6 February 2013

Tanzania: Sumatra for Shipping Law Review

RAMPANT cheating by foreign shipping companies in collaboration with high profile personalities, including politicians, diplomats and lawyers, has forced the Surface and Marine Transport Regulatory Authority (Sumatra) to draft an amendment of the 2003 Shipping Agency Act.

Sumatra's Acting Director General Ahmed Kilima had told the 'Daily News' in Dar es Salaam recently that his authority has failed to reign in foreign shipping companies which use politicians, diplomats and lawyers as fronts to run shipping agency business contrary to the law.

"We are aware of the problem and that's why we are seeking a review of the law so that we can be able to check against rampant cheating in the industry," Mr Kilima said as months of a 'Daily News' investigation unveiled that the government is losing billions of shillings per annum to foreign shipping companies.

The Agency Act clearly bars foreign owned firms from running shipping agency business except if they partner with locals who should have a 51 per cent controlling stake of the joint company. "The law simply says the company should be locally registered with Tanzanians as majority shareholders, it does not give us powers to scrutinize shareholders to prove that they are genuine," Mr Kilima argued.

Investigations by the 'Daily News' have established that to by-pass the law, foreign shipping companies use local lawyers, politicians, diplomats and elite businesspeople to register local companies which conduct agency business. Mr Sree Kumar from a law and finance firm, Tanna Sreekumar & Company, said an interested party should carry out reasonable sampling to get a comprehensive understanding instead of pursuing only one or two companies.

Mr Kumar, who is Executive Director of Unique Financial Services Limited, a company which has registered several shipping agency companies, said his role is simply to assist clients register companies with Business Registration and Licensing Agency (Brela).

"It is for the regulatory bodies to confirm whether the laws have been adhered to or not," he quipped. According to Brela records, Mr Kumar, who is identified as an Indian national, partnered with a Tanzanian, Mr Anthony Ooko, in February 2005 to establish a company called CMA CGM Tanzania Limited.

This company was formed with this shareholding, as the 49 per cent shareholders had not finalized the shareholding pattern at this stage. However before the company commenced business the shares were transferred to Vincent Jacques Hachez at par, as the company did not have any value at that time.

"I am not shareholder of any shipping company; my job is simply to help clients register companies and if there is anything wrong, then it is up to the regulators to act," Mr Kumar pointed out. CMA CGM Tanzania Limited, which started with 100 shares of 10,000/- each, had its shares capital dramatically increased after Mr Hachez's joining from 1m/- to 1bn/- by November of the same year.

The company's shares, which increased to 100,000 valued at 10,000/- each, only shows that 10,000 were owned by Mr Ooko and a prominent Tanzanian lawyer cum diplomat, Ms Mwanaidi Majaar, who sold her shares in 2007 upon her appointment as a diplomat in Europe and Marseilles based CMA CGM Agencies Worldwide.

Asked to clarify who owns the rest of the over 90,000 shares at CMA CGM Tanzania, Mr Kumar said: "They are no longer my clients. I cannot comment on the current scenario". He advised that the matter should be taken up with CMA CGM.

According to the company's returns of 2010, its shareholders who have been changing almost annually are Tanzanian Mohammedali Remtulla, Danish Lars Kastrup, Dr Wilbert Kapinga, CMA CGM and Societe D'Agence Maritime En Afrique (SEMA) who jointly own less than 10,000 paid up shares while the rest are unknown.

Registered by Brela in July 2011, ESS Tanzania Limited has 100,000 authorized shares of 10,000/-, each totalling share capital of 1bn/- and the paid up capital is 100m/- with Mr Abji owning 51 per cent of the shares (5,100) and ESS European Shipping Services owning the balance 49 per cent.

Asked to clarify who owns the 90,000 shares, Mr Kumar said: "100,000 shares are the authorized shares, out of which the issued share capital is 10,000 shares of 10,000 each totalling to 100m/-." Mr Abji who is also director at New Africa hotel in Dar es Salaam, turned down numerous approaches by 'Daily News' to seek clarification on his shareholding at ESS which is largely owned by the French.

At Mediterranean Shipping Company Limited which has serious shareholding discrepancies, Brela described the status of the company which was registered in February 1989, as having many 'anomalies.'

Listing Sudhir Kalidas and Felix Mbuya as shareholders with 2m/- shares of 1,000/- each during registration, the company's shares dramatically transferred to Italian captain Ferdinando Ponti, Giovanni Cuomo of Geneva, Switzerland and Tanzanian captain John Nyaronga who was also appointed Managing Director by 1999. The company's share capital was also dramatically increased to 20m/-.

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