December 17, 2014 / 10:32 AM / 5 years ago

UPDATE 1-Tanzania's attorney general resigns over graft accusations

(Adds comment on cabinet reshuffle)

By Fumbuka Ng’wanakilala

DAR ES SALAAM, Dec 17 (Reuters) - Tanzania’s attorney general has resigned, becoming the first political casualty in an energy corruption scandal that has led Western donors to delay aid.

The resignation late on Tuesday followed a vote in parliament last month calling on the government to dismiss senior officials, including Attorney General Frederick Werema, for their role in an energy deal lawmakers say was fraudulent.

President Jakaya Kikwete has said he will respond later this week to parliament’s resolution, which is binding.

Tanzania is estimated to have 53.2 trillion cubic feet (tcf) of gas reserves off its southern coast, but its energy sector has long been dogged by allegations of graft.

Lawmakers found the officials, including the attorney general and the energy minister, fraudulently authorised the transfer of at least $122 million of public funds to a private company. The funds came from an escrow account held jointly by state power company TANESCO and independent power producer IPTL and went to IPTL’s owner, Pan Africa Power (PAP) in 2013.

The government officials denied any impropriety in the transfer of the funds, and PAP said the transfer was legal.

In his resignation letter, Werema said he was stepping down “because his advice on the Tegeta escrow account issue had not been understood and had disrupted the country’s political atmosphere.”

A major cabinet reshuffle could limit what Kikwete is able to accomplish before he leaves office in 2015, said Ahmed Salim, senior associate at consultancy Teneo Intelligence. But he said major stakeholders in the hydrocarbon sector had expected the government would be preoccupied with the October 2015 election.

A group of 12 international donors have said they will only pay outstanding pledges of budget support worth nearly $500 million to aid-reliant Tanzania if the investigation into the graft claims is published and appropriate action is taken.

The United States warned last week that its award of grants, under a program that rewards countries for good governance, would depend on the government’s anti-graft effort.

A group of Tanzanian non-governmental organisations has urged the government to prosecute officials linked to the scandal. (Editing by Edith Honan and Michael Perry)

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