Sailesh Vithlani finally nailed by UK authorities

Sunday, July 19, 2009

Sailesh Vithlani finally nailed by UK authorities

Sailesh Vithlani the man who has been hiding out in Switzerland for years to escape prosecution for brokering the BAE radar scam has finally been cornered by UK authorities.

Vithlani fled Tanzania almost three years ago while out on bail for charges involving the trumped up $40million radar deal, and since then the Prevention and Combating Corruption Bureau (PCCB) has sought help from the UK’s Serious Fraud Office (SFO) in getting Vithlani extradited back to the country to face the charges.

According to reliable information confirmed by sources within the SFO and the PCCB, Vithlani has been apprehended and will be extradited to Tanzania in the next few weeks.

Corruption Bureau (PCCB) has sought help from the UK’s Serious Fraud Office (SFO) in getting Vithlani extradited back to the country to face the charges.

According to reliable information confirmed by sources within the SFO and the PCCB, Vithlani has been apprehended and will be extradited to Tanzania in the next few weeks.

The move by UK’s authority follows an official request made by PCCB chief Edward Hosea in April, which, among other things, asked the UK to assist in the extradition of all key officials accused of corruption in the controversial radar deal.

Apart from Vithlani, three UK citizens, including a former close aide to Tony Blair, have been implicated in the controversial radar deal, The Guardian on Sunday has established.

Vithlani organised the $40 million deal between the UK arms suppliers British Aerospace Engineering (BAE Systems) and the Tanzanian government, and allegedly received kickbacks amounting to $12 million that he shared with at least seven high-ranking officials from the previous Tanzanian administration.

Vithlani’s capture and subsequent extradition will put in motion the first prosecution involving the deal, in which BAE Systems peddled a watchman radar at about Sh16billion above the market price.

“We have him…he is under our watch and once everything is finalised we shall hand him over to the Tanzanian authority,” a senior SFO official told The Guardian on Sunday on Friday in a phone interview.

Vithlani cooperated with the SFO’s investigation of the deal in exchange for legal immunity in that country, but the UK official, who spoke on condition of anonymity, said that the UK couldn’t shield Vithlani from the prosecutions in Tanzania.

“The UK can’t protect any individual proved to be implicated in corruption or any other forms of serious crimes,” said the official, who has been working on the BAE case with controller Mathew Cowie. “Vithlani is within our reach and once everything is ready he will be extradited to Tanzania.”

Vithlani’s arrest and prosecution will be a breakthrough for Dr Hosea and his team at the PCCB, which has faced growing public pressure to deliver on the case that it has been investigating for nearly four years.

But, if Vithlani serves jail time in Tanzania, it could complicate things for the SFO, which once described Vithlani as a potential witness after he admitted to receiving millions of dollars in kickbacks for brokering the radar deal.

His admission in 2007 that $12million was covertly moved to his Swiss bank account by BAE Systems angered some top government officials from the previous regime. He said BAE had made two parallel arrangements with the middlemen.

In the first, a conventional agency agreement was signed.

Under this, a 1-percent commission was to be paid if the $40m radar deal went through, to a Tanzania-registered firm, Merlin International Ltd.

Vithlani was the majority shareholder in Merlin, his partner Tanil Somaiya said, while he had a small token interest himself. BAE paid the $400,000 in installments, Somaiya said, as the radar equipment was delivered.

But under a second, more unusual agreement, BAE's secretly-owned offshore company Red Diamond deposited another $12million, representing 30 percent of the contract price, in Switzerland.

That money was under the personal control of Vithlani, Somaiya said, and this had been admitted to UK police.

The back-door payment represented 30 percent of the contract value. “They now see him as a betrayer and that’s why he needs strong protection,” an official close to the investigation told The Guardian on Sunday on condition of anonymity.

A tough task ahead The BAE case has put UK authorities in a tight position over the years, with one official diplomat from the British High Commission in Dar es Salaam trying to block the investigation at one point.

The official, who has since retired and returned to the UK, tried unsuccessfully to block PCCB officials from nailing two Britons believed to be close associates of former Prime Minister Blair.

In one incident, the diplomat wrote a very damning dossier asking for the protection for the Britons implicated in the case, to avoid what he described as a huge embarrassment to the UK and to Blair’s regime.

The diplomat wrote that it would be embarrassing for the world to know that some of Blair’s close associates connived to ‘steal’ from a poor country like Tanzania whose budget is in large part financed by foreign donors including the UK.

The dossier was intercepted by top officials within the SFO, who then leaked the information to the PCCB.

On June 12, 2007, Blair defended the government's 2006 decision to halt the SFO’s investigation into alleged bribery surrounding BAE Systems' contracts with Saudi Arabia.

The former prime minister told the House of Commons that continuing the investigation would have damaged the UK's relationship with the oil-rich country.

Since 1985, BAE Systems has signed $80billion worth of arms contracts with Saudi Arabia. But it was alleged these were agreed in return for payments totalling £1 billion to Prince Bander.

The government halted the SFO investigation in December 2006 and the case has since been investigated by the OECD.

Who is Vithlani?
Born on October 3, 1964, in Mwanza, Sailesh Vithlani grew up poor and was fixated at a young age on getting rich quickly.

In 1986, two years after graduating from Lake Secondary School, Vithlani secured $2,000 to start his first business, brokering gold from the Mwanza area.

“He established strong ties to the black market in Kenya…and after few months he bought two vehicles and formed a company to supply various services to the army,” a relative of Vithlani told The Guardian on Sunday recently.

After dealing with the army for about two years, Vithlani moved his base to the country’s commercial capital, Dar es Salaam, with his business associate and childhood friend, Tanil Somaiya.

He was tipped-off by close friends of the booming business of catering to the army in Dar es Salaam. Together the two friends relocated from Mwanza and opened a company, which they used to win lucrative military tenders.

According to reliable sources in Dar es Salaam, two controversial deals involving the purchase of a radar and the presidential jet earned Vithlani close to $25million.

In Dar, Vithlani has longstanding relationships with military and government figures, relationships he was able to milk when the opportunity to transact dubious deals with the government arose.

To those who knew him growing up, Vithlani was a very well bred person who has always been meticulous, if ruthless, in planning how he would earn his riches by his mid-30s.

His former secondary school teacher described Vithlani as “very polite, shy, humble, but very ambitious.”

“In class he was mainly interested in studying English language and commerce…he spent more time reading western literature novels, especially those focusing on crime,” the teacher told The Guardian on Sunday.

In the early 1990s, as he accrued greater wealth Vithlani relocated his mother and younger brother to South London.

He applied for a British passport five years later and qualified for one, despite holding onto his Tanzanian passport.

In 1992, Vithlani first proposed a $220m military radar tender to the government of Tanzania, but the deal didn’t mature due to lack of funds. If the deal had gone through, Vithlani would have earned a kickback amounting to $70m, according to a close friend.