C O N F I D E N T I A L DAR ES SALAAM 001037

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