DOCUMENTS RAISE NEW QUERIES ON INDEPENDENT POWER TANZANIA LIMITED SALE

The documents show how the IPTL price dramatically changed. In two weeks after Piperlink, a British Virgin Island offshore company bought the firm for just Sh6 million, only to sell it to Mr Sethi at $300,000(480million).  More questions also abound why IPTL sale tax revenue letters from TRA to Piperlink and Merchmar based in the British Virgin Island and Malaysia respectively, bore the same reference number and used the same address of C/O IPTL in Dar es Salaam. Signatures in both bank slips used to pay the taxes were by the same person.  Mechmar was assessed to pay Sh776,000 as taxes following the purported sale of its 70 per cent share at the price of Sh6million to Piperlink, while Piperlink  was also instructed by TRA to pay taxes amounting to Sh62 million after it allegedly sold its 70 per cent stakes to Mr Sethi. Both assessments were done and approved by Mr Kabunduguru, the regional manager, Ilala Tax region, without raising any concern.

Dar es Salaam. The documents submitted by Pan African Power Solutions(PAP) to Tanzania Revenue Authority (TRA) show that the Malaysian company, Mechmar Corporation purportedly sold its 70 percent shares in Independent Power Tanzania Limited (IPTL) in September 2013 at a mere Sh6 million, The Citizen can reveal today.

The revelation comes as the nation waits keenly the report on final investigation on the purported acquisition of IPTL by a Kenyan businessman, Mr Harbinder Singh Sethi, who is the executive chairman and majority shareholder of PAP.

Mr Sethi and his son owns 50 percent of PAP, while the rest is owned by a company called Simba Trust purportedly incorporated in Australia, according to investigation conducted by The Citizen.

What casts doubt on the transaction is the fact that at the time of the purported sale of shares, IPTL had power plants located at Tegeta in Dar es Salaam worth millions of dollars plus cash totalling $250 million—including $122 million sitting idle at an escrow account at Bank of Tanzania (BoT).

According to TRA’s letter with reference number TRA/DR/ILA/RE/175, dated November 15, 2013, which was directed to Mechmar Corporation, the Malaysian firm allegedly sold its 70 per cent share at Sh6 million($3750), according to the prevailing exchange rate by the tax agency on that day.

The letter is signed by regional manager, Ilala Tax region, Mr Paschal Kabunduguru. The documents, whose authenticity The Citizen has thoroughly verified, show that tax amounting to Sh776,000 was then paid by the Malaysian firm at CRDB bank, Water Front Branch, on December 6, 2013.

But, at the time when the PAP-IPTL acquisition was being endorsed by TRA, the former had, in the previous two weeks,  already received $122 million(Sh201 billion) from the escrow account at BoT.

The escrow payments were paid to Mr Sethi after he successfully convinced the relevant officials he had legally acquired 70 per cent of Mechmar share within IPTL, the claims, which enabled him to reach out of court settlements, with VIP Engineering and Marketing, a local firm that owned 30 percent of IPTL.

To settle the deal with VIP, Mr Sethi had to pay a whopping $75 million to acquire 30 per cent of IPTL in order to have full control of the Tegeta escrow billions as well as power plants.

What doesn’t add up here is how possible it was for 70 per cent of IPTL to attract only $3750 (Sh6 million), while a few weeks later, the 30 per cent of the same company was bought at $75 million(Sh120 billion).

As one analyst puts it, “Even if the shares were being traded at New York Stock Exchange, the largest stock market, the massive disparities could still raise an alarm that something was not right in this transaction.”

The documents, which were also submitted at Business Registration and Licensing Authority (Brela) also show that two week after Piperlink, a British Virgin Island offshore company that purportedly bought the 70 per cent IPTL share at a mere Sh6 million, then sold them to Mr Sethi at $300,000 (480 million).

Simply put, the 70 per cent share price also surged 80 times after they were purportedly bought by Piperlink at the mere price of  Sh6 million—but still nobody raised the alarm.

According to another TRA letter written on November 15, 2013 with Reference Number TRA/DR/ILA/RE/175, the Piperlink was asked by the revenue agency to pay taxes amounting to Sh62 million.

But, both two letters addressed to two different companies, one based in Malaysia, and the other one in British Virgin Island bear the same reference number and uses the same address of C/O IPTL in Dar es Salaam.

It should be noted that at the time of the purported transactions, Mr Sethi was in control of IPTL.

But, according to investigation conducted byThe Citizen, though Piperlink and Merchmar were two different entities, the signatures in both bank slips used to pay taxes at CRDB Water Front branch appears to have been signed by the same person. Mechmar was assessed to pay Sh776,000 as taxes following the purported sale of its 70 per cent share at the price of Sh6 million to Piperlink, while Piperlink  was also instructed by TRA to pay taxes amounting to Sh62million after it allegedly sold its 70 per cent stakes to Mr Sethi.

Both assessments were done and approved by Mr Kabunduguru, the regional manager, Ilala Tax region, without raising any quesries.

The Citizen has unsuccessfully tried for three months now to get Mr Kabunduguru to comment on the matter.

The Citizen