Did minister lie to the House?
19th February 2012
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The Guardian on Sunday has learnt that the five-star hotel was sold last year to Serena Hotels Group, one of 96 companies that make up the Aga Khan Fund for Economic Development (AKFED) trading under the name Tourist Promotion Services (TPS Serena).
Whereas all transactions for the sale of the 230 room posh hotel were engaged and finalised late 2011, Deputy Minister for Finance Pereira Silima told Parliament during the just ended meeting in Dodoma that what has been changing was just management and not the owner.
Silima was then responding to question number 67, posed by Chiku Abwao (Special Seats-Chadema), who wanted to know how much in terms of revenue share the country had benefitted through various change of business names and sale of companies including hotels and mobile telephone firms.
“On the example of Sheraton, Royal Palm, Movenpick and now Serena what is changing is the hotel management and not the hotel owner. The hotel owner who is the taxpayer is the company, Tanruss Investment Ltd,” deputy minister Silma told the House.
He affirmed that in case of change of share ownership for the same business the government’s entitlements are tied to various available tax laws, nature of change in share ownership, shareholding structure among local and foreign shareholders and company registration within and outside the country.
But when tasked through supplementary questions as to what the government was doing to ensure all state revenues are rightly collected, Silima pledged that the ministry would keep tabs on all businesses in a bid to curb evasion of rightful governments dues.
However this paper has established that the entire property of now Serena Hotel has been sold to Tourism Promotion Services (TPS) that is registered at the Nairobi Stock Exchange.
For years there have been public claims that changes of business names were done dubiously for the purpose of evading relevant taxes especially when there was a popular government practice of five – year tax holiday, aimed at investment attraction for major foreign companies.
But since the law governing investment was amended and made it harder to obtain tax holidays, activists now focus on whether such transactions follow the right procedure, without which no taxation and resulting revenue dues can be attracted, that is deemed evasion of capital gains tax.
The capital gains tax (CGT) is a tax on capital gains meant to be the profit realised on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.
Sources privy to the Dar es Salaam Serena Hotel management told this paper exclusively this week that what took place last year was a sale of the property and not management contracting as in previous times.
“I clearly understand how managements were changed from the time of Sheraton to Royal Palm and later on to Movenpick. Arrangements for such changes were totally different from the recent one,” a Serena Hotel employee intoned.
He affirmed: “During previous changes of management employees used to be informed one day before the changes came into effect that the hotel symbol on name tags were going to be altered and the new ones were simply provided. The last changes went further to matters such as finances and it took months before finalization.”
This paper has gathered that whereas Serena took full charge of the hotel management and ownership effective December 2011, there was a one month transitional period before total takeover.
“It was a hectic period that most of the employees had not experienced before. The Serena guys were very serious and keen on financial matters. They told the Movenpick people for instance that they would not inherit any debt dated prior to the one month-transitional period,” intoned the well placed official.
The Guardian on Sunday has further learnt that during an induction course for employees under the new Serena boss that was held late last year, workers were briefed that the hotel majority shareholder was TPS but Tanruss were still around as minor shareholders.
Tanruss, uniting capital from ex-Russian debt and local investment partner Emmanuel Mantheakis, an orthodox Christian with Greek origins in like manner as most Russians, erected a building along Ohio Street in the early 1990s, with the Sheraton Hotel chain picked to run the hotel in 1995. A few years later Royal Palm Hotel chain took over, with subsequent changes that saw Movenpick take over the management in 2005.
Then (2005) it was reported that the Kingdom Hotel Investment (KHI) of Saudi Arabia led by Prince Walid bin Talal had became majority shareholder as Tanruss remained a minor shareholder with less than two percent.
On July 27th 2011 KHI senior vice President for Africa, Roger Kacou issued an internal announcement that read in part:
“KHI, the owning company of the hotel, has decided to sell the property to the Serena Hotel Group that not only owns hotels but also operates them.
The hotel staff are currently employed by a subsidiary of KHI and will be employed by the new owner after the sale of the property. We have been assured that there will be no changes to the employment agreements. We are also working with all parties involved to find an adequate solution for those employees who are flexible and who want to stay with us.
“We have been managing the hotel since 2005 and we regret to see this property leaving our Africa portfolio. We would like to thank all the hotel employees for their hard work and dedication over the past years.
They have achieved great results and were a key contributor to our region and Mövenpick Hotels & Resorts”, said Roger Kacou.
Serena Hotels Group owns and operated several hotels and Lodges and tourist camps in Kenya, Tanzania, Rwanda, Mozambique, Uganda and in South Asian countries of Afghanistan and Pakistan, as well as the central Asian state of Tajikistan.
Some popular hotels in Tanzania owned by Serena are located in Ngorongoro, Manyara, Serengeti, Mivumo River Lodge, Selous Wildlife Lodge and Zanzibar.
SOURCE: GUARDIAN ON SUNDAY
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