"The prosecution has failed to present tangible and cogent evidence. It instead came with circumstantial evidence and failed to prove its case," said Principal Resident Magistrate Irvin Mugetta, when delivering his one and half hour judgement.
Mahalu and Martin first appeared before the Kisutu Resident Magistrate's Court in Dar es Salaam in August 2006 and denied that they conspired to steal from the government.
According to the prosecution, on September 23, 2002 at the Tanzanian embassy in Italy, being persons in the service of the Tanzanian government, knowingly and with intent to deceive, the two used payment vouchers containing false particulars that the embassy building in Rome cost 3,098,741.58 euros.
It was alleged that the accused stole euro 2,065,827.60 and thereby causing the government of Tanzania to suffer a pecuniary loss.
"The prosecution has failed to show that the Ambassador (Mahalu) used two contracts in making payments without government's permissionÉthe fact that the Ministry of Foreign Affairs made payments shows that the payment was authorised," stated the magistrate.
He noted that the use of two contracts alone does not amount to stealing as there was no evidence which shows that the monies once paid were sent back to the buyer.
Magistrate Mugetta held further that there was no provision in the law that can be used to justify the payment made in two contracts as a criminal offence but "I agree that the two contracts may have been used by the vendor in Italy to avoid tax and but there's no evidence to show that monies were swindled by the accused."
He noted that the accused persons were in Italy and no evidence was presented to show that they influenced decision making at the ministry in Dar es Salaam. Magistrate Mugetta held that it was obvious that there could be shortcomings on the procurement procedures and for all that, the ministry of foreign affairs was the one to blame.
He noted that purchasing of the buildings in Rome had all the blessing from the government as "in December, 2001, the then Minister for Foreign Affairs and International Cooperation, Mr Jakaya Kikwete visited Rome and agreed that there was need to buy the building that would represent the image of the country."
Prof Mahalu received the verdict with a broad smile, but declined to make a long statement and simply said: "God fought for me. Justice has been done." Ms Martin came out in tears. She simply thanked God for the acquittal.
Mr Alex Ngongolwa and Mr Mabere Marando, for defence, said they were pleased with the verdict in the historical case that dominated headlines in the recent years. During the trial the prosecution called seven witnesses, while the defence had three including former president, Mr Benjamin Mkapa.