In this blog, Michaela Collord takes a look at the escrow scandal in Tanzania, and the impressive efforts by politicians to investigate the issue and hold those responsible to account. With elections coming up in 2015, she asks what the political implications of this investigation might be. This blog was initially posted on Presidential Power.
As noted by one observer, last Saturday was ‘a big day in Tanzania.’ In an unusually bold move, the Tanzanian parliament passed a resolution calling on President Jakaya Kikwete to remove four high-ranking officials in his government. The Minister and Permanent Secretary of the Ministry of Energy and Minerals topped the list, followed by the Attorney General and Minister of Lands. The Prime Minister, meanwhile, narrowly avoided joining his colleagues on the parliamentary chopping block.
The vote comes on the back of lengthy investigations into the disappearance of $122m out of an escrow account held by the Tanzanian central bank. The funds in the account—opened jointly by the state-run power utility TANESCO and Independent Power Producer Ltd (IPTL)—were paid to IPTL’s putative owner, Pan Africa Power (PAP), in 2013. Only in early 2014, when TANESCO won a long-pending court case against IPTL and went to claim the funds in the escrow account did it emerge that PAP never in fact legally purchased IPTL and that the funds were fraudulently acquired with the collusion of officials in the executive as well as two judges and three MPs—all from the ruling CCM party.
What is remarkable about the escrow scandal is not the amount of money involved—Tanzania has unfortunately seen worse in recent years. Rather, it is the sheer number of those involved, not to mention the fervour with which Tanzania’s oversight institutions—namely the Controller and Auditor General (CAG) and Parliament—are pursuing them.
Parliament’s opposition-headed Public Accounts Committee (PAC) started the ball rolling last March when it tasked the CAG to investigate the process leading to the irregular withdrawal of money from the escrow account. The CAG probe ultimately resulted in a report spanning three volumes. The report details a financial saga whose roots lie in the early 1990s and whose many threads crisscross from Malaysia to Hong Kong to the British Virgin Islands to Kenya and back to Tanzania. Analysts of illicit international financial flows note how the ever more complex quality of these fraudulent dealings stretch the capacity of many oversight institutions, particularly those in low-income countries. Understandably, then, the quality of the CAG investigation has won the admiration of many both in Tanzania and abroad.
The PAC also handled an adverse environment to draft its recommendations and ensure—after last ditch obstructionist efforts—that they were tabled before parliament. For the most part, the recommendations won the support of both ruling party and opposition MPs, although some key figures—including the Prime Minister—were spared.
A primary reason for this bipartisan agreement is the perceived electoral implications of the escrow scandal. As one MP argued, ‘There was no way the Parliament could have saved these people [the accused officials].’ He then added, ‘How could you do that and go back to your constituency to ask wananchi [citizens] to contribute for school labs.’
Beyond the political fortunes of individual MPs, however, the escrow scandal is already raising serious questions about the strength of the CCM party ahead of the planned 2015 general elections. CCM has ruled Tanzania since Independence. In 2005, President Jakaya Kikwete was elected with 80% of the vote on an anti-corruption platform. Five years later he saw his winning share shrink to 60%. Observers attribute this precipitous decline to public anger over the corruption scandals that plagued Kikwete’s first term. His chief opponent, Wilibrod Slaa of the opposition Chadema party, was also able to win over a record level of support notably as a result of his own anti-corruption credentials, which he earned while working as a member of PAC in parliament.
The Chadema party, more generally, has attained a new level of prominence as a result of the escrow scandal. Domestically, its members in parliament have attracted considerable attention due to the critical role the played in PAC. Meanwhile internationally European donors, who in October suspended $490m in aid to the CCM government, are now hosting a delegation of top Chadema officials to discuss the escrow scandal as well as alleged CCM manipulation of the recently concluded constitution drafting process.
But it is too early to celebrate the outcome of the escrow scandal investigations. Despite the apparent success story of a newly empowered CAG, an assertive Parliament, and an emerging opposition, there are still many concerns linked to the escrow affair. Of course, the scandal itself points to a lack of integrity in government, highlighting just how deep the penchant for corrupt dealings runs. The performance of Tanzania’s oversight institutions, meanwhile, although impressive in its own right, is not certain to achieve the desired end. In particular, parliament lacks the constitutional powers to demand accountability from the executive; it is limited to merely calling for executive action in line with its recommended sanctions, thereby leaving the ultimate decision to take action—or not—with President Kikwete.
The initial signs are not altogether promising. Already one of Kikwete’s deputy ministers has lamented parliament’s decision to ‘scapegoat’ politicians while ignoring technocrats, who the minister implied are the real ‘culprits’. What’s more, the fundamental power mismatch between parliament and the executive is preserved in Tanzania’s controversial new draft constitution, which many critics are calling on voters to reject in a referendum set for next April.
Last Saturday’s parliamentary vote did indeed mark a ‘big day in Tanzania.’ But there is still a risk that a recalcitrant president may leave it as an opportunity squandered.