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Badilisha Lugha KISWAHILI

Revealed: How minister lied in Parliament on Serena Hotel deal

19th May 2012
Serena Hotel in Dar es Salaam

Serena Hotel in Dar es Salaam, formerly known as Movenpick, was sold to a new investor in a multimillion-dollar deal, The Guardian on Saturday can authoritatively reveal.

The revelation, which has also been confirmed by Serena Hotel’s top management, proves that former Deputy Minister for Finance Pereira Silima lied in the National Assembly in February, this year.

Though Serena’s top management declined to divulge the exact amount paid as the price for the hotel, citing a clause in the contract which bars the buyer from disclosing the total amount paid during the acquisition, The Guardian has established that $28 million was the value of the transaction.

According to details gathered by this paper, what transpired in the change of the hotel’s name from the previous Movenpick to the current Serena was total acquisition of the property - meaning the hotel was sold to its current owner.

The posh hotel was previously owned by a Saudi Arabia-based company, Kingdom Hotel Investment (KHI), and managed by Movenpick, before it was sold to the Serena chain of hotels last year.

Speaking to The Guardian this week, the Nairobi-based Managing Director of Serena Hotels, Mahmud Jan Mohamed, confirmed that what transpired was total acquisition and not just a change of management as earlier reported.

“This transaction was done in a transparent way as we acquired this property from KHI (Kingdom Hotel Investment) last year. All information is there as there is nothing to hide,” Jan Mohamed told The Guardian in a telephone interview.

Asked about the hotel’s shareholding and whether TANRUSS was still a shareholder, Jan Mohamed said:
“It is clear TANRUSS is no longer there. In fact it was not there even during the KHI era, with whom we negotiated before the acquisition was concluded.

The shareholders are TPS East Africa Limited (TPSEAL), Norwegian Development Fund, PROPARCO which is part of the French Development Agency (FDA), Property Development and Management Company (PDM) of Kenya and the Aga Khan Foundation for Economic Development (AKFED)”.

With regard to the amount involved in the transaction to acquire the 230-room posh hotel, Jan Mohamed said he could not disclose such information because there was a confidential agreement which prohibited such revelation.

However, this paper has established through credible sources that the transaction was concluded at a tune of $28million (Sh 44.8 billion).

And when quizzed about the amount of money paid to the government as capital gains tax for the sale of a business property based in Tanzania, Jan Mohamed replied, “That question should rightly be directed to the seller and not the buyer.

“TPS, as the main shareholder, as well as its partners such as PROPARCO and NORFUND, are big names which can not engage themselves in dubious deals. We pay all due taxes, as the country’s tax authorities can ascertain.

“We have been in the hotel business in Kenya for the past 16 years and in Tanzania for an equal length of time. We have transformed hotels in Kampala and Rwanda and we hope to do the same for the Dar es Salaam hotel.”

It remains unclear why the government issued a statement to the effect that the previous owner sold the property to another company more that six years ago.

On February 19, 2012 The Guardian on Sunday reported exclusively that there was controversy with regard to the ownership of the said hotel following a statement given by Deputy Minister Silima in the National Assembly.

The report stated that on July 27, 2011 KHI Senior Vice-President for Africa Roger Kacou had issued an internal announcement which read in part:

“KHI, the owning company of the hotel, has decided to sell the property to the Serena Hotel Group that not only owns hotels but also operates them.”

KHI had owned the hotel for about 6 years from 2005, at the same time that the management team from Mövenpick Hotels & Resort was also hired.

Serena Hotels Group owns and operates several hotels and lodges and tourist camps in Kenya, Tanzania Rwanda, Mozambique, Uganda and in the Southern Asian countries of Afghanistan, Pakistan and Tajikistan.

The former Finance deputy minister told the National Assembly during its last February’s meeting in Dodoma that what had changed was just the hotel’s management team and not its actual ownership.

Silima, who has since been transferred to the Home Affairs ministry as deputy minister during the recent cabinet reshuffle, was then responding to a question asked by legislator Chiku Abwao (Special Seats- Chadema), who wanted to know how much revenue the country had benefited from various changes in business names and sale of companies, including hotels and cellphone service firms. 

Silima then affirmed: “In the case of Sheraton, Royal Palm, Movenpick and now Serena, what is changing is the hotel management and not the hotel owner. The hotel owner, who is the taxpayer, is the company named TANRUSS Investment Ltd”.

  The Guardian has further established that while government records, according the deputy minister, show that TANRUSS was still the recognised hotel owner, the latter’s ownership of the property actually ceased in 2005, when the new company, Kingdom Hotels Investments, replaced TANRUSS.

Kingdom Hotels investments ownership ended officially on December 1, 2011 when the new investor rebranded the hotel with the Serena logo and name.

Silima added then that, with regard to the change in share ownership of the same business the government’s entitlements were governed by various tax laws, the nature of change in the share ownership, the shareholding structure among local and foreign investors and companies’ registration within and outside the country.

Further responding to a supplementary question on what the government was doing to ensure that all the state’s statutory revenues were collected, Silima pledged that the ministry would keep tabs on all businesses in a bid to avert any evasion of payment of rightful government dues.

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