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Viewing cable 07DARESSALAAM1037, BIG FISH STILL RISKY CATCH IN TANZANIA

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Reference ID Created Released Classification Origin
07DARESSALAAM1037 2007-07-24 14:02 2010-12-19 21:09 CONFIDENTIAL Embassy Dar Es Salaam
VZCZCXYZ0004
PP RUEHWEB

DE RUEHDR #1037/01 2051406
ZNY CCCCC ZZH
P 241406Z JUL 07
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC PRIORITY 6498
INFO RUEHDS/AMEMBASSY ADDIS ABABA PRIORITY 3227
RUEHJB/AMEMBASSY BUJUMBURA PRIORITY 2563
RUEHKM/AMEMBASSY KAMPALA PRIORITY 3045
RUEHLG/AMEMBASSY LILONGWE PRIORITY 5435
RUEHLS/AMEMBASSY LUSAKA PRIORITY 1774
RUEHNR/AMEMBASSY NAIROBI PRIORITY 0721
RUEHSA/AMEMBASSY PRETORIA PRIORITY 3521
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHMFISS/CJTF HOA//J3 PRIORITY
C O N F I D E N T I A L DAR ES SALAAM 001037 

SIPDIS 

SIPDIS 

AF/E FOR B YODER AND D MALAC 
MCC FOR G BREVNOV AND M KAVANAGH 

EO 12958 DECL: 07/23/2012 
TAGS PREL, PGOV, ECON, EAID, KMCA, PINR, TZ 
SUBJECT: BIG FISH STILL RISKY CATCH IN TANZANIA 

REF: A. A. DAR ES SALAAM 1009  B. B. DAR ES SALAAM 00085

Classified By: D. Purnell Delly, Deputy Chief of Mission, for reasons 1 .4(b and d).

1. (C) SUMMARY. Tanzania’s Prevention of Corruption Bureau
(PCB) has never successfully prosecuted a high-level
corruption case involving either the private or public
sector. On July 14, the Director General of the PCB, Edward
Hoseah, assured the DCM that the PCB was now prepared to
prosecute a milestone corruption case: the U.K.-Tanzanian BAE
radar deal. Beyond plans to prosecute the BAE case, Hoseah
painted a mixed picture regarding the Government of
Tanzania’s (GOT’s) progress toward addressing the country’s
endemic corruption problem. On one hand, Hoseah highlighted
recent legal reforms and the increasing willingness of both
Parliament and press to level corruption charges against the
government. On the other hand, he noted the unabated
corruption in Zanzibar, weak capacity of his bureau, and
President Kikwete’s reluctance to implicate former President
Benjamin Mkapa or members of Mkapa’s inner circle in
corruption scandals. Finally, Hoseah reiterated deep concern
about his personal safety, explaining that he frequently
received threatening letters. In the event of increasing
threats to his life, Hoseah said he would not hesitate to
seek refuge in another country. END SUMMARY.

PCB: Ready to Prosecute the BAE Radar Deal
------------------------------------------
2. (C) Edward Hoseah, Director General of the Prevention of
Corruption Bureau (PCB) told the DCM that the PCB was almost
finished with its investigation of the U.K.- Tanzanian BAE
radar deal and that it intended to prosecute the case. “We
are focused on the 31 percent commission paid to BAE. We
understand that businessmen need commissions but the question
is whether 31 percent is lawful or not,” Hoseah said. He
called the deal “dirty” and said it involved officials from
the Ministry of Defence and at least one or two senior level
military officers.

3. (C) Hoseah said that the two primary suspects,  XXXXXXXXXXXX and Shailesh Vithlani, CEO of
Merlin International, were currently out of the country but
that when they returned the GOT would begin to prosecute. “I
have obtained President Kikwete’s support to prosecute the
culprits once they return to Tanzania,” he said, stressing
that prosecution of the case would mark an important
milestone in the PCB’s struggle. “The real signal of the
GOT’s political commitment will be when we take this radar
case to court,” Hoseah said.

4. (C) Note: Shailesh Vithlani is a British citizen who
reportedly grew up in Tanzania. He heads Merlin
International, a Dar es Salaam based company. Merlin
International has been implicated as the agent for Britain’s
BAE Systems which sold a USD 40 million military radar system
to the GOT in 2002. Beyond the BAE radar deal, Merlin has
been linked in the media to a range of other high profile
government deals including the sale of a Gulfstream
presidential jet to former President Benjamin Mkapa.
According to a July 13 report in This Day, a local newspaper,
at the time of the BAE deal, Vithlani’s local partner was
Tanil Somaiya of Shivacom Tanzania Ltd.

Promising Signs on Anti-Corruption Front: Legal Reform...
--------------------------------------------- ------------
5. (C) In addition to the possible prosecution of the BAE
radar case, Hoseah emphasized that there were other promising
signs in Tanzania’s fight against corruption. First, he
noted that as of July 1 the Anti-Corruption bill had become
fully operational, laying the legal groundwork to accelerate
the prosecution of corruption. He said that the GOT had
almost finalized its “whistle blowers” legislation and that
the relationship between the PCB and the Director of Public
Prosecution (DPP) had improved. “I have a good working
relationship with the new DPP and he appears serious about
prosecuting corruption.” XXXXXXXXXXXX

Stronger Parliament, Press, and Public Support
--------------------------------------------- -
6. (C) A second promising sign regarding anti-corruption
efforts which Hoseah stressed was increased support within
the Parliament, press and the general public. “Parliament is
now our ally. Members of Parliament are no longer just
spectators; they are starting to ask the tough questions to
unveil corruption schemes,” Hoseah said. He explained that
the media was also making a crucial contribution, showing
politicians that they could not hide: “The press has started
to bring allegations against former President Mkapa. This
signals to all politicians that no one is immune.” Awareness
is growing among the general public too, Hoseah noted, as
evidenced by the increased trust in the PCB and the decline
of negative news articles about the PCB and its staff.

Initiatives Stemming from the UNCAC
-----------------------------------
7. (C) Finally, Hoseah noted Tanzania’s participation in the
UN Convention Against Corruption as another reason for
optimism on the anti-corruption front. As a signatory to the
UNCAC, Tanzania must not only follow international standards,
but will take part in several anti-corruption initiatives in
the near future. For example, Tanzania will be subject to a
peer review and a gap analysis on its compliance with the
convention.

Troubling Signs on Anti-Corruption: Impunity at the Top....
--------------------------------------------- ----------
8. (C) Hoseah then turned to his concerns regarding
Tanzania’s anti-corruption struggle. He noted that President
Kikwete does not appear comfortable letting the law handle
corruption cases which might implicate top level officials.
According to Hoseah, President Kikwete is hesitant to pursue
cases which may implicate former President Benjamin Mkapa:
“Kikwete is soft on Mkapa. He does not want to set a
precedent by going after his predecessor.”

9. (C) Referring to the widespread rumors of corruption
within the Bank of Tanzania (Ref B), Hoseah remarked that
XXXXXXXXXXXX In Hoseah’s view, Kikwete’s recent appointment of three new
deputy BOT governors was XXXXXXXXXXXX. The DCM
remarked that XXXXXXXXXXXX responses to allegations  XXXXXXXXXXXX were opaque and even projected a
sense of impunity. “Your perception is correct,” Hoseah
responded, adding, “there is a sense of impunity with XXXXXXXXXXXX because he and XXXXXXXXXXXX are so closely intertwined. Kikwete
would find it very difficult to fire him.”

Complacency on Zanzibar...
---------------------------
10. (C) The ongoing, if not accelerating, level of corruption
on Zanzibar is another cause for pessimism in Tanzania’s
fight against corruption. While establishment of Tanzania’s
Financial Intelligence Unit (FIU) would indeed force changes
on Zanzibar in the long term, Hoseah admitted that he did not
believe Zanzibar’s current leadership was committed to
fighting corruption. With a “free port” and government
officials routinely on the payroll of foreign investors,
Zanzibar is rife with corruption, Hoseah emphasized. With
the momentum of anti-corruption efforts on the Mainland,
Zanzibar will have to follow suit, Hoseah said. He added,
however, that “in the short term, Zanzibar’s President faces
the end of his term and it appears that there is actually an
acceleration of corruption through acquisition of land and
other assets.”

Continuing Capacity Constraints...
---------------------------------------
11. (C) Hoseah raised the PCB’s lack of capacity as another
key challenge to Tanzania’s anti-corruption campaign. He
stressed that support from the Millennium Challenge Account
(MCA) Threshold Program has assisted the PCB immensely with
training prosecutors and investigators. Still, institutional
capacity at the PCB is weak and additional capacity building
is needed. One area which Hoseah specified for additional
training was intelligence or evidence gathering.
“Cooperation among law enforcement agencies is still limited
and we need to improve our intelligence capabilities,”
Hoseah told the DCM.

Threat of Stepping on the Wrong Toes
------------------------------------
12. (C) At the end of the meeting, Hoseah reiterated concern
for his personal security (Ref A), saying he believed that
his life may be in danger. He told the DCM that he had
received threatening text messages and letters and was
reminded everyday that he was fighting the “rich and
powerful.” While Hoseah maintained that he was not scared to
do his job, he said that he could not be seen as
“uncompromising.” Toward the end of the meeting, he said
quietly to the DCM, “If you attend meetings of the
‘inner-circle,’ people want you to feel as if they have put
you there. If they see that you are uncompromising, there is
a risk.” Finally, he made clear that if the threat to his
life reached a certain point, he would flee the country.


Comment: PCB’s List of Untouchables: Growing?
--------------------------------------------- --
13. (C) In our January 2007 meeting with Hoseah (Ref A), he
said his primary goal as the newly appointed Director General
of the Prevention of Corruption Bureau would be to prosecute
“big fish.” He told us point blank, however, that cases
against the Prime Minister or President were off the table.
Now, he has revealed that former President Benjamin Mkapa and
certain members of Mkapa’s inner circle may also be
untouchable, many of whom have ministerial or sub-ministerial
posts in Kikwete’s government. Thus, while President
Kikwete’s talk against corruption might be tough, he is
clearly treading carefully and the jury remains out on his
commitment to tackling high-level corruption.

14. (C) Even if the Kikwete administration does prosecute
the BAE case, it is important to note that the U.K. Serious
Fraud Office conducted the lion’s share of the investigation.
According to Hoseah, after the Fraud Office confronted the
GOT with evidence, PCB officials were invited to spend one
month in London working with the Serious Fraud Office to
finalize the case. Therefore, although the GOT may
ultimately point to BAE as a landmark case reflecting
commitment to combating corruption, the decision to prosecute
may actually reflect the notoriety of the case in the UK, its
notoriety and prominent press play here, and most
importantly, the fact that a fully developed case file,
brimming with detailed evidence, was presented by UK
investigators to the Prevention of Corruption Bureau. In
short, to the cynical eye, the GOT may have little recourse
other than to prosecute. END COMMENT.
RETZER