70bn/- military radar deal: Key suspect disowned

DAR ES SALAAM business tycoon Tanil Somaiya, a long-time partner of controversial military radar deal agent Shailesh Vithlani, has contacted the government’s anti-corruption watchdog to deny any further links between the two. Well-placed sources confirmed to THISDAY that Somaiya sought out Prevention and Combating of Corruption Bureau (PCCB) officials ’’sometime last month (September 2007)’’ to inform them that he was no longer doing business in partnership with Vithlani. According to our sources, Somaiya told the PCCB that he had forfeited his shares in Merlin International Limited and Vithcorp Food Packers, both of which are companies he co-owned with Vithlani. Insiders say the two companies were used as agents for a string of dubious multi-million dollar government contracts including the purchases of the 28 million pounds sterling (approx. 70bn/-) military radar system, the Gulfstream presidential jet, and fleets of army trucks and helicopters. ’’Somaiya, through his lawyers, wrote a letter to the PCCB explaining that he was no longer associated with Merlin International and Vithcorp as of January this year,’’ a government source told THISDAY on condition of anonymity. It has been learnt that apart from telling the PCCB he was no longer in business partnership with Vithlani, Somaiya also sought to distance himself from the controversial deals, saying he had been only a nominal shareholder in the companies while Vithlani had the controlling stake. He also cleared the air over the ownership of Shivacom group of companies, explaining that he and his wife are the sole owners. But despite Somaiya’s assertions that he has now split up with Vithlani, most of the alleged fishy deals were done when the two were still in partnership. It has been established that Somaiya and Vithlani, who are both of Asian extraction (with Vithlani holding a British passport), grew up together in Mwanza Region and operated as business partners for many years. Agents of both the PCCB and Britain’s Serious Fraud Office (SFO) have been asking questions about the link between the two as part of their parallel investigations into the 2002 radar deal, now reportedly nearing conclusion. At the heart of both probes are alleged bribe payments amounting to about 30 per cent of the transaction value (approx. 21bn/-), made by British defence manufacturer company BAE Systems to Vithlani’s bank account in Switzerland. BAE Systems is also facing corruption allegations in other international deals. SFO investigators visited Dar es Salaam last year and interviewed both Vithlani and Somaiya over the deal, and PCCB director general Edward Hosea was recently quoted by Britain’s Financial Times newspaper as saying criminal charges are expected to be filed against at least one suspect in the deal before the end of the year. However, Vithlani already a key figure in the probe is understood to have gone on an extended trip out of the country for the time being. Merlin International Ltd was officially registered in Mwanza on March 27, 1986, with Vithlani (8,000 shares) and Somaiya (2,000 shares) identified as the company’s two listed shareholders at the time of its formation. The company began operating in Mwanza in relative anonymity, dealing in general merchandise and imported goods, before shifting the location of its main offices to Dar es Salaam in August 1998. It was at this point that the always low-profile company is understood to have begun its meteoric rise by landing a string of big government defence deals. In January 2007, after Merlin International’s links to questionable deals with the Tanzanian Government were exposed, Somaiya is said to have withdrawn from the firm leaving Vithlani to continue as owner, chairman and managing director.