Three Tanzanian businessmen have stashed away $29 million in cash in the bank accounts of proxy companies in foreign tax havens.

It is not illegal to own an offshore bank account but an approval is required from the central bank before any Tanzanian residing in the country opens such an account.
But records from the Bank of Tanzania show that no such approval was ever granted to the businessmen.

The news comes at a time when a cross-section of parliamentarians are questioning the Speaker’s motive for withholding the report of investigations by the Attorney-General’s office into businesses and politicians illegally owning offshore bank accounts.

Fugitive Tanzanian businessman Shailesh Vithlan, who is wanted on criminal charges by the British and Tanzanian authorities for his role in a controversial radar scandal, was associated with three bank accounts holding as much as $25,922,269 in the offshore haven of Switzerland between 2006 and 2007.  

The records further show that accounts associated with Mr Vithlan had $,13,640,245 and $694,054 in 2006 and 2007 respectively. Stallions International Holdings Inc, a company associated with him, was connected to an account holding $1.3 million in 2006 and 2007.

According to new evidence unearthed in a joint investigation between The EastAfrican and the Washington-based International Consortium of Investigative Journalists, Mr Vithlan also owned Envers Trading Corporation.

Mr Vithlan was a Tanzanian government agent on many military deals, including the $40 million Gulfstream jet sold to president Benjamin Mkapa in 2002. He further arranged for $12 million to be secretly paid out by the UK arms company BAE into a Swiss bank account, in the radar case.

Records further show that Mr Vithlan’s longtime associate Tanilkumar Somaiya was associated with bank accounts which held up to $1,031,650 between 2006 and 2007.

In 2006, the UK’s Serious Fraud Office established that the BAE system had secretly paid a $12 million commission into the Swiss bank account of a former government official. SFO investigators said that at the time, the actual price of the military radar sold to Tanzania was $12 million, but the government paid $40 million with the excess $28 million paid to government officials and businesses people involved in the deal.

Both British and Tanzanian authorities have been hunting for Mr Vithlan, who was born in Mwanza, but has been travelling on a UK passport over the past 10 years. His whereabouts are still unclear although some reports indicate that he is hiding in Switzerland.

The source of Mr Vithlan’s money is unclear and the records did not confirm whether he had obtained the money from the radar and the government aircraft deals.

Another Tanzanian-born businessman, Somji Kulsum was the owner of a trust, AK’s Trust, connected to seven bank accounts that together carried as much as $1.9 million between 2006 and 2007.

The company had two addresses in Tortola, British Virgin Islands and Switzerland, but Mr Kulsum used addresses in London and Mombasa to open the bank accounts.

The issue of Tanzanians illegally owning offshore bank accounts has been politically divisive over the past five years with MPs pressurising the government to launch investigations into the matter.

The matter came up after reports suggested that a number of politicians who had benefited from corrupt deals were hiding money in offshore bank accounts.

Investigators at the Prevention and Combating of Corruption Bureau told The EastAfrican that the investigation into Mr Vithlani had not been closed but had failed to move in the past due to lack of political will.

“We are excited that President John Magufuli has shown zero tolerance for corruption and this is one of the cases we are planning to present to him,” a senior PCCB investigator said.

Zitto Kabwe, an opposition MP who has been pushing the matter for six years, said that he had written to the Speaker asking him to table the report from the investigations into the offshore bank account.

“We are informed that the Attorney-General has already presented the report to parliament but the government is trying to hide it from the public,” said Mr Kabwe. “We want transparency; the report has to be known to everybody.”

Mr Kabwe on Tuesday wrote to the AG, presenting the names of  99 Tanzanians who horde $116 million at HSBC bank in Switzerland mentioning  Mr Vithlani, Mr Somaiya and Mr Kulsum, who together have $30 million in Switzerland.

The letter, a copy of which The EastAfrican has seen, advises the AG to institute charges against HSBC bank for facilitating money laundering “because reports show that the bank officers were visiting their clients in Tanzania.”

READ: Tanzania may sue British bank HSBC over ‘illegal operation’

Sources within the AG’s office said that the government has decided to prosecute the three businessmen and the DPP has been instructed to prepare charge sheets against them.