Before military choppers deal landed in court: Ikulu was warned, asked to intervene

THISDAY REPORTER
Dar es Salaam

PRESIDENT Jakaya Kikwete’s State House was sometime this year asked to intervene in the controversial military helicopters deal before the matter finally landed in the High Court this week, THISDAY can now reveal.

It has been established that State House was formally informed about the intricacies of the deal and warned that the Ministry of Defence and National Service had bought civilian helicopters that were unsuitable for military operations.

In a letter addressed to State House Chief Secretary Philemon Luhanjo, dated April 3 this year, proprietors of the Dar es Salaam-based Khaisa Enterprises Limited company endeavoured to explain how the defence ministry had allegedly breached its contract with the firm for the supply of the choppers.

’’We know that the breach of contract was the result of (a decision by) the Ministry of Defence to purchase four civilian helicopters, known as Agusta Bell 412EP, from a different company,’’ said the company’s executive chairman Mouhidin A.S in the letter to Luhanjo.

Agusta Bell 412EP
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He added: ’’You may wish to know that the plan to buy such civilian helicopters was waived earlier, as this type was not recommended for military use and it’s not a multi-purpose helicopter - it is only for commercial operations.’’

According to Mouhidin, it was quite a surprise to everybody when the already rejected Agusta Bell aircraft were eventually purchased by the defence ministry for use by the Tanzania Peoples Defence Forces (TPDF).

In his letter to State House, the Khaisa Enterprises top executive also pressed for compensation from the government, on grounds that the defence ministry’s own correspondence to the company clearly stated that the government would be responsible for the costs incurred in the deal.

It could not be immediately ascertained if the company had received any response from State House before finally deciding to open litigation proceedings against the government this week.

Khaisa Enterprises Limited is suing the Ministry of Defence and National Service, with its permanent secretary as principal officer and therefore first respondent, for a total of 10 million euros (approx. 16.8bn/-) in compensation.

In civil case number 74 of 2007 filed at the High Court in Dar es Salaam on Thursday, the company accuses the defence ministry of ’’unlawfully dishonouring’’ a 2002 agreement between the two parties over the supply of the choppers.

The attorney general has also been named as second respondent in the plaint, by virtue of his position as the government’s chief legal advisor.

According to a copy of the plaint obtained from the High Court, Khaisa Enterprises claims that the defence ministry went against a valid contract in which the company was to supply six units of COUGAR AS 532 helicopters at a total cost of 125 million euros (approx. 210bn/-).

Eurocopter´s version AS - 532 Cougar Mk II of the Netherland Air Force.
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The 16.8bn/- being claimed as compensation is said to be equivalent to an 8 per cent commission that the company stood to earn, if the aborted deal had actually gone through.

Apart from the compensation package, Khaisa Enterprises is also seeking a refund for payment of $100,000 (approx. 130m/-), being commission to the would-be financiers of the project, costs of the suit, plus any other relief that the High Court may decide.

In the suit, the city-based company claims to have spent a lot of money in covering travel costs and other expenses for delegations of senior TPDF officers to inspect the COUGAR helicopters in France, in anticipation of clinching the deal.

Investigations by THISDAY have previously established that the defence ministry purchased the controversial Agusta Bell civilian choppers through Merlin International Limited, another Dar es Salaam-based company owned by businessmen Shailesh Vithlani and Tanil Somaiya.

Apart from being reportedly unsuitable for military operations, the Agusta Bell aircraft are also said to have been overpriced by close to $20m (approx. 26bn/-).

Merlin International is the same company linked to the government’s purchase of a similarly controversial, $41m (approx. 52bn/-) military radar system, which is currently at the centre of a local and international corruption investigation.

The company was also behind the sale of a $40m (50.7bn/-) Gulfstream presidential jet to the third phase government of former president Benjamin Mkapa, the supply of over 600 IVECO military trucks to TPDF at a price exceeding 90bn/-, and other big defence contracts involving the government.