$20m from Libya: Tales from Membe

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Dar es Salaam.  Key presidential aspirant Bernard Membe has finally broken his silence on the $20 million (Sh40 billion) Libyan debt. The Minister for Foreign Affairs and International Cooperation yesterday denied any wrongdoing in the transaction that involved a debt swap agreement between the two countries.  

Mr Membe’s political rivals have linked him with the deal, saying he might have benefitted from the money paid to Meis Industries Limited.

According to Mr Membe, the two governments signed the agreement in July 2005, setting out how Dar es Salaam would pay its debt to Tripoli. They signed an Addendum to the agreement on March 4, 2009, that set out how Libya’s debt that was held at the Tanzania Investment Bank would be spent.

Clause 4.02 of the agreement stated that the $20 million, which was part of the Libyan debt that was at TIB, should be paid to Meis for the purpose of building a cement factory in Lindi region.

The Libyan government chose the company and it was agreed that the $20million be loaned to Meis on condition that the firm pays up within six years. The money would then be loaned to other local investors in projects approved jointly by both governments. 

According to Mr Membe, the Libyan government conducted due diligence at its own cost before it released the funds to its chosen investor and concluded that the cement project was worth investing in.

 After signing the Addendum, according to the minister, the Libyan government via its embassy in Dar es Salaam, wrote to the Tanzanian government insisting that payments to Meis be hastened to avoid delays in constructing the cement factory in Lindi.

 “In implementing these two agreements, the debt swap agreement and addendum to the debt swap agreement, the Tanzanian government—through its experts from the ministry of finance, TIB, Attorney General—and Meis Industries met to draft an investment agreement.”

According to Mr Membe, the Tanzanian government, TIB and the investor signed the agreement. The Libyan government was also required to sign the agreement so the project could kick off, but the Muammar Gaddafi regime declined to seal the deal.

The Libyan government went silent for a year. In September 2010, Meis wrote to the Attorney-General’s office announcing its intention to sue the Libyan government for not signing the agreement.

The investor went ahead and  filed a civil suit number 124/2010 at Tanzania’s High Court seeking a decree that the $20million get paid to the company as agreed earlier.

 According to Mr Membe, the summons was issued to the Libyan government though its embassy in Dar es Salaam but there was no response. Neither did the Libyans appoint a lawyer to represent them at the High Court.