State fails, Rugemalira out

17Sep 2021
By Guardian Reporter
Dar es Salaam
The Guardian
State fails, Rugemalira out
  • DPP drops all charges, arising from 2014 escrow account saga

THE Kisutu Resident Magistrate's Court yesterday acquitted James Rugemalira after the Director of Public Prosecutions (DPP) dropped charges against the businessman.

James Burchard Rugemalira (3rd-R) poses for a photo in Dar es Salaam yesterday with some members of his family shortly after the city’s Kisutu Resident Magistrate’s Court acquitted him of the economic sabotage charges he had faced since 2017. The Director of Public Prosecution had a little earlier decided to dropped the charges. Photo: Guardian Correspondent

Speaking shortly after he was set free, Rugemalira’s lawyer Michael Ngalo told journalists in Dar es Salaam yesterday that his client walked home a free man the DPP entered nolle prosequi.

His co-accused Harbinder Singh Sethi was released in June this year after paying a fine of 200m/- out of 26bn/- he was ordered to pay.

He signed a document to say the remaining amount will be paid in instalments as demanded by the Director of Public Prosecutions (DPP), the sum being settled in 12 months.

 Sethi was facing an economic crimes charge alongside Rugemalira, thrown into remand prison in 2017 in the wake of a parliamentary resolution of December 2014 which declared that payment of the Tegeta escrow account after issues pending at the High Court were cleared was gross fraud of public funds.

After they were arrested, Sethi and Rugemalira appeared before the Kisutu Resident Magistrate on June 19, 2017 facing 12 charges, which included money laundering.

The prosecution listed long accusations of dealing with criminal networks, forgery, submission of false documents, obtaining money through fraudulent means, occasioning the government a loss of $22,198,544 and 309bn/-.

The funds were the total amounts repaying the TANESCO debt to IPTL which Sethi bought from Mechmar Corporation of Malaysia as well as the 30 per cent shared held by Rugemalira.

The purchase was validated by the High Court Judge John Utamwa but was rejected by the legislature, citing claims by a merchant bank, the Standard Chartered Bank of Hong Kong.

The bank failed to pursue the issue in the Court of Appeal to overturn Utamwa’s ruling, and continued to petition various governments and international tribunals, heavily relying on the parliamentary resolution, observers noted

The prosecution maintained that the said crimes in Dar es Salaam, South Africa, Kenya and India, that is, the locations were the purchase of IPTL shares was discussed, validated and executed.

Arraignment of the two businessmen followed a sitting of a panel of the International Centre for Settlement of Investment Disputes (ICSID) sat in London and issued a ruling in favor of the Hong Kong bank, intimating that the Tanzania government as sole shareholder in TANESCO needs to pay the bank, claiming proceeds from the Tegeta escrow account that it was the creditor to Mechmar Corporation, despite failing to put up a credible case for hearing at the Court of Appeal on the Utamwa J. ruling.

Local political and media sentiment was elated with their arrest, seen as a bold move by the government to bring to justice suspects implicated in mega scandals.

Tabling the committee report in the National Assembly in November 2014, then Kigoma North MP Zitto Kabwe as chairman of the Public Accounts Committee and his vice chairman Deo Filikunjombe (leading 19 CCM MPs in the committee) said that Sethi collaborated with high-ranking state officials to swindle the 300bn/- from central bank vaults. Filikunjombe died in a plane crash before the 2015 general election.

The payment of the Tegeta escrow account funds to IPTL irked wide sections of the government and the legislature, with the Controller and Auditor General (CAG) asserting in a report that the payment was invalid as there were remaining issues to be settled between TANESCO and IPTL by the time the money was emptied from the escrow account.

IPTL and Tanesco were in a 20-year power purchasing agreement from 1995 for 100MW of electricity, a situation that was rocked into conflict as Rugemalira sided with TANESCO in an ICSID case in 1998 which contested the 3.6m dollars monthly payments, struck down to 2.6m dollars in the ruling in 2002.

From then on the Malaysian company, detesting their local partner for not going with the scheme, started working to quit their investment for insufficient profits and dubious unmet expectations

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