Local companies defend Tanesco

THREE local companies have added their voice on Tanzania Electric Supply Company (Tanesco) move to seek annulment of International Centre for Settlement of Investment Disputes (ICSID) award for payments of 148.4 million USD to Standard Chartered Bank (Hong Kong) Limited (SCBHK).

They are VIP Engineering and Marketing Limited, Independent Power Tanzania Limited (IPTL) and Pan Africa Power Solutions (PAP) Tanzania Limited, who have maintained that SCBHK has never been a secured creditor let alone a creditor of the country’s giant electricity producer company (IPTL).

While VIP, through its international advocate, Dr Camilo Schutte, claims the loan SCBHK is trying to enforce is tainted with fraud, the IPTL and PAP, through their Company Secretary and Chief Legal Counsel Joseph Makandege were of the opinion that the ICSID award was illegal both in law and facts.

In an exclusive interview with the Daily News yesterday, Dr Camilo said, “Any court of law or arbitral tribunal that finds on the basis of the evidence before it that the loan SCBHK are trying to enforce has an illegal object must reject the claims and deny any sort of legal effect to them.”

The Canadian lawyer proposed to Tanesco to prepare application for annulment of the September 12, 2016, ICSID award and request stay of its enforcement, thus joining what was being contemplated by advocate Richard Rweyongeza, for the government owned electricity Supply Company.

“Tanesco and the government are in difficult situation. (They) are to engage their own independent international experts who will analyse and discuss the evidence and the expert opinions of VIP’s independent international experts,” he suggested.

Dr Camilo cautions that the ICSID order has international legal effect, as both Tenesco and government would be exposed to worldwide prosecution and enforcement measures and not complying with the award without good reason would also detriment the international financial reputation of Tanzania.

Expounding further on the loan, the international lawyer said that what SCBHK was trying to enforce was not the original loan extended to Independent Power Tanzania Limited (IPTL) under the facility agreement of 1997, but a new purported 12 million USD based on variation letters of 2001 and 2003.

He claimed that the new 120 million USD facility was not legally approved by IPTL, but only Mechmar Corporation (Malaysia) Berhad (Mechmar), as VIP and its board members in IPTL were ignored and that was known to Danaharta and also Standard Chartered Bank (SCB)/SCBHK.

Dr Camilo pointed out that such new facility has the purpose of financing illegal debt in IPTL to Warsila and Mechmar, the debts that were created by such two parties on the basis of secret illegal commissions and other illegal kickbacks meant to inflate the IPTL costs and embezzle its money.

“Because Mechmar refused to disclose the details and nature of the debts, VIP and its board members refused to approve those debts for IPTL ever since 2001 when the ICSID established that the debts had been inflated and could not be taken into account in the tariff calculated under the PPA,” he said.

At a press conference in Dar es Salaam yesterday, Mr Makandege analysed several grounds within which the ICSID award should be annulled. He claimed that SCBHK had no locus to petition before the international court because was neither an agent nor secured creditor of IPTL.

“It is no wonder SCBHK is not even in the list of creditors in the handing over report when the provisional liquidator of IPTL handed over to PAP when it took over affairs of IPTL following the September 5, 2013 order of the High Court of Tanzania,” he said.

Mr Makandege, on behalf of the companies’ Executive Chairman Mr Harbinder Sing Sethi, told the journalists that IPTL and PAP instituted a case on April 3, 2014, seeking several reliefs. Among such reliefs, he said, include the declaration that the Bank was not a creditor and for payments of 3.24 billion US dollars (about 6.48 tri/-), as compensation for colossal business losses they have sustained following SCBHK relentless interference.

“You could see that while SCBHK demands 148 million US dollars, IPTL and PAP demands from them 3.24 billion US dollars. But it must be noted that the position as far as SCBHK are creditors is still pending as no court of law in Tanzania has given any decision on the matter,” he said.

Mr Makandege further pointed out that the ICSID decision was unlawful for being in contemptuous of the valid existing order issued by High Court Judge Dr Fauz Twaib, who had prohibited the enforcement of the first award issued in February 2014, requiting Tanesco and SCBHK to recalculate the tariffs.

“Consequently, award issued by the ICSID contravenes the public policy and laws of the United Republic of Tanzania the compliance of which is required of Tanesco as public institution supposed to adhere to the tenets of the Rule of Law and the observance of which the Tribunal is required,” he said.

Regarding escrow money claims, Mr Makandege insisted that the release of such funds was proper and lawful because the dispute for which the monies were escrowed had been amicably settled and it was for Tanesco and IPTL and nobody else to resolve the dispute as they did.