GT wa JF naomba mnisamehe kwa kuwaharibia mood zenu
kwani kuna huu ufisadi wa mradi wa bilioni 150 ambao tunaambiwa kuwa JK ame sign huko USA
Sasa mkitaka kujua kama huu ni ufisadi wa kutisha ambao Mwakyembe amesign huko USA na unafana na ule wa upanuzi Bandari uliomfukuzisha kazi Omari Nundu baada ya kuuweka wazi.
Nimepitia mtandao wa wizara ya mwakyembe lakini cha ajabu hakuna details zozote za kuonyesha kinachoendelea na maswali yamekuwa mengi zaidi kuliko majibu:
1. Je tenda ya Feasibility ya huu mradi Ilitangazwa lini na wizara?
2. Je vigezo vipi vilitakiwa ili makampuni yapitishwe?
3. Kampuni zilizo bid ni zipi ?
4. Kampuni zilizo ondolewa ni zipi na kwa vigezo vipi?
5. Kampuni zilizokuwa shorlisted ni zipi?
6. Kampuni iliyoshinda ni ipi? na walishinda kwa vigezo vipi?
7. Tenda ya kufanya hii kazi ilitangazwa lini?
8. Masharti yepi yalikuwa ili kampuni ipewe contract?
9. Kampuni zipi zilibid?
9. Zilizoondolewa zilikuwa zipi?
10. Hii kampuni ilikuwa awarded lini?
11. Ripoti ya Environmental Impact Assessment iko wapi na inasemaje?
12. Je Mwakyembe na jamaa zake pale wizarani walifanya due diligence kwa hii kampuni ya kitapeli?
13. Ofisi ya Mheshimiwa Rais ilikuwaje hawakufanya vetting kabla hawajamwingiza Rais kwenye huu upuuzi wa kusign na matapeli?
14. Kwa nini wizara ya mwakeyembe haitaki kuweka wazi hizi documents au inapingana na juuhudi ya OPEN GOVT INITIATIVE ya JK?
15. Kwa nini Mwakeyembe na wizara yake hawataki kuweka wazi INFRASTRUCTURE STRATEGIC PLAN ya Tanzania? Wanaficha nini?
16. Kwa nini serikali haijafanya consultation na wananchi wanaoishi maeneo ambayo hizo treni zitapita
Watetezi wa huu Mradi na na mashabiki wa Mwakyembe watakuja kudai kuwa mradi ni PPP hivyo hakuna haja ya kutangaza wala kufanya pre feasibility study wala kufuata sheria za manunuzi (PPA 2004) lakini ukweli ni huuu
POINTS OF REFERENCE KUHUSU PPA HIZI HAPA:
Sheria ya miradi ya PPP 2010 inasema hivi:
IDENTIFICATION OF PROJECTS
Projects for partnership
4.-(1) Subject to section 4 of the Act, the Minister shall determine and publish a notice in the Gazette specifying various projects that may be undertaken by the public sector in partnership with the private sector for a particular period as may be specified in the notice.
(Hili Mwakyembe hakulifanya)
(2) After publication of specific projects under sub-regulation (1), a public sector shall, based on the published projects, select or identify specific project or projects which can be undertaken in partnership for a particular year or such period as the public sector may determine.
(Hili Mwakyembe na Wizara yake hawakulifanya)
Pre-feasibility study
5.-(1) The contracting authority shall, after identifying a project for partnership under regulation 4, cause to be conducted a pre-feasibility study in respect of the project.
(Hili Mwakyembe na Wizara yake hawakulifanya)Contents of project concept for unsolicited proposals
9. The project concept shall contain:
(a)
a private party’s name, postal and physical address, Tax Identification Number and VAT registration number where applicable;
(b)
a company profile, audited accounts and evidence of financial capacity;
(c)
the title and abstract of the proposed project;
(d)
a statement of the objectives, approach and scope of the proposed project;
(e)
a statement describing property rights or any confidential information or proprietary data not to be made public;
(f)
a statement describing how the proposal is innovative and unique, supported by evidence that the proponent is the sole provider of the innovation;
4
(g)
a statement of the anticipated benefits or cost advantages to the contracting authority including the total estimated cost for developing the project and projected cash flow to allow a meaningful consideration;
(h)
a statement showing how the proposed project supports the Government’s development plans; and
(i)
a statement to indicate compliance with other relevant laws and government policies.
(Kutonana na masharti ya OPEN GOVT INITIATIVE hizi taarifa zilitakiwa ziwekwe wazi kwenye mtandao wa wizara inayoongozwa na Mwakyembe )14.-(1) Upon receipt of the feasibility study report under these Regulations, the contracting authority shall appoint a committee of experts to study the report and make recommendations or advice on the implementation of the project.
(Hili Mwakyembe na Wizara yake hawakulifanya)Consultation with regulatory authority
16.-(1) The contracting authority shall, after selection of a project under regulation 15, consult with the relevant regulatory authority under which the selected project is regulated.
(Hili Mwakyembe na Wizara yake hawakulifanya)Advertisement Cap. 410
33.–(1) The contracting authority shall, after the approval of the project by the Minister responsible for finance under regulation 28 and subject to the provisions of the Public Procurement Act, advertise for tenders in respect of the projects calling upon interested parties from private sector to apply for the tender.
(Hili Mwakyembe na Wizara yake hawakulifanya)Agreement
37.-(1) The contracting authority may, for the purpose of implementing the approved project, and subject to the provisions of the Act, enter into a written agreement with the successful bidder
(Hili Mwakyembe na Wizara yake hawakulifanya...soma hapo kwenye blue'..successful bidder')Vetting of the agreement
42.-(1) The contracting authority shall submit the draft agreement as approved by the Minister responsible for finance and agreed by both parties to the Attorney General for vetting.
(Hili Mwakyembe na Wizara yake hawakulifanya)Approval and finalization of contract
43.-(1) The contracting authority shall, after receiving the opinion of the Attorney General on the draft contract, consider the opinion and prepare the final draft of the agreement.
(Hili Mwakyembe na Wizara yake hawakulifanya)Signing of agreement
44.-(1) The accounting officer shall, upon being satisfied with the contents of the agreement, sign the agreement on behalf of the contracting authority.
(masharti yote hayakutimizwa kwa nini Mwakyembe na watu wake wame sign huu mkataba ?)
SHERIA YA PPP YA TANZANIA HII HAPA
City centre-airport train coming
Dar es Salaam. Plans are afoot to establish a 13-kilometre commuter train route from the Central Business District (CBD) to the Julius Nyerere International Airport (JNIA) by the end of this year, the government said yesterday.The project aimed at reducing traffic jams is expected to start operating by December this year or early next year.
It will be rolled out by Shumake Rails, a private company from the US, which was expected to sign a contract with the Tanzania Railways Authority yesterday. The firm is expected to deliver wagons for the job later in the year.
The ministry of Transport through TRL will extend the meter gauge railway from the city centre to the airport and is expected to operate under the Public Private Partnership (PPP), according to the PS, Dr Shaaban Mwinjaka.
Dr Mwinjaka told reporters yesterday that talks over the project have already been finalized and a memorandum of understanding between TRL and Shumaka Rails prepared.
“We are very committed to the project and as soon as the wagons arrive the route will start operating,” he said.
Upon the starting of operation the train is expected to transport an approximate of 800-1000 passengers per trip.
Dr Mwinjaka was speaking in the city after introducing a delegation of 12 US businessmen from the US who is in the country to explore investment opportunities in the transport, tourism and hospitality sectors.
The start of the project is an outcome of the tour of President Jakaya Kikwete’s tour of the United States who assured American investors wishing to do business in Tanzania of abundant opportunities available in the country.
Currently the leading investor in Tanzania is the UK.
In his words thje Honorary Consul for Tanzania in the United States Mr Robert Shumake said they have come to Tanzania to explore some investments opportunities in various sectors including transport.
“We see various investment opportunities in Tanzania and we believe that we will explore as more opportunities as possible” he said.
UKWELI KUHUSU HII KAMPUNI na huyu BALOZI MDOGO WA TANZANIA USA NI HUU HAPA:
Robert Shumake's résumé looked impressive when he convinced Detroit's two public pension boards in 2006 to invest millions in his companies.
Had pension trustees checked, they would have found inaccuracies in that résumé:
-- He said he was licensed as a mortgage banker and real estate broker. But his bank license lapsed years earlier, and his brokerage license had been placed on probation after state regulators cited irregularities at his real estate company.
-- He said he was on the state Board of Real Estate Brokers & Salespersons, which regulates the industry. He was not.
-- He said he was educated at a financial institute founded by a Florida entrepreneur. The institute does not exist.
Shumake conceded his résumé could have been clearer, but he said he never attempted to misrepresent his background.
"It is accurate that I at one time had the licenses, and that is part of my executive education," Shumake said in a statement last week. "There has never, however, been any attempt to mislead the boards."
Lax vetting of businesses that make investment pitches to Detroit's pension boards has been a stubborn issue for trustees, who oversee $5 billion in assets on behalf of city workers and retirees.
The funds, for example, lost $90 million after a key investment adviser failed to note red flags with people who convinced the boards to invest in business deals.
Former police and fire trustee George Orzech, who left in June, said if people who appear before the board misrepresent their background, "there should be a penalty for lying. That's public money."
In a 2006 presentation to Detroit's two public pension boards, Shumake touted his real estate broker's license as part of his pitch to secure millions in pension money.Turns out, his license had been suspended since 2002, when Michigan regulators said he failed to account for customers' money and his company's trust account had a deficit of more than $14,000.
It was another example of Shumake's résumé not matching his credentials when he made the sales pitch.
The résumé listed membership on the state Board of Real Estate Brokers & Salespersons, though he had not been on the board since 2002. He left after it voted to put his broker's license on probation for trust account violations and failing to give buyers and sellers complete closing statements.The résumé claimed he was educated at the Larry Pino Institute of Finance. A spokesman for Pino, a Florida entrepreneur, said, "There is not now nor has there ever been a Larry Pino Institute of Finance."
Shumake also said he was a licensed mortgage banker. But that license, issued in Florida, lapsed in 2001.
Still, Shumake persuaded the pension funds to invest more than $70 million in two real estate deals with his companies, even as he was being sued by Fifth Third Bank for his alleged role in what the bank called a $10-million mortgage fraud scheme. The scheme is now the subject of a federal criminal probe. So far, two men have pleaded guilty and agreed to cooperate.
Shumake has not been charged and, through his lawyer, James Thomas of Detroit, denied any wrongdoing.
Legal, money woes
Meanwhile, a report by Courtland Partners Ltd. of Cleveland, an adviser to the Detroit pension board for police and firefighters, found that returns on Shumake's investments were modest, with 0.5% returns by the end of 2008, the most recent report obtained by the Free Press shows.
An expert in measuring real estate performance said it is too early to say whether Shumake's deals will produce the kinds of returns he promised for the pension funds.This much, however, is clear: Shumake has legal and money woes of his own.
To settle the Fifth Third lawsuit, Shumake agreed to pay $750,000 in April 2008, but court records show he didn't make the full payment. The bank now has a $1-million judgment lien filed against him.
John Chamberlin, a University of Michigan professor of public policy, said the pensions should be troubled by Shumake's failure to pay. A typical board, he said, "would get pretty exercised about this."
Shumake, who declined an interview, said in a statement last week that he considered the lapsed licenses on his résumé "part of my executive education."He said he "can understand that some might not make the distinction from past experience and current licensing, and in hindsight, it would have been good for me to make that clear. There has never, however, been any attempt to ... misrepresent my background." A spokeswoman for Shumake did not address Shumake's claim of being trained at the Pino Institute, but said he did participate in a "cash flow specialist training program" with Pino.Despite the country's financial turmoil in recent years, Shumake claimed in an e-mail last week that his pension investments are solvent, well-managed and have returned 6% to 9.25% and more than $5.5 million to the boards. Neither Shumake nor his spokeswoman, Darci McConnell, responded to repeated requests for documents to support the claimed returns. McConnell later said that the returns cited by Shumake were projections.
Jeffrey Pegg, chairman of the pension board for police and firefighters, declined to comment on the discrepancies on Shumake's résumé or on the bank lawsuit, saying, "I don't know if it's true. ... I'd like to see the facts. Until I see that, I will not give my opinion." Other officials on Detroit's two public pensions did not return calls and e-mails.
Questionable credentials
The city pension boards invested $27 million with Shumake in 2006, which his company used to acquire five office buildings in Auburn Hills and in three other states. The pensions invested another $44 million in 2007, which a Shumake company used to buy five General Motors parts warehouses that it now leases back to the automaker.
Doug Poutasse, executive director of the National Council of Real Estate Investment Fiduciaries, an industry association of investment managers and pension funds, said it is too early to tell whether Shumake's investments will pay off.
The key, he said, is whether Shumake can keep his tenants.
In 2006, Shumake, chief executive of Inheritance Capital Group of Southfield, appeared before Detroit's two pension funds to pitch a real estate investment. His résumé, attached to a presentation booklet, said he was a licensed real estate broker and mortgage banker.
But Jason Moon, a spokesman for the state Office of Financial and Insurance Regulation, said Shumake never had a mortgage broker or lender license with the agency. And his real estate broker's license has been suspended since 2002.State regulators examined another Shumake company, First Equity Realty, after a former employee complained in 2001 that trust account records were not kept properly. Regulators filed an administrative complaint against Shumake and First Equity in January 2002, saying they had found trust account and record-keeping violations.
The state Board of Real Estate Brokers and Salespersons put Shumake's license on probation (it was later suspended) in 2002, fined him $2,000 and required more oversight of his books. He left the board that summer, he says to join an Indiana bank board. Shumake said state auditors who investigated the complaint were unable to do a thorough review because a "renegade employee" stole files. He said he did not pay the fine because he no longer needed the license.
Separately from his pitches to the pension boards, Shumake also has touted other questionable credentials.
A college dropout, he calls himself a doctor on his Web site and in promotional materials, even though the academic title stems from an honorary doctorate from Detroit's Lewis College of Business, which has since lost its accreditation.
Despite the blemishes on his résumé, in April 2006, the general pension board approved a $12-million investment with Inheritance Capital. That June, police and fire trustees approved a $15-million deal.By then, Shumake had been sued by Fifth Third Bank for what the bank called his role in an alleged fraud scheme. In October 2006, after accounts of the suit appeared in the Detroit News, an executive with Shumake's company told trustees the allegations of fraud were untrue.
Shumake later told a board lawyer: "I am confident that I have done nothing wrong."
Reviewing options
Around that same time, Shumake pitched a new proposal to the pension funds: invest $44 million with an Inheritance Capital fund that was to acquire five parts warehouses from General Motors and lease them back to the automaker. Detroit's two pensions each agreed to fund half of the $44-million deal. A real estate adviser to the police and fire trustees laid out eight options on the day of the vote, reflecting different fees and returns. The scenarios ranged from a deal with fees to Shumake's company of $2.45 million and returns to the board of 10.48%, to fees of $6.95 million and returns of 9.2%. Trustees chose the latter option.Peter Henning, a Wayne State University law professor, said, "There's no apparent logic to that as an investment decision by a board with a fiduciary obligation to get the best return for the lowest cost. That's fiduciary duty 101 -- you always try to get the most reasonable return at the lowest cost. There's no other way around it."
Three trustees representing city firefighters were so upset that the Detroit Fire Fighters Association sought outside legal advice. Lawyers at Sachs Waldman of Detroit said they found no "overt violation" of the board's fiduciary duties in choosing the low-return-high-fees option. But the firm's report, obtained by the Free Press, noted that "background checks of the principals" at Shumake's company "should have been performed."
Shumake said in a statement his management fees are a bargain by industry standards.
His companies received fees on the police and fire fund's share of the investments of about $1.5 million through Dec. 31, 2008, according to the Courtland Partners report.
Poutasse, the real estate performance expert, said real estate investment management fees can vary significantly and are a function of "how much work has to be done, the complexity of the investments," and other factors. In Shumake's case, he said, the fees on the GM deal "are not high."Shumake is not the first person doing business with Detroit's pensions who was not fully vetted by their advisers. The Free Press reported earlier this year that the pension plans invested in companies that Adrian Anderson and his firm, North Point Advisors of Oakland, Calif., recommended despite documented histories of failing to pay bills, lawsuits accusing them of cheating investors, and unsubstantiated claims of sizable wealth or revenue.
Investigating the allegations
The Fifth Third fraud claims continue to be investigated by federal prosecutors. And the two people who pleaded guilty have agreed to cooperate. Fifth Third contends in the suit that two employees conspired with real estate appraisers, title insurance agencies and developers to make inflated, multimillion-dollar mortgages on properties in Birmingham and Bloomfield Hills. The bank says the schemers obtained inflated appraisals and recruited so-called straw buyers.
After the real estate changed hands, the lawsuit alleges, the parties pocketed a share of the mortgage. The suit describes Shumake as one of nine so-called facilitating parties and contends he or his companies received nearly $1.8 million from the proceeds of three mortgages.
Shumake settled with Fifth Third in April, paid $200,000 immediately, and agreed in a consent judgment entered in Oakland County Circuit Court to pay another $550,000 by Aug. 1, which he didn't pay, court records show.The bank sought to garnish any state tax refunds Shumake was to receive and got a subpoena to require Shumake to appear in court this month for a creditor's exam. He was told to bring financial records, including information about property, investments, jewelry, art, antiques and paintings.
In 2006, businessman Robert Shumake asked trustees of Detroit’s two pensions to hand him $27 million to invest in real estate.
George Orzech, a fire battalion chief who still represents uniformed workers on their fund’s board, found one thing odd:
“Anybody who knows the first names of trustees in a first meeting has already had meetings with people,” said Orzech, who unsuccessfully opposed the plan. “It was a political deal.”Shumake, whose real-estate broker’s license had expired four years earlier, became embroiled in a federal case that led to indictments of a former city treasurer and pension officials on charges of bribery, extortion and kickbacks that cost the systems more than $84 million, the U.S. Justice Department said.
A litany of such deals gone wrong shows how a municipal retirement system for 30,000 employees and retirees -- propped up by$1.4 billion inorrowed money -- became a cash cow for a select few. Now, these bad investments are coming back to haunt workers and pensioners as the city proposed slashing their benefits in its filing last week of the biggest municipal bankruptcy in U.S. history.
Emergency Manager Kevyn Orr, appointed to oversee the city, wants to restructure $18 billion in debt and long-term obligations and is asking creditors to accept less than 20 cents on the dollar. Detroit’s pensions are underfunded by as much as $3.5 billion in part because of unrealistic assumptions of 8 percent annual investment returns, Orr has said. The pensions say the gap between assets and obligations to retirees is $700 million, according to a June 20 statement.
Long-Time Coming
“Detroit has been working its way to a level of insolvency for decades,” Orr said at a news briefing after the bankruptcy filing. The city was “continuing to borrow, continuing to defer pension payments, continuing not to pay its bills on time, continuing a deepening insolvency.”
On July 19, a Michigan judge ruled that Detroit’s Chapter 9 filing violated the state’s constitution by harming pension benefits. Michigan’s attorney general has appealed. U.S. Bankruptcy Judge Steven W. Rhodes in Detroit set a hearing for tomorrow to consider giving the city protection from lawsuits.Though authorities have investigated past investments authorized by the two pension boards, personnel changes have occurred on both with changes in city administrations. The present general retirement system trustees are acting responsibly, said the board’s legal counsel, Michael VanOverbeke. He said the fund has fared well compared with other public pensions.
Probe Ordered
In June, Orr ordered city investigators to review pension investments, as well as operations and other aspects of employee-benefit programs.
The funds are sustained by contributions from the city and its employees, as well as returns from investments in stocks, bonds, private equity and real estate. Trustees, who are chosen by workers, retirees and mayors or serve because of the municipal office they hold, don’t necessarily have investment experience. One is a pastor.
Real estate and related investments made up 17 percent of the assets of the police and fire pension and 15 percent of the general employee fund, according to their 2011 annual reports.
Orzech and other members say questionable deals were made during 2006-08, when the boards were influenced by then-mayor Kwame Kilpatrick, a Democrat who did prison time for perjury and now faces sentencing for a March 11 conviction on federal corruption and racketeering charges.
Property Losses
The city’s $2 billion General Retirement System lost $16 million in fiscal 2011 when it wrote off a housing development near Sarasota, Florida, that collapsed after the real-estate bubble burst, according to pension fund records. The $3.1 billion Police and Fire Retirement System lost about $15 million on 1,100 vacant acres 30 miles east of Dallas that was to be sold to homebuilders.
A 2006 loan guarantee for a Westin hotel and condos in downtown Detroit cost the funds $14 million.
That was just in real estate. The funds lost more than $20 million investing in a telecommunications company started by a Detroit businessman, $30 million on a cargo airline and almost $70 million on collateralized debt obligations -- derivative securities backed by a pool of bonds, loans and other assets.
Guilty Plea
Chauncey Mayfield, a real-estate adviser, has pleaded guilty to bribery charges, according to the Justice Department. The U.S. Securities and Exchange Commission said in a May 2012 complaintthat Mayfield flew Kilpatrick and former city treasurer Jeffrey Beasley to Las Vegas for a weekend that involved golf, rooms at the Venetian Resort Hotel Casino, concerts by Toni Braxton and Prince and massages at the Canyon Ranch Spa.
The posts held by Kilpatrick and Beasley made them ex-officio trustees of both pensions.
On June 10, the SEC said Mayfield took $3.1 million from the police and fire pension to buy two strip malls in California. Other executives at the firm tried to cover it up, the SEC said. Mayfield and his firm agreed to settle the case by paying back the stolen amount.
The Kilpatrick administration’s sale of $1.4 billion in debt to fund the pension created a pool of money that attracted speculative deals, said Orzech, the firefighter.
“There was a group of bad actors and they’ve been busted,” he said.
Tightened Up
Orzech, 57, who was first elected to his board in 1988, said it otherwise had a good track record and that new members have tightened control. He said Orr exaggerated the shortfalls in an effort to take control of retiree assets.
Under Michigan law, Orr can remove the boards if they have less than 80 percent of assets to cover promised obligations. Orr said the general-employee pension may be as little as 60 percent funded.
While board members dispute Orr’s claim, it’s clear that real-estate investments, at least, haven’t done well.
The value of property and related assets, such as mortgages, held by the general-employee pension plummeted almost 47 percent, or $293.2 million, between June 30, 2008 and June 30, 2012, according to reports filed with the state treasurer. The police and fire pension real-estate investments declined 33 percent, or $228.3 million.
That compares with a 3.6 percent gain for that period by the National Council of Real Estate Investment Fiduciaries property index, which gauges a pool of almost 7,200 commercial properties acquired by pensions and nonprofit investors.
Trailing Returns
The recent investment performance of the Detroit funds has dragged down overall returns. In four of the past five years, the general-employee pension lagged behind the median returns of public funds with more than $1 billion of assets, according to Wilshire Associates’ Trust Universe Comparison Service. The police and fire pension trailed the median in three of the past five years.
Past deals plague both funds, though the general-employee pension aims to reduce real-estate to 8 percent of investments from 14.5 percent, according to its consultant.
One of its biggest money-losers was a $16 million bet in 2006 on a development near Sarasota. The Villages of Avignon was to comprise 1,300 condominiums, townhouses and single-family homes on almost 300 acres, according to filings related to $2.7 million of municipal bonds used to finance infrastructure. The Florida developer was Robert D. Barwick.
Investments Recommended
The investment was promoted to the board by Capozzoli Advisory for Pensions Inc., a Northville, Michigan-based firm.
Joe Capozzoli, on a “due diligence” visit to Florida, gave former city councilwoman and pension fund trustee Monica Conyers a $200 Burberry sweater, the Detroit News reported, citing testimony by Capozzoli to a grand jury. Conyers pleaded guilty in 2009 to taking bribes to support a contract with a waste recycler.
By November 2007, construction at the Villages of Avignon stopped as the housing bubble burst, according to bond filings.
The general retirement system valued the investment at $16 million as late as June 30, 2010.
The general pension gave an additional $11 million to Capozzoli, who invested it in a proposed 130-unit condominium project in Gulfport, Mississippi, that was never built, and in lofts in downtown Detroit.
Millions Gone
As of June 2011, the pension had written off the $16 million investment in the Florida development while the other two investments were valued at $725,000, according to its financial statement.
In December 2011, the fund blocked Capozzoli from spending more of its money and hired an auditor. In March, the pension board hired a law firm to consider suing Capozzoli, according to meeting minutes. The board hasn’t filed such a complaint.
A woman who answered the telephone at the Capozzoli residence told a reporter to stop calling.
The pension boards’ relationship with Shumake, 44, began in 2006. The former high-school track star’s blog says he considers Don King and Donald Trump role models. He approached the pensions to invest in commercial and residential real estate, according to lawsuits the pensions brought against Shumake and his company in Wayne County Court in 2011.
Shumake told fire and police trustees that he was a broker and attended the “Larry Pino Institute of Finance,” the board’s complaint said. Shumake’s real-estate license had expired, according to state records. The institute doesn’t exist, according to the suit. On his company’s website, Shumake is described as a Morehouse College graduate who heads the Detroit City Council Alternative Finance Committee.
Values Decline
The general-employee pension invested $12 million with Shumake’s fund, Inheritance Capital Group LLC, and the police and fire fund invested $15 million, according to the complaint. The stakes were valued at $1.7 million and $11.6 million respectively as of June 30, 2011.
In 2007, Shumake approached the two boards with another deal, involving five General Motors Co. (GM) warehouses. He proposed buying the properties and leasing them back to the automaker, sharing the profits with investors. The $44 million deal was supposed to net the pensions a return of about 10 percent, meeting minutes show.
In August 2007, at a restaurant in Detroit, Treasurer Beasley demanded $250,000 from an unidentified businessman in return supporting the proposal, according to the March 12, 2012 indictment of Beasley. The following month, the pension boards approved the investments, the indictment said.
Frat Boys
Beasley, a one-time fraternity brother of Kilpatrick, has pleaded not guilty. He didn’t respond to a request for comment through his lawyer.
Ultimately Beasley received $70,000, with the payments stopping when the treasurer left office in 2008 following Kilpatrick’s resignation, according to the Beasley indictment. The architect of the leaseback deal, who wasn’t charged, also paid for a Miami Beach, Florida, vacation and hotel rooms in Detroit for Beasley and his mistress, the indictment says.
The businessman also covered the costs of an excursion from Florida to the Bahamas for police and fire pension trustee Paul Stewart, Stewart’s mistress and an unnamed trustee, according to a 2013 indictment charging Stewart with corruption.
Stewart declined to comment, said his lawyer, Elliott Hall.Shumake’s firm, ICG Real Estate Advisors LLC, sought bankruptcy court protection in April 2012, listing a $40 million debt to Detroit’s general-employee pension. Shumake, who hasn’t been charged, filed for personal bankruptcy in January. He didn’t respond to telephone calls seeking comment on the cases.
Misled FundsThe pensions said in a court filing related to Shumake’s bankruptcy that companies he controlled misused $5 million from their Inheritance Capital Group investments. Shumake also misled them about a consulting arrangement related to the lease-back deal, paying a top aide to Kilpatrick $546,000, the funds said in the filing.
The two pension boards have taken over operations of the five warehouses, Orzech said. The $20 million invested by the police and fire pension is currently valued at $14 million, according to Bruce Babiarz, a spokesman.
The leases have generated $2.7 million in income since 2007, Orzech said.
“It’s not going at a 9 percent clip, which was the target,” Orzech said. “But it’s still generating income.”
VanOverbeke, the general retirement system’s Detroit-based lawyer, said the ill-starred investments are part of history.
“In any investment portfolio of any individual or corporation or pension fund, you can find some investments that were not successful,” he said.
Different Approach
“The individuals sitting as trustees today are conducting appropriate due diligence, meeting with their investment consultant, adopting board governance policies and procedures and things of that nature,” VanOverbeke said of his board.
Current police and fire pension trustees want to avoid repeating poor decisions, said Mark Diaz, 38, a board member and the Detroit Police Officers Association president.
“We’re there to make damn sure it never happens with us,” Diaz said by telephone. “We have a lot of skin in the game. I want to be an old man not concerned about where my meager pension is going to come from.”
To contact the reporters on this story: Martin Z. Braun in New York, NY mbraun6@bloomberg.net Chris Christoff in Lansing, MI cchristoff@bloomberg.net.
SOURCE JAMII FORUM
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