Tanzanian Association Oslo

More revelations in

radar deal saga:

The secret BAE money machine

-Details of elaborate but clandestine bank account system used to effect payments both overt and covert

THISDAY REPORTER
Dar es Salaam

A MYSTERIOUS offshore company linked to Tanzania’s festering radar transaction scandal, Red Diamond Trading Limited, was used to channel secret payments all over the world to sweeten multi-million dollar contracts for the renowned British defence manufacturer company BAE Systems, it has been verified.

Tanzanian and British investigators have established that Red Diamond, which was registered in the British Virgin Islands (BVI), made illegal payments of $12m (approx. 15bn/-) to Envers Trading Corporation, now understood to have been the company that brokered the 28 million pounds sterling (approx. 70bn/-) radar deal in 2002.

The transaction is being investigated simultaneously by the UK’s Serious Fraud Office and the Prevention and Combating of Corruption Bureau (PCCB) over allegations of illegal kickback payments amounting to the same $12m to government officials in order to get it approved.

According to official records from the British Virgin Islands Financial Services Commission, Red Diamond was registered on February 24, 1998, under company number IBC No. 269342, and incorporated with a share capital of $50,000 with its registered agent identified as ATU General Trust (BVI) Limited.

The company’s owners are not listed, but its registered office address cited as 65 Main Street, P.O.Box 3463, Road Town, Tortola, BVI.

It has now emerged that BAE Systems allegedly used Red Diamond to channel payments to recipients around the world, via bank accounts registered in the name of the company in London, Switzerland and New York.

The latest revelations suggest that the British defence manufacturer firm used a secret payments system and channelled illegal commissions to agents through the BVI offshore company.

Financial sector experts have described the British Virgin Islands as a financial ’black hole’ in the Caribbean, where beneficial ownership of a company can be hidden.

In criminal charges stemming from the radar deal against lead suspect Shailesh Vithlani, filed on November 1 this year at the Kisutu Resident Magistrate’s Court in Dar es Salaam, the name of the Red Diamond Trading company has cropped up prominently in the charge sheet.

According to Tanzanian prosecutors, the BVI company paid Envers Trading Corp. - an obscure company now directly linked to Vithlani - a total of $12,391,459.50 (approx. 15bn/-), equivalent to 31 per cent of the radar purchase price, as consultancy fee.

BAE Systems on its part has never disclosed the existence of the Red Diamond company in its published company accounts, and is yet to explain why it was set up.

Investigators say an elaborate banking system was organised under which cash from BAE Systems was automatically funnelled through Red Diamond accounts and on to its final destination(s).

The Tanzanian radar deal has been roundly criticised on the international front, with various keen observers asserting that the technology purchased was both outdated and too expensive for one of the poorest countries in the world.

The World Bank is amongst those that objected to the sale of the air traffic control and military radar system to the government of ex-president Benjamin Mkapa, which came at a time when Tanzania had just been granted a debt relief package of $2bn (approx. 2.6trn/-).

However, despite all the investigative efforts by both the PCCB and Britain’s SFO, neither of the two law enforcement agencies has so far actually filed any criminal charges against those identified as suspects in the deal.

Paradoxically, lead suspect Vithlani has been charged with mere ’perjury’ rather than outright corruption, and the prosecution is being handled by the attorney general’s chambers instead of the state-run anti-corruption watchdog itself.