Prime
Rwanda asks Uganda to arrest Chinese investor
Chinese investor Chen Chao. PHOTO | COURTESY
What you need to know:
- The businessman held power of attorney for Power China Guizhou Engineering which was awarded an $85 million (about Shs317 billion) contract for the civil works at the international specialised hospital in Lubowa.
Rwanda’s chief prosecutor has asked Ugandan authorities to arrest and extradite a prominent Chinese businessman wanted in Kigali on forgery and tax evasion charges.
Mr Chen Chao, 38, was named in an international warrant of arrest issued on September 22 by Aimable Havugiyaremye, head of Rwanda’s National Prosecution Authority and submitted to the authorities in Kampala where the businessman is currently living. He is understood to be under the protection of a senior police officer.
This publication has seen a copy of the warrant submitted to the Ugandan police.
We were unable to get a comment from police on the matter by press time.
The court case in Rwanda arose from a contract worth more than $12 million (about Shs44.8 billion) King Faisal Hospital Limited issued to Power China International to build an out-patient department section at its facility in the capital, Kigali. Power China International farmed out the contract to its subsidiary, Power China Guizhou Engineering, which also farmed it down to Mr Chao’s Entec Technology Company Limited, which is registered in Kenya.
The company did not complete the work satisfactorily and reportedly abandoned the work site. Power China Guizhou Engineering stepped in to salvage the project and tried to cash in a warranty bond worth $610,322 (about Shs2.3 billion) that Entec Technology had offered it to guarantee its execution of the contract. However Sidian Bank of Kenya disowned the guarantee and Rwandan authorities now believe that the bond was probably forged.
Parallel investigations by Rwanda Revenue Authority uncovered an unpaid tax bill of Rwf21,840,259 (equivalent to about Ushs67 million). Rwandan prosecutors unveiled an indictment against Mr Chao on April 26, 2023, on which the warrant of arrest issued late last month is based. If convicted Mr Chao faces between five and seven years in jail and a fine.
Uganda and Rwanda signed an extradition agreement in 2020 as part of efforts to thaw relations between the two countries that had led to Kigali closing its border.
Big contracts
Mr Chao, who is said to enjoy close ties to government officials, is a prominent member of the Chinese business community in Uganda and the region.
The businessman held power of attorney for Power China Guizhou Engineering which was awarded an $85 million (about Shs317 billion) contract for the civil works at the international specialised hospital in Lubowa.
The project has been mired in controversy because of the opaque manner in which Ugandan taxpayer’s money was put at the disposal of its promoter, Italian businesswoman Enrica Pinetti. The hospital remains unbuilt several years after it was supposed to have been completed and there has been little accountability for taxpayer’s money.
In March 2023, a whistle-blower asked the Criminal Investigation Department of the Uganda Police Force to investigate a $2.9m (about Shs10.8 billion) payment that Power China made out of the money it received from the hospital project to a company, M/s Legrandlac Consulting and Engineering Company Limited just eight months after it was incorporated.
Documents from Uganda Registration Services Bureau list Mr Chao, who held powers of attorney on behalf of Power China (the payer), as one of the two shareholders in Legrandlac company, which received the money.
The investigation is on-going, police sources said, but the official has not been charged with any offence in connection with the transaction.
Separately, court documents seen by this newspaper show that Mr Chao is involved in a long-running fight over control of Entec Electrical Equipment Company, which he co-founded with other Chinese business partners.
Mr Chao claims to be the majority shareholder in the company and has successfully applied to the courts to freeze the accounts of the company which makes concrete electric poles at its factory in Tororo.
His erstwhile business partners, Zhang Jun and Hu Zheheng claim to be the rightful owners of the company. The fight over control of the company has spilled over into Kenya where the Ethics and Anti-Corruption Commission (EACC) in Nairobi has been asked to investigate how a payment for concrete poles supplied by Entec Electrical Equipment was paid to a Kenyan company with a similar name.
“We have been asked to look into allegations of money laundering but we obviously cannot comment on an on-going investigation,” an official at the EACC told this newspaper on Friday. He asked not to be named because he is not authorised to speak on behalf of the organisation.
