DODOMA, Tanzania
The management of Tanzania’s National Social Security Fund (NSSF) admitted before the Parliamentary Public Accounts Committee (PAC) that a multibillion joint venture contract to develop Kigamboni Satellite City was fraudulently entered into.
According to the Controller
and Auditor General (CAG)’s 2014/15 Audit Report, NSSF entered a joint venture
with Azimio Housing Estates to form Special Purpose Vehicle Company, Hifadhi
Builders Limited.
Under the contract, Azimio
undertook to develop 20,000 acres located in Rasi Dege, Kigamboni, of which
NSSF holds 45 per cent, while Azimio holds 55 per cent shares.
The estimated cost of the
project, according to the CAG, was $653.44 million (Sh1.4 trillion) and the
terms of capital sharing is that, NSSF will fund 45 per cent of total project
cost and Azimio will fund 35 per cent cash plus the value of land which will be
regarded as 20 per cent.
The NSSF Director General,
Prof Godius Kahyarara, told PAC members on Tuesday evening that the contract
implementation hasn’t been ongoing since February this year due cash flow
problems. He said until that time NSSF had already injected $129 million
(Sh270.9 billion) while Azimio $5.5 million (Sh11.5 billion), suggesting that
now, the fund is technically the majority shareholders.
According to Prof Kahyarara
who took over office in March this year, NSSF’s initial probe into the matter
unearthed massive flaws in the contract. For instance, he pointed out, the
project area was only 3,503 acres and not 20,000 acres.
“Again, the price of the plots
was massively overrated, for according to contract, one acre was valued at
Sh800 million, but our valuation indicates that the actual price of an acre is
Sh25 million,” he said.
Prof Kahyarara said after the
valuation, they held a meeting with Azimio and informed the company about the
flaws and it conceded in some of them. He said during the next management
meeting, they will dwell on the way forward, including the modalities of
restructuring the contract which would take into account the actual value of
the land price and categorically state that NSSF is the majority shareholder.
Committee member Ezekiel
Maige, who is also Msalala MP, noted that it was clear the Kigamboni deal was
dirty and all players were dirty as well. “Why should the NSSF continue
partnering with Azimio? By doing so, wouldn’t the Fund be contaminated?”
Responding to that, Prof
Kahyarara told PAC that, if NSSF pulled out, it would be in a great risk of
losing Sh270 billion which has already been invested and besides, they have
signed a contract which is binding.
“There are legal implications
in this matter, that’s why we are for a review of the contract; our partner
(Azimio) is smart as well… in our last meeting, he came along with a team of
eight lawyers,” cautioned the NSSF chief.
The PAC chairperson and Same
East MP (Chadema), Ms Naghenjwa Kaboyoka, said the matter must be dealt with
carefully, “Azimio remains the land owner and already there are buildings that
have been constructed. If NSSF is to pull out in a rush, it might be told to
remove their buildings.”
The MPs also asked the NSSF
management if it was familiar with Azimio’s financial status and if it were
true that it failed to give their contribution because it didn’t have funds,
and if it were true it (Azimio) tried to secure a loan from NSSF.
Prof Kahyarara confirmed that
indeed Azimio tried to secure a loan from NSSF, but we disqualified it since it
had failed to execute its obligations. “Azimio is free to go anywhere and
secure a loan, but not to NSSF,” he said.
Morogoro South-East MP (CCM)
Omary Mgumba, wanted to know why Azimio was favoured by NSSF despite its bad
track record and awarded hefty tenders including another joint venture to
develop another satellite city in Arumeru where the company was paid Sh43.9
billion as a consultancy fee. The project was, however, terminated in January.
Responding to that, the NSSF
board of trustees chairman, Prof Samuel Wangwe, said that generally, any
partnership ought to be forged on the grounds of trust and reputation; a lot of
questions can be asked, but the truth remains that NSSF did sign the contract
with Azimio. He added:
“The ongoing probe will
establish if the rot came from within or was brought from outside. We have
suspended some directors and senior managers in connection with these queries;
some of them have already been interrogated and the truth will be revealed.” On
the consultancy fee, Prof Kahyarara said already, the company has agreed to
repay the money. Saccos Saga
Another area which was hotly
questioned by MP was disbursement of loans to nine Saccos over and above 50 per
cent of their assets contrary to the requirement of NSSF lending policy. Some
of the Saccos are Bumbuli Development Corporation which received a loan of Sh1
billion, but 50 per cent of their asset is only Sh51 million, an excess of more
than Sh940 million or 1,859 per cent and Korongo Amcos Saccos that received
Sh500 million loan, but the 50 per cent of its asset is Sh18 million, an excess
of Sh480 million or 2,621 per cent. “This is a serious matter, apart from being
unqualified, Bumbuli Development Saccos received additional Sh1.4 billion in
the same year while it’s not clear if they serviced the first loan,” said Ms
Kaboyoka.
Prof Wangwe who was appointed
to the position in June this year admitted that the new management is also
puzzled about the Saccos affair. He added that this is also an area under
investigation. Currently they have halted the disbursement of loans. The PAC
ordered a special audit on the Saccos saga, and according to Ms Kaboyoka, it
will make resolutions and table them before the National Assembly. – The Citizen
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