The Tanzania government is demanding that the £30 million ($46 million) that Britain’s biggest arms company, BAE Systems, has promised to pay to settle the Watchman radar scandal, be channelled through it.

BAE promised to pay the money in a plea agreement with the UK’s Serious Fraud Office, in a deal to end a six-year investigation into suspected bribery.

However, British papers say the plea is unlikely to come before the courts for approval before November.

Under the deal, the money in questions is be returned “to the Tanzanian people” through various charity organisations rather than through the government, which paid BAE Systems for the purchase of the radar system in the first place.

BAE — which was being investigated in the 1999 multimillion-dollar scandal involving senior government officials, prominent businessmen and ministers, who conspired with the arms dealer to “push a costly and pointless air traffic control system on Tanzania,” in the words of the Financial Times newspaper — admitted only to a single minor bookkeeping offence relating to the sale but nevertheless agreed with the SFO to pay the 30 milion pounds penalty. A third of the Tanzanian contract was allegedly paid in bribes.

The SFO then dropped its charges against those involved in the scandal, who included Tanzanian officials Andrew Chenge (the then Attorney General), tycoon Tanil K.C Somaiya of Shivacom and a middleman named Shailesh P. Vithlani.

As part of the same deal, BAE agreed to pay $400 million in an agreement with the American authorities, to settle bribery accusations over jet fighter sales to Saudi Arabia and the Czech Republic.

Now activists are reading sinister motives into the Tanzania government’s demand that the payment be made to it, warning that the funds will be misused taking into account that the country is going into a general election.

International lawyers and bribery watchdogs are campaigning against the government receiving the cash, saying it would be like returning money to the very people that took payoffs in the first place.The World Bank, through its Stolen Assets Recovery Initiative (StAR), is ready to assist Tanzania to repatriate the proceeds of the fraud.

StAR is a partnership between the World Bank Group and the United Nations Office on Drugs and Crime that assists developing nations to recover stolen assets.

Salar Zeynelabidin, a lawyer with the World Bank, told The EastAfrican last week in Arusha that StAR is ready to assist Tanzania to recover the money, but first the country must apply for support through the Cabinet.

Mr Zeynelabidin added, “The theft of public assets from developing countries has assumed alarming proportions; between $1 trillion and $1.6 trillion is being looted every year.”

He estimated that kickbacks received by public officials from developing and transition countries amount to between $20 and $40 billion per year — a figure equivalent to 20 to 40 per cent of flows of official development assistance.Back in 2005, the World Bank successfully managed to assist the Nigerian government to recover $458 million stolen by the late military dictator Gen Sani Abacha from Swiss banks.

The Watchman radar deal was negotiated despite intense opposition from then UK Cabinet ministers Claire Short and Robin Cook as well as the World Bank.

Thereafter, the SFO discovered that a third of the contract’s price had been diverted into secret offshore bank accounts. The SFO further exposed that the money had gone into a Swiss bank account controlled by Sailesh Vithlani, a middleman of Indian extraction with a British passport.

The SFO believes that this money was used to pay bribes to Tanzanian politicians and officials to approve the deal.Mr Vithlani left Tanzania after the country’s Prevention and Combating of Corruption Bureau accused him of lying to investigators.

He is listed as wanted by Interpol.Dick Oliver, BAE Systems chairman, admitted only that his firm “made commission payments to a marketing adviser and failed to accurately record such payments in its accounting records... The company failed to scrutinise these records adequately to ensure that they were reasonably accurate and permitted them to remain uncorrected.”

Now, UK prosecutors plan to send the money from the bribery-probe settlement to Tanzania. British High Commissioner to Tanzania Diane Corner told The EastAfrican in Dar es Salaam last week that under the proposed settlement, the SFO will ask that most of the £30 million BAE is paying, go to Tanzania as the agency’s director, Richard Alderman, pushes to return money to corruption victims.

Mark Mandelssohn, former chief of the Fraud Division at the US Department of Justice, told The EastAfrican that, “There is a grave danger that you’re returning money to the very people who took the bribes in the first place.”

However, Bernard Membe, Minister for Foreign Affairs and International Co-operation told The EastAfrican that Tanzania cannot let the money be donated to charitable organisations, “because it belongs to the government of Tanzania and it is the state that should decide how to use its recovered funds.”

Mr Membe said Britain should not dictate the use of the money by Tanzania when the US government in a similar arrangement was being refunded directly and not through individual organisations.

In February, the British Serious Fraud Office and the US Department of Justice reached settlements with BAE Systems in a ground breaking global agreement that involved BAE’s business dealings in a number of countries including Tanzania.