FORMER Prime Minister Edward Lowassa has been implicated in a questionable joint venture agreement between the National Housing Corporation (NHC) and Mbowe Hotels Limited (MHL) entered in 1997 where the latter acquired 75 stake of the building housing Club Bilicanas.
Mr Lowassa ran unsuccessfully for the
Union presidency in general election last year through CHADEMA after
defecting from CCM where he had been eliminated from the presidential
race.
MHL is owned by the National Chairman of
CHADEMA, Mr Freeman Mbowe -- and the company is on the verge of being
evicted from the building due to outstanding rent arrears amounting to
over 1 billion/-.
Mr Mbowe was yesterday quoted by some
media outlets describing the debt as ‘political persecution’ meant to
silence him, admitting, however, that there have been disputes between
the two parties.
The building in question is among
structures nationalised by the government through the Building
Acquisition Act of 1971 and placed under the then Registrar of
Buildings, the predecessor of NHC.
It is located on plots number 725-726/11 along Mkwepu and Indira Gandhi (Makunganya) streets.
“Through the agreement, NHC remained
with only 25 per cent. This is not right because such shareholding
structure is entered when NHC only provides land to a developer who
foots all construction costs,” a source privy to the issue informed the
‘Daily News.’ He added that the MHL was given 75 per cent for the
building; not the land.
‘‘This makes the contract questionable;
what is worse is that the company pledged to expand the structure by
setting up a three-star hotel and conference facilities but nothing has
been done,” the source confided.
This newspaper was informed that in his
capacity then as Minister for Lands, Housing and Urban Development, Mr
Lowassa, through the Permanent Secretary in the Ministry, Mr J. M.
Mgwheno, wrote to the then Director of NHC, Mr Haruna Masebu, directing
the housing corporation to sell the building to MHL.
The directive was made through a letter
dated March 24, 1994, which has been seen by ‘Daily News,’ instructing
NHC to sell the building through a tender “but with consideration of
MHL.”
It has come to light that the company
had way back in 1993 made a request to the State House to purchase the
property through a letter dated May 20, 1993 in which it claimed it
wanted to expand the structure at a total cost of 720m/-.
“However, the snag (in making the
expansion and renovation) is that we do not own the property hence
making the whole endeavour a very risky one and that is why we are
appealing to your office to give us a permission to purchase the
‘dilapidated’ property,” reads part of the letter to the State House.
According to the letter, MHL claimed it
wanted to construct an ultra-modern international multi-purpose function
hall by renovating the old backyard and renovating the right wing into
an international standard casino. On the proposal there was also a plan
to upgrade the left wing into a two-storey 100-room international
standard hotel.
Subsequently, the then Secretary to
President Ali Hassan Mwinyi, Ambassador Paul Rupia, wrote to the Board
Chairman of NHC at that time, Mr Emillius C. Mzena, to consider the
request, which he eventually advised against in a letter written on
August 26, 1993.
Mr Mzena reasoned that allowing the
request for purchase by MHL will prompt other tenants to make same
demands for NHC buildings in prime areas. After failing to get a nod
from the presidency, the company then approached Mr Lowassa who made
directives that finally saw MHL and NHC signing the deal with the
shareholding structure of 75 and 25 per cent, respectively.
“After too much pressure the board and
management of NHC finally allowed for the joint venture in which each
party would have 50 per cent stake but this was rejected,” the source
confided to this paper.
However, almost 20 years since the joint
venture agreement was entered, MHL did not make any expansion as
claimed and this prompted NHC to propose a review of the contract which
the company rejected.
It was at this juncture that NHC issued
MHL with a notice to terminate the joint venture for re-development and
co-ownership of the property on February 16, 2015, which, among others,
required the company to pay outstanding rent arrears.
Even with the notice, MHL did not settle
the arrears and thus on June 24, this year, the state-owned corporation
issued a notice to terminate the lease agreement.
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