Tanzania defends Sh18bn cashew nut deal with little-known Kenyan firm

Tanzania's permanent secretary in charge od trade and industries, Prof Joseph Buchweishaij
Tanzania's permanent secretary in charge od trade and industries, Prof Joseph Buchweishaija. PHOTO | NMG 

Dar es Salaam

A top government official has defended the $180 million (Sh18 billion) cashew nuts deal with Indo Power Solutions, a Kenyan company whose credibility has now been brought to question.

Trade and Industries Permanent Secretary Prof Joseph Buchweishaija, said the track record of the company was not the basic criterion for awarding it the contract to purchase 100,000 tonnes of cashews nuts from Tanzania.

“The seller of cashews is the Cereals and Other Produce Board of Tanzania, and our task (as a ministry) was to make sure that we seal the purchase deal.

"What you are looking at is the ability of the buyer to pay for the asking price, the rest is left between them,” he on said Sunday in a telephone interview with our sister publication, Mwananchi.

Asked about the ethical and credibility questions being raised concerning the financial ability of Indo Power Solutions, the PS defended the apparent size of the Kenyan firm to see the deal through.

He said it was possible that the company may have not conducted such business before; but it saw an opportunity – and grabbed it.

“We all know that most rich people have no cash in hand; they borrow from banks. These people have taken a bank loan, and I urge Tanzanians to use such opportunities when they arise,” Prof Buchweishaija said.

Reached for comment, Bank of Tanzania Governor Florens Luoga said through a spokesman that such queries should be referred to the Cereals Board who were better appraised on the matter.

But the board’s executive director, Dr Hussein Mansoor, was not able, willing or ready to discuss the contract.

“There are some things in progress, so I cannot say anything for now until they are concluded. I ask that you be patient,” he told Mwananachi in a telephone interview.

When pushed to say if all critical aspects were looked into before entering the deal with the Kenyan company, Dr Mansoor said: “The ministry of Industry saw the contract through. They are the experts, even if we are signatories, they empower us.” He did not expound.

Shadowy nature

Reports on the shadowy nature of Indo Power Solutions were revealed on Friday by The EastAfrican newspaper, which raised questions regarding the company’s registration, ability and authenticity of the officials behind the lucrative deal.

The newspaper carried a background check following the announcement, on January 30, that the firm had won the contract.

Dr Mansoor and Indo Power’s chief executive Brian Mutembei signed the deal at a ceremony attended by the Tanzania minister for Justice, Prof Palamagamba Kabudi, Industry Minister Joseph Kakunda, Prof Luoga, and Kenya’s High Commissioner to Tanzania Dan Kazungu.

The newspaper revealed that Indo Power Solutions was virtually “unknown.”

Registration documents show that the firm was registered in 2016 with its base in Thika town on the outskirts of Nairobi. It was not known to have transacted any deals worth more than $10 million.

In Kenya, analysts were pointing to the fact that the little-known firm may have merely acted as a broker for a third party. Official registration records also indicate that Indo Power has no bankers, no lawyers, no auditors, and no company secretary.

Mr Mutembei however reckoned that “the company has expertise in connecting Tanzania with the buyers of the produce,” a pointer to the fact that it may have merely acted as a broker.

Sources in Kenya’s financial services sector expressed doubts that this deal would be financed by a Kenyan bank, given the shadowy nature of the firm.

The country’s stringent financial reporting and anti-money laundering regulations would pose serious hurdles to the deal.

Mr Mutembei admitted that the money is not coming from Kenya, indicating that Indo Power had “presented a letter of credit for the total amount to the Tanzanian government as required in the agreement.”

“This LC was from international banks, and this credit line will make the purchase successful. So, the money isn’t going to be coming from Kenya’s financial system. I cannot name the banks that offered these LCs.”