James Rugemalira, a central figure in the Tegeta Escrow Account scam, has written to Tanzania President Jakaya Kikwete accusing the Public Accounts Committee of taking advantage of the row to settle scores.

In an attempt to sanitise individuals who have been accused of fraudulently withdrawing money from the escrow account at the central bank, Mr Rugemalira, the owner of VIP Engineering, says far less money was involved than the PAC would want the public to believe.

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He says while the PAC report indicated that Tsh306.6 billion ($177 million) was irregularly withdrawn from the account last year, only Tsh183 billion ($105 million) was in the account at the time because Tanesco had not deposited another Tsh124 billion ($72 million) that was due to IPTL.

Mr Rugemalira accuses the opposition and a section of the ruling party of being against transparency in the airing of the facts as recommended by the CAG’s office. “What is it that they don’t want the public to know about the CAG and PAC reports?” he writes.

To show that PAC’s recommendations were inconsistent with the CAG report and findings, he writes that the CAG recommended a revision of the power purchase agreement signed on May 26, 1995, concerning the IPTL power plant of 100MW whereas the September 5, 2014 court decision directed IPTL to increase its electricity generation from 100MW to 500MW.

Other directives by the High Court of Tanzania included conversion of the IPTL Power plant to use natural gas that would result in a reduction of the IPTL tariff to Tanesco to between US cents 6/kWh and US cents 8/kWh and PAP paying off all legitimate creditors of IPTL.

“We believe that these are facts in the CAG report that the public should know, and that the PAC has deliberately suppressed,” says Mr Rugemalira in his letter to the president. President Kikwete had earlier encouraged the publication of the full CAG report so that the public could be better informed.

Standard Chartered Bank’s position on the ownership of monies in the escrow account also differed from PAC, he said.

On November 10, 2014, Colin Johnson of Grant Thornton UK LLP signed on behalf of Standard Chartered Bank (Hong Kong) an expert report in ICSID Case Number ARB/10/20, which also confirmed that all the monies in the Tegeta escrow account belonged to IPTL and that Tanesco owed IPTL more money.

“Rather than address the CAG report, as was its mission, the PAC ignored the detailed factual findings and recommendations of the CAG report to instead convince parliament to make extraordinary accusations that have threatened the security and independence of Tanzania,” says Mr Rugemalira.

He further said that the 2nd Circuit of the Court of Appeal of the US has ordered (Summary Order of the Court dated December 15, 2014) Standard Chartered Bank to raise all its claims against VIP and or IPTL in Tanzanian courts after the bank said it would submit to their jurisdiction.

“VIP firmly asserts that the escrow money belonged to IPTL and that the present political pressure against the government captioned as the escrow saga is sponsored by conspirators whose sole aim is not to see IPTL grow.”

He said this approach had caused matters that were before court to be concluded on a political platform without giving persons affected their constitutional right to be heard.

What CAG said

The Controller and Auditor General, upon the request of the prime minister, conducted audit of the BoT Tegeta escrow account to establish the circumstances of withdrawal of the money.

The PM had ordered the CAG to conduct an audit into the account following a request from the ministry of energy and mineral resources and the Clerk of the National Assembly.

The CAG report says that, in 1995, the government of Tanzania through Tanesco entered into an agreement with IPTL to generate 100MW of electricity.

In the course of the project, Tanesco learnt that it was being overcharged in capacity charge and in June 17, 2004, it issued an invoice protest notice demanding recalculation of investment charges.

The CAG further revealed that, until November 22, 2013 there was $22.2 million, Tsh8 billion ($5 million) and corporate bonds worth Tsh159 billion ($92 million) deposited in the account.

The Public Accounts Committee when tabling a probe report last November, recommended that Prime Minister, Mizengo Pinda and other top government officials resign over inappropriate withdrawal of the money. PAC said the money belonged to the public and its withdrawal was tantamount to theft.

PAC chairman Zitto Kabwe said  a Kenyan businessman, Harbinder Singh Sethi, and high-ranking state officials conspired to grab the money.

READ: The mystery tycoon who shook up Tanzania

Other top government officials implicated in the scam are Attorney General Frederick Werema, who later resigned citing “his advice which was misunderstood had  polluted the air,” Permanent Secretary in the Ministry of Energy and Minerals Eliakim Maswi, who has been suspended for further investigation, Energy and Minerals Minister Sospeter Muhongo and his deputy, Stephen Masele who are still in office.

Additional reporting by Joseph Mwamunyange