TANZANIA: Norweigian firm pulls out over graft

Publisher Name: 
The Citizen (Tanzania)
A Norwegian engineering consulting firm undertaking government and
donor-funded projects worth billions of shillings has pulled out of
the country over corruption allegations.




The firm, Norconsult AS, announced on Sunday that it was winding up
all its operations in Tanzania and terminating the employment of its
managing director after audit reports linked it to corruption.




The decision to halt its lucrative contracts in Tanzania was taken a
week after The Citizen exclusively revealed how the Norwegian company
had operated locally for a decade without any form of official
registration.




The decision was announced by Norconsult global president John Nyheim
in a two-page statement posted on its official website. It said the
decision to close down operations in Tanzania has been communicated to
the relevant Norwegian authorities.




According to the statement, audits done over the last one year for
instance, revealed embezzlement of up to a reported Sh332 million in
highly irregular payments.




Norconsult AS had since 1998 ran business in the country as Norconsult
Tanzania Limited but without obtaining official registration from the
Business Registration and Licensing Agency (Brela) until this year,
according to the Engineers Registration Board (ERB).




That anomaly did not, however, prevent Norconsult from executing
mammoth projects funded the Government, World Bank and the Norwegian
government. It has over the years evolved into one of the major
engineering consultancy firms in Tanzania.




Yesterday evening, Norconsult ASs local partner and managing director
Francis Kifukwe did not wish to respond on the latest development and
appeared surprised when The Citizen sought his comments.




However, it was later established that Mr Kifukwe was in a meeting
with Norwegian officials in Dar es Salaam.




Earlier, a call to the local offices of Norconsult also yielded a
negative response from an unidentified woman staffer who said they had
nothing on the matter.




In the statement announcing their withdrawal, Mr Nyheim said
Norconsult AS was perturbed by its operations in Tanzania, which he
noted do not measure up to the companys international code of ethics
and contracts.




We do not accept any kind of misconduct or corruption. As a
consequence, we cease our activities in Tanzania, said Mr Nyheim.




He added: Internal and external reviews of the activities of
Norconsults partly owned subsidiary in Tanzania have revealed activity
that is not in accordance with the companys Code of Ethics and
contracts.




He said the misconduct was revealed through Norconsults own internal
review followed by an external review by PricewaterhouseCoopers
(PwC).




Mr Nyheim gave the example of Sh332 million which was believed to have
been corruptly obtained from its local operations.




It has been established that in the past several irregular cash
payments have been made from Norconsults partly owned subsidiary in
Tanzania, NTZ, totalling approximately NOK (Norwegian Kronor) 650.000
(Sh156 million), he said.




He noted that last year, $146 500 (Sh176 million) had been paid out in
cash from the project office in Dar es Salaam, with only petty cash
receipts as documentation. This particular case apparently involved
Norconsults participation in the World Bank-funded Dar es Salaam Water
and Sanitation (Dawasa) project.




Interestingly, 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.




We have brought the irregular activities to an end. NTZ (Norconsult
TZ) has been put under administration from Norway. The employment of
the managing director is being terminated. Finally, we withdraw from
Tanzania. Any kind of misconduct and corruption is contrary to all we
stand for and believe in. No Norconsult employees have contributed to
or known about the irregular payments, said Mr Nyheim.



He said the Norwegian National Authority for Investigation and
Prosecution of Economic and Environmental Crime (KOKRIM) has been
notified about the embezzlement with a view to taking legal
action.




Norconsult, he said, did a full review of all international activities
to detect misconduct emphasising that its aim was to help bodies like
the World Bank fight corruption.




Norconsult is also reviewing the internal procedures for evaluation of
cooperating parties, bidding, contracting, execution, financial
control and accounting in order to prevent corruption in connection
with our assignments, he stated.




The shutting down of the Tanzania office by a firm that has several
offices span across several countries is certain to bear a lot of
significance in the war against corruption in the country and gives
credence to views that some international corporate bodies could be
silent and implicit players in fueling the vice.




Tanzanian authorities are already reported to be investigating 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
and their values 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, which is working closely with The Citizen on the
issue, says the $6.7 million project might lead to Norconsults
blacklisting by the Work Bank.




What raises the eyebrows of those who have been aware of the companys
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.
AMP Section Name:Corruption