U.S. company denies ties to Tanzanian power scandal

Katharine Houreld

NAIROBI, Kenya — A U.S. company said it had never received “a single penny” from the Tanzanian government, despite being named as a recipient of millions of dollars in a scandal that brought down the country’s cabinet the week before U.S. President George W. Bush was due to visit.

In a fax to The Associated Press, Houston-based Richmond Development Company said officials had not seen the parliamentary committee report that blamed the prime minister and two other ministers for continuing to make payments to the company after it had failed to provide emergency power.

But, it said, neither it “nor any of its employees have received a single penny from, or paid a penny to, the government of Tanzania or any of its officials.”

The company did confirm it had negotiated a contract worth $83 million with the government, but did not specify whether it had supplied any services under the contract. It said it had been “plagued by false and misleading claims” since it won the contract in 2006.

President Jakaya Kikwete last Thursday dissolved his entire cabinet over the scandal, having already received the resignation of the prime minister and two other ministers named in the report. The following day, veteran civil servant and freshman legislator Mizengo Peter Pinda was elected as the new prime minister. The rest of the cabinet has yet to be named.

The upset came a week before a scheduled visit by Bush, which has been considered a sign of approval for the government. More than half of Tanzania’s budget comes from foreign aid, and the impoverished East African country is struggling to improve services and attract foreign investment.

The resignations followed last Wednesday’s highly critical report by a parliamentary committee on a contract awarded to Richmond to supply emergency power about two years ago.

The report said a contract of $172.5 million was signed to supply the government with 100 megawatts of emergency power when drought hit Tanzania’s hydroelectric dams. But generators arrived faulty and late, or not at all.

There was no immediate explanation of the discrepancy between the worth of the contract given by the report and that given by Richmond.

The report said the company with which the contract had been signed did not exist in the United States. It said the government was paying the company $140,000 a day, and asked who was collecting that money.

The fax from Richmond did not say why the contract had not been canceled if the company had not received payment, nor who else might have received it. But it emphasized the company — which says it has projects on four continents — “has no prior record of wrongdoing” and was not implicated in investigations by the U.S. Department of Commerce or previous committees in Tanzania investigating the project.

Kikwete took office in 2006 promising to fight graft in Tanzania, one of southern Africa’s poorest countries. Last month, he fired the head of the central bank after international auditors discovered more than $120 million was missing.

Bush praised Kikwete’s “leadership and vision” in a statement announcing a trip to Africa that was to include three days in Tanzania.

(Associated Press)