The announcement stressed that the termination had been
mutually agreed, and that no compensation would be paid to
0.C.C. In effect by paying them two million shillings for shares
by then virtually worthless, the Government paid them to leave.

With hindsight, it is possible to attempt an interpretation of
what happened.

Initially O.C.C. like the Government negotiators, probably
thought that it would be easy to make profits, but in any case
their equity investment was relatively small. They may also have
realised that the project would give them a useful base in Tanzania
if they wanted to do other work. For example if a new project
was starting up, expatriate staff for that project could be sent to
MECCO first to ‘acclimative’ (where they would be paid by
MECCO) and then when the new project was ready they could be
transferred across.

By November 1969 it was clear that it was in fact easy to make
losses in the Tanzanian building market. There were a number of
established building firms in operation, and the profit rate at the
time was not high enough to absorb MECCOQ’s overhead costs
swollen with the expatriate salaries which were approximately
13% on its turnover (compared with about 5% for the Asian
building firms). The Government’s Central Tender Board was not
willing to direct work to MECCO if another contractor would do
it more cheaply. Through poor management (in this case mainly
through failing to cut the overheads) MECCO was simply not
competitive.

After November 1969 they tightened up, replaced the General
Manager, and trimmed the overheads. But by then highly dubious
machinations were coming to the surface, and they found that
they had lost the confidence of the Government. When they
realised this they concentrated even more on protecting their in-
terests in Holland. They maximised turnover (which meant taking
on large contracts even when they knew that they would make
losses on them), they over-invoiced. (a tower crane was purchased
from Europe for much above its cost price), and they looked for
other methods of taking money out of MECCO. These included
the device of using MECCO to do subcontracting work for O.C.C.
(who were the main contractors for new berths in Dar es Salaam
harbour) at below cost rates — some of the rates for earth-moving
were so low that they did not even cover the running costs of the
machinery! '

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