Soft on corruption
The British newspaper, The Guardian, on January 15 reported that the transaction was brokered by a British middleman based in Dar al-Salaam.
It is reported that BAe Systems secretly paid a $12m commission - 29 percent of the total $40mn contract value - to the middleman.
Kikwete said last month that officials from Britain's Serious Fraud Office had recently visited Tanzania to investigate the 2001 radar deal.
Sailesh Vithlani, the British middleman, admitted to the daily that the company had covertly paid him $12m.
The money was in addition to $400,000 paid to Vithlani's Tanzanian-registered company, Merlin International.
The reports triggered widespread condemnation from activists and opposition parties in the east African country, who blamed Kikwete and his government for being soft on corruption.
"Kikwete must act tough on graft. We want money spent on the radar back and those involved in corrupt acts in the disputed transaction brought to justice as soon as possible," Ibrahim Lipumba, chairman of the main opposition Civic United Front (CUF) told a rally in Dar al-Salam recently.
BAE, Europe's largest defence contractor, has said it will cooperate fully with the investigation.
Questions have been raised about BAE defense contracts in Romania, Saudi Arabia and South Africa.
The British government began a probe two years ago into alleged secret payments made by BAe when agreeing defence contracts.
"We did not procure the radar from the streets. We shall lodge a formal request for refund from the British government upon proof that BAE inflated the price of the radar to squeeze extra money out of our poor country," he said.
Kikwete maintains that Tanzania was right to buy the radar and that it would reflect badly on Britain if executives of its arms supplier took advantage of the transaction to earn illegal income.