introduced her to two African central bank governors who were formerly tax chiefs and implored for her “good” bank consider the business of raising funds for the government.

Details in the London case that has exposed how the 2013 government loan was used to create the Sh12 billion bribery conduit, paint a picture of wheeler-dealing among public and private corporate executives to siphon billions of shillings of taxpayers’ money for personal benefit.      

In the documents, Ms Sinare says Mr Kitilya’s company, Enterprise Growth Markets Advisors (EGMA), the firm that was paid the Sh12 billion bribe in the loan transaction, facilitated behind-the-scene talks to secure the deal.

In one of her documents explaining the role of EGMA in an internal investigation, Ms Sinare who was Acting Head of Corporate and Investment Banking at Stanbic, claimed Mr Kitilya and his company did intervene to stop a cabinet meeting on February 27 and also “obtained the AG’s (Attorney General) opinion in good time.”

She does not say why the cabinet meeting had to be stopped but the details paint a picture in which Stanbic Managing Director Bashir Awale and herself were engrossed in lobbying with cabinet ministers and other senior civil servants to bag the agreement as lead players in sourcing for the government loan.

UK’s Serious Fraud Organisation (SFO) which carried out the corruption investigation involving Stanbic and its main unity, Standard Bank’s role, reveals a link between individuals who were central to the deal and how they may have influenced it.

The back and forth negotiations run from February 2012 to March 8 when the government finally received the $600 million (Over Sh1.2 trillion). Other than the former TRA chief who played a camouflage role as EGMA co-principal, the negotiations were handled at either stage by former finance minister Mustafa Mkulo, his successor William Mgimwa, retired finance Permanent Secretary Ramadhan Khijja, the current PS in the same docket, Dr Servacius Likwelile, and other senior treasury officials.

One of the puzzles in the investigation was to establish when and how EGMA came into the picture despite the fact that Standard Bank was kept in the dark over its role in the negotiations that eventually raised the cost of the loan agent fees by a staggering Sh12 billion.

Other than the Washington meeting between, Mr Kitilya and Ms Sinare, the Stanbic MD is also shown as enjoying a personal relation with the former TRA chief since 2008. Information shows that Mr Awale was the referee for Mr Kitilya in a Havard University course seven years ago. Investigators also found that his contact was high priority.

Mr Kitilya’s co-principal in EGMA, Fratern Mboya, is shown at one time approaching a Standard Bank subsidiary with a proposal for a business opportunity, believed to have been the role it played for Stanbic despite insiders in the bank labelling his firm “a one man show without experts.”

Mr Mboya’s CV that was filed with Mr Awale in the middle of the negotiations, give Dr Likwelile as his referee as well. He formerly served as the Director General of the Capital Markets and Securities Authority (CMSA). Dr Likwelile was mentioned by Ms Sinare as “the key person in this transaction.”

According to the details, Mr Mkulo gave the go-ahead for the negotiations when the deal was first floated by Mr Awale in 2012 but would soon be fired from the docket in a cabinet reshuffle in May of the same year. Mr Mkulo had in 2011 overseen another $250 million loan deal for the government by Standard Bank of South Africa and Stanbic.

Dramatic turn of events are detailed when Dr Mgimwa is appointed as finance minister to replace Mr Mkulo. Details show most of the negotiations that followed involved him and Dr Likwelile and some technical staff at the ministry of finance.

In show of high wheeler-dealing, Ms Sinare is quoted severally indicating how she had “cleared the air” with potentially set-back queries raised by the government negotiating team. When Mr Mkulo was sacked, she wrote to their London headquarters thus; “despite no letter of mandate signed, our deal is intact, with support of the technical team and civil servants.”

A few week after meeting Dr Mgimwa in May 2013, the deceased minister’s son, Godfrey Mgimwa was expressly hired as graduate trainee at Stanbic bank. He was placed directly under Ms Sinare.

According to the documents, the younger Mgimwa, was sent to Mr Awale by his father with an introductory letter which then saw him interviewed alone by the bank’s CEO and hired him two months later. The SFO point to this move as a possible inducement for the minister to consider the deal fronted by Stanbic.

The newly recruited Mgimwa would actually play a minor role at some point, first acting as a go between the bank and the ministry of finance, delivering confidential documents on the deal.

On October 12, 2012, Mr Mgimwa who is now the MP for Kalenga, is said to have organized a meeting on Tokyo, Japan, between his father and the representatives of Standard Bank who were pushing for hard to bag deal.

At all the stages however that the Standard Bank UK members met the Tanzanian minister, there was no mention of the EGMA role and that they were kept in the dark throughout by Mr Awale and Ms Sinare. The two always described the fees paid to EGMA as being payment for “facilitation and arrangement.”

Yesterday, the younger Mgimwa who would later quit his bank job for a detour to London before he returned to run for politics in the same constituency his father represented, denied any role in the negotiations for the loan deal when he worked at Stanbic bank. He declined further inquiries on the SFO record. “With due respect, there is nothing for me to comment about,” he said in an SMS reply.

Contacted, Dr Likwelile said he would not comment as an investigation had been ordered by the Chief Secretary. “You heard the Chief Secretary on this issue, Investigations are onging….facts will be made clear when the investigation is concluded,” said Dr Likwelile.