Tanzania

How Dar es Salaam`s tycoon made

Shilling 5.4 bilions in dubious deal

He is among the most famous Dar es Salaam men, known for his penchant for posh cars and beauty contestants, two vices he has been able to fund easily with the massive wealth he has acquired over a decade of conning foreign mineral dealers from Russia, Israel and Italy.

His name and dress code might make you think he is a native of the Democratic Republic of Congo and a prominent mineral dealer from Lubumbashi. But the truth is that he is neither a Congolese nor a mineral dealer, but just a notorious conman born in Kilimanjaro Region about 45 years ago.

With the protection of a few key politicians and corrupt cops, this man alone is believed to have conned dozens of international mineral dealers out of close to $10million between 2001 and 2009 without owning even a single gold mine.

He has been arrested five times, but no serious legal action was ever taken as he continued to enjoy the buffer of his well-placed connections.

Although in the short-run he was a lauded hero in Dar es Salaam, today his criminal activities in mining have cost the country’s image, forcing the government to come out strongly this week to defend its dying glory at the global arena.

According to details gathered by The Guardian on Sunday, the man (name withheld) operates a network of well-educated conmen who have outstanding technical know-how in the global minerals business.

They are all equipped with satellite phones, internet facilities and posh cars, and they spend most of their time at Dar es Salaam's swankiest hotels, hunting for international mineral dealers who have just arrived in the country looking to buy gold, diamond, copper or uranium easily and cheaply.

It all starts online with email communications between foreign dealers and local conmen. There are locals who are fluent in English as well as French who are employed just for their language skills during the online business inquiry. In setting up their con schemes, fake email addresses, mobile numbers and identities are established and after a successful transaction, everything is abandoned or destroyed.

It’s during the online communication that foreign dealers are lured into this fake business because of the cheap prices offered and the promise of pure gold, diamond or copper from either DRC or Tanzania.

Finally, a foreign dealer plans his journey to Dar, hoping to strike a quick fortune. After arrival at the Julius Nyerere International Airport, he finds a posh car with a driver and pretty girl waiting for him, ready to escort him to one of the booked hotels in the city centre.

From the first communication email to the reception at J K Nyerere International Airport, these conmen create the illusion of a reputable and wealthy firm. But behind this fake impression lies the true nature of their criminality.

For example, in August 2005, this man and his associates managed to defraud Russian dealers of $4million, after promising to export seven containers of copper from the Democratic Republic of Congo.

To convince the Russian dealers, five containers with official seals from Tanzania Revenue Authority were at the Dar es Salaam port and the fraudsters had prepared Export Declaration Forms from Congo, claiming that the 20-feet containers were filled with copper worth $800,000 each.

According to our inside source, the DRC Export Declaration Forms were stamped and marked “Goods in Transit” by a local TRA official who was also on the payroll of the fraudsters.

In their briefcase, they had fully certified samples from the defunct Humac minerals laboratory in Mwanza, plus an official letter from the Commissioner of Minerals in Lubumbashi Province certifying that the contents of the containers was pure copper mined and processed in his province.

None of these documents were authentic, however; even the Mwanza-based laboratory was mainly established to deal with gold and diamonds, according to its owner, Gareth Hughes.

Finally the local fraudsters met their victims at the Movenpick hotel, where they exchanged documents and received a cash payment of $500,000 as an advance before they were wired the balance of $3.5 million in three days.

The Russian dealers left the country after a week with hopes of reaping millions in profit, but they were shocked to learn later that all five containers were filled mostly with sand, with a little concentration of copper that would be worthless by global mining standards.

The Tanzanian fraudsters remained heroes in Dar es Salaam but their counterparts in Russia did not take the news of their being conned idly. They chose to fight back to get their millions of dollars, but since the Tanzanian ringleader is a well connected man, no arrest was made.

As the government now steps in to deter this notorious network of conmen, fresh details show that a syndicate of local fraudsters has swindled foreign dealers of close to $20million in the past three years, The Guardian on Sunday has learnt.

This Monday, Commissioner for Minerals Peter Kafumu came out strongly urging both local and foreign minerals traders to stop trading with fake dealers.

According to Dr. Kafumu, the local conmen pretending to be mineral dealers use fake company names and brands and are luring international mineral traders who have little knowledge of the local market. To prove their case, says Dr Kafumu, the local conmen show international traders genuine samples of gold, diamond and copper alongside documents purportedly approved by the Minerals Department as well as the TRA’s Customs Department.

Although the Ministry of Minerals and Energy, Tanzania Police Force and Interpol are all vowing to fight the syndicate, the damage already done by these fraudsters may have cost the country’s image dearly internationally.

Today, according to Dr Kafumu, there are about ten local companies being investigated in connection withdozens of fake transactions that took place in recent years, where international mineral dealers lost an estimated $20million.

But according to our source, the ringleader and Dar-based tycoon is far from reach as none of his assets or companies have been seized or investigated, despite his various fake transactions with foreign mineral dealers.

“This is their master, but you will be surprised to hear that he is not among those being investigated…It’s because some big wigs in the ruling elite eat and drink with him,” a source close to the network told The Guardian on Sunday under condition of anonymity.

The Lake Zone syndicate

Apart from the Dar-based network of mineral conmen, there’s another syndicate operating in Mwanza and Shinyanga regions that has also defrauded foreign mineral dealers.

The syndicate, known as ‘Kakumba’, dates back to the 1990s, when the government through the Central Bank of Tanzania allowed local banks to buy gold directly from local dealers in a bid to curb the smuggling of minerals in East Africa.

Alarmed by the growing smuggling of its minerals to Kenya, Tanzania introduced the local market, hoping to boost the economy as well as helping the small-scale miners to access a reliable market. In those days, unlike today, there wasn’t any large-scale mining firm operating in the country.

But soon after the introduction, the network of conmen realised a golden opportunity to make a quick fortune, and they took advantage of the corrupt system and little knowledge of pure gold and diamond within the banking circle to defraud the local banks, including the BoT.

By mid-1995 when the system was halted, the local banks, especially the National Bank of Commerce suffered a huge loss amounting to $11million as a result of trade in fake diamonds and gold.

According to details gathered by The Guardian on Sunday, when the government halted the gold-buying scheme through local banks, this syndicate then shifted its focus to foreign mineral dealers who were then beginning to eye Tanzania as a source for lucrative minerals.

Following the minerals sector liberalisation which, among other things, witnessed the entry of foreign investors as well as diamond and gold buyers, this network quickly changed its target.

Taking the advantage of the black market preferred by both foreign and local mineral dealers in order to avoid paying taxes, this network managed to defraud foreigners of billions of shillings.

In one incident in mid-June 2001, a Russian businessman, along with his local partner who is a qualified engineer, was conned about $1.5 million at Aspen Hotel, in Mwanza city, after being sold fake diamonds.

Narrating the incident, the engineer who is currently a District Commissioner and a member of the ruling party, said, “They showed us a verified sample of pure diamond…from these samples we established that it was genuine diamond and were tempted to trade with them.”

“However the packed diamond which they finally sold to us turned out to be industrial diamond not the pure diamond that we paid for….I couldn’t eat for two days when my partner phoned to inform me that what we bought was fake industrial diamond,” recalled the engineer, who declined to be named.

The engineer further said, “When we tried to trace them, we established that they were fake from their identities to the diamonds they sold us…not only that but one of them was a man connected to some top government officials.”

“We couldn’t even inform the police because the transaction was done on the black market…none of us has a mineral dealer license,” he told The Guardian on Sunday.

SOURCE: GUARDIAN ON SUNDAY