[2007-06-27]  BoT Debt Fraud Was On Balali's Watch
Fresh evidence has emerged showing that the mysterious disappearance of millions of dollars from the Bank of Tanzania - the subject of an investigation ordered by Finance Minister Zakhia Meghji in December last year - was in connection with suspicious payments that occurred as recently as 2005.

The EastAfrican has seen a confidential letter by Mrs Meghji to the managing director of the International Monetary Fund, Rodrigo de Rato, in which she also clarifies that the questionable transaction was in respect to payments made from the country's external payment arrears.

The minister says in the letter that the accounts in question were established in the mid-1990s to settle arrears incurred during the 1980s and early 1990s when foreign exchange shortages and controls prevented settlement of private sector import-related payments. It has also emerged that the government has made a commitment to the IMF that it will take action on the culprits.

"While we believe that this specific allegation is an isolated occurrence, the authorities take the allegations seriously and are determined to address them in a comprehensive and transparent manner," she said.

With the revelation that the fictitious payments were made in the financial year 2005/2006, it appears likely that some members of the current management of the BoT under governor Daudi Balali may be caught in the investigator's dragnet.

The issue, which has dogged Mrs Meghji's tenure at the Treasury since she took over the sensitive finance docket two years ago, has refused to fade away despite concerted attempts by President Jakaya Kikwete's regime to show both the IMF and World Bank that it is tackling the scandal.

At the heart of the scandal, is allegation that private businessmen colluded with bank officials to manufacture documents that were then used to siphon monies from the BoT disguised as debt arrears payments.

Most of the creditor firms supposed to have received the funds have said they have not been paid a single cent by the Tanzania government or the BoT.

Even as the government moves to initiate fresh investigations into the scandal, politicians are demanding that another investigation be conducted into the allegedly inflated costs of constructing BoT's prestigious twin towers headquarters.

Some Members of Parliament last week demanded government action on what is now seen as one of the biggest ever scams in Tanzania, and called for the resignation of top BOT officials.

In a conversation with The EastAfrican, Dr Wilbroad Slaa, deputy leader of the opposition in parliament, said some of BoT's top management should be made to step aside to pave the way for an investigation into the phenomenal escalation in the cost of the BOT twin towers.

It is believed that the government was prompted to conduct an investigation following widely circulated reports that some big businessmen and high-ranking officials of the country's central bank had been found to be involved in the scandal.

Hamad Rashid Mohamed, a Member of Parliament for CUF, said Tanzanian opposition parties had information to the effect that more than $200 million was plundered from the central bank, at one point triggering a 25 per cent depreciation of the Tanzania shilling overnight.

Reliable sources in the Central Bank said the money, which was paid in dollars to the dubious firms, was transferred to Dubai in the United Arab Emirates overnight, returned to Tanzania and changed into local currency, leading to the depreciation of the Tanzania shilling.

The source further said part of the money paid to the local associates was used to buy posh houses in Dubai, South Africa, London, New York and Sicily while part was deposited in the Swiss accounts.

In the letter to the IMF, Mrs Meghji assured Mr de Rato that the investigation into the suspicious ransactions will be conducted by an international audit firm.

"The results of the audit will be shared with the Fund staff," she added.

She also said that the terms of reference of the investigations would be agreed with the Fund staff and broadly drawn to cover all the transactions from the external payments arrears account during 2005/06 as well as verification, monitoring and control procedures related to the account.

Mrs Meghji informed the IMF that in addition to the special audit, the government had initiated its own internal investigation of all payments under the external payments arrears scheme and will share the results with the Fund.

Copyright © 2007
Source: Copyright © 2007 East African.