Bank of Tanzania “Twin Towers” in Dar es Salaam.
President Jakaya Kikwete yesterday fired the Governor of Bank of Tanzania (BOT), Daudi Balali, after an audit investigation uncovered fraudulent transactions involving the repayment of the country’s external debt.
A press release from Ikulu (State House) stated that “the president has been deeply angered and disappointed with what has happened” at the central bank, and acted to “revoke” Balali’s appointment after he received a damning audit report prepared by the global accounting firm, Ernest and Young, that revealed more than $116 million had been improperly paid to 22 firms through BOT’s external payment arrears account (EPA) in one financial year alone.
The EPA account was originally set-up the Government to help service balance of payment, whereby local importers would pay into the account in local currency and foreign service providers would then be paid back by BOT in foreign currency. However, due to poor foreign currency availability in 1980s and 1990s, the debt within the account ballooned to $677 million by year 1999. Efforts under Debt Buyback Scheme and cancellations negotiated under Paris Club helped to reduce the debt level to $233 million in 2004.
Despite these efforts, unscrupulous officials and businesses were able to take advantage of one of the plans devised to reduce the account debt, whereby a creditor could endorse debt repayment to a third party. The audit report, sanctioned by the Government’s Controller and Auditor General (CAG) covering Bank of Tanzania’s 2005/2006 financial books, revealed that 13 companies used falsified records and claimed third party status and received BOT payments, while 9 companies couldn’t substantiate payments they received. Among these, 2 companies were not even registered by BRELA – Business Registrations and Licencing Agency. These companies are owned and operated by some of the most prominent business people in Tanzania.
Daudi Balali has been Governor since 1998. The President replaced Balali with one of his two deputies, Prof. Beno Ndulu, who before joining BOT was a senior official at World Bank offices in Tanzania and lectured at the University of Dar es Salaam. Recent media reports claimed that Balali, (who has been out of the country for a couple of months now since the investigation started — reportedly in Boston, USA for medical reasons), had written a letter of resignation, but no one in the Government was ready to confirm receipt of the letter, even after some newspapers published its entire contents.
In his most brutal crackdown on corruption ever since he came to office in 2005, President Kikwete also directed the Attorney General, the Inspector General of Police and the Director of anti-corruption bureau to take appropriate legal steps to bring to justice all the individuals and companies implicated in the EPA scandal. He also directed the Board of Directors of the central bank to study the report and take appropriate reprimand actions to all Bank officials involved in the scandal.
The scandal started after Controller and Auditor General (CAG) finished its annual auditing of BOT books in August of 2005. Following a public outcry that was echoed by the Bunge (National Parliament) and the IMF over the findings, the President and CAG ordered an external investigation conducted by Ernest and Young from September to December of last year. The public had been eagerly waiting for the contents of the audit report to be made public. It is still unclear if there will be investigations of BOT accounts in years prior to 2005/2006. Concurrently, Bank of Tanzania has been dogged by another investigation over the inflated cost of constructing the Bank’s headquarters, the Dar es Salaam’s 20 storey Twin Towers pictured above, which cost $25.48 million according to Group Five construction company).
What are your thoughts on this scandal and the way President Kikwete has reacted to the report? What do you think should be Balali’s fate? Should he be arrested and put to jail? Who else would you like to see taken to task? Please leave your comments.
January 10, 2008 at 12:54 pm
There are staff going into the bank every saturday with empty bags which come out full and saturday is the day they burn the old currency
January 12, 2008 at 1:47 pm
The businesses cited in the audit should be published in the newspapers. Naming and shaming might be a way to curb illegal practices and corruption and for the public to boycott the businesses. Any chance of getting a list of these businesses?
January 14, 2008 at 6:30 am
Sijui
The 22 businesses were indeed listed in the State House’s press release and widely published in newspapers. Names of individuals behind the companies have also began to emerge.
For example, The “EastAfrican” newspaper wrote:
The government said that more than $133 million was improperly paid to 22 local firms through the Bank of Tanzania EPA account during the period 2005/06.
According to special audit findings, 13 out of the 22 firms were paid $90 million by using forged documents. These include Bencon International Ltd, VB & Associates, Bina Resorts, Venus Hotel and Njake Hotel & Tours Ltd.
Others are Maltan Mining Company, Money Planners & Consultants, Bora Hotels & Apartment, B.V. Holdings, Ndovu Soaps, Navy Cut Tobacco, Changanyikeni Residential Complex, and Kagoda Agriculture Ltd.
A further nine firms received $42 million for which there was no documentation of why they were paid. These were G&T International, Excellent Services Ltd, Mibale Farm, Liquidity Service Ltd, Clayton Marketing, Rashtas Ltd, Malegesi Law Chambers, Kiloloma and Brothers and Karnel Ltd.
The audit further revealed that two companies’ registration documents were missing from the Business Registration and Licensing Authority. These were Rashtas (T) Ltd and G&T International.
January 15, 2008 at 5:03 am
Time is of the essence in bringing those responsible to justice…6 months deadline!!!….JK is not serious….Kasi mpya kama ndio hii basi dah!…sijui kama hii procrastination ni by default au design????
January 15, 2008 at 8:50 pm
It took so long to act and after so much pressure from the oppositional parties. Wa kupongezwa sana sio Kikwete ni Dr. Slaa kwa kusimamia mpaka ukweli umethibitika. Bado mengi yamefichika,nani anathubut kusema yeye ni msafi ndani ya chama na serekali? Wenye kujiamini kuwa ni wasafi watoke mbele na kutangaza usafi wao. Usafi ni sifa mojawapo ya uongozi. Bora ngamie aingie ndani ya tundu la sindano kuliko kiongozi wa chama na serekali kuonekana msafi. Ni nani tajiri sana ndani ya chama na serekali,utajiri wao umetokana na biashara au kukaa ofisini na kutumikia nchi. Mtumishi wa nchi si vibaya akiwa na utajiri wake na mali zake alizopata kwa akili na jasho lake. Lakini kama anafoji cheki na kutapeli uma, magereza yako mengi na kwa nini wote wasiingizwe jela kutoa fundisho? Huko maiaka ya nyuma kipindi cha kina Nyirabu watu wamesingiziwa kuiba BOT na kufikishwa mahakamani na kupotezewa ajira zao wakati hata hawakuhusika na wizi wowote. Leo miaka 30 baadae, magavana na mawaziri wamebainika kufanya wizi wa kufoji cheki, wizi wa kalamu, lakini bado uchunguzi unahitajika zaidi ili watiwe jela. Ama kweli watu mnajua kulindana na kuwafanya wengine hawajui kula. Kitoeni puani mlichokula, bado mnatembea na limousines tu na kupanda first class KLM?
January 15, 2008 at 9:07 pm
Uteuzi wa kina Bukuku na Ndulu kama vionzozi wapya unaashiria mambo mema.Hawa wazee ni injini za nguvu sana, yaani kma umenunua gari lako la kutembelea ni sawa na Bentley au Phantom Rolls Royce. Tusubiri kuona utendaji wao na mchango wa katika financial sector na na uchumi mzima kwa ujmla.Ila nao wana maboss wao na walio chini yao nao ni vifaa na injini za nguvu? Kama sio basi ni kazi bure tu kuwa magavana injini kubwa halafu walio juu yao na chini ni injini zinazohitaji service kila siku. Hatutafika popote,tutabaki nyuma siku zote na kuchekana na kuendelea na finger pointing style. You can’t blame the weather or the disaster,take measures to manage all kinds of things that will screw you up. Manage all kinds of risks. Hapa ni kwamba fraud risk haiukuwa monitored vizuri kote wizarani na BOT. In the future kazi hiyo apewe nani? mzungu? Mpaka lini kila kitu mtampa mzungu? What is in your backyard is in your backyard. How come then you expect the stranger to solve your backyard problems? You don’t want your hands to get dirty? Right? Me too. Thanks.
January 16, 2008 at 12:20 am
Jk, Madakitari,tena wa Kigeni toka St.Thomas(ukerewe) weshafanya uchunguzi,imegundulika kuwa BoT ni Donda tayari!! tena ni donda Ndugu!!sasa sijui miezi sita ulotoa wataka Muhimbili wachunguze nini tena!! donda halifai KUUGUZA hilo,Kata guu lasivyo mwili wote waoza huo eboo!!!
**Hawa wahuni wakamatwe wote maramoja,lasivyo watahamisha mali,kufilisi makampuni hayo,na hata kukimbia Nchi ndani ya Mwezi mmoja tu,wala hawaitaji miezi sita.
Yangu macho.
January 18, 2008 at 8:23 am
Wananchi wameanza kusalitiwa na viongozi wao tokea zaidi ya miaka 40 iliyopita na wasaliti wamekuwa wakipigiwa makofi siku zote na kucheka na wananchi. Wananchi hawakuweza kuelewa kwa nini jamaa wanacheka kwenye majukwaa ya siasa.
Mrema alijaribu kujenga jukwaa jipya la siasa lakini Wananchi wakamuona ana njaa na uchu wa madaraka kitu ambacho si kweli. Mrema kashindwa vibaya sana kwenye uchaguzi na sasa Tanzania inalia machozi kwa kumkosa shupavu kama Mrema. Tanpower, Bank M, Kiwira Coal Mine, kuuzwa kwa Serengeti, Meremeta, Anben,Fosnik, Tanesco saga,BOT scandal ni matokeo ya Mkapa na Mkapa alipendekezwa na nani? Bila shaka Nyerere alimfanyia kampeni bwana Ben na kosa kubwa lilikuwa ni kumsikiliza bwana Julius baada ya kung’atuka Taifa limeburuzwa na linaendelea kuburuzwa. Hayo ndio ya kujifunza katika miaka zaidi ya 40 ya maendeleo baada ya uhuru.
Cockroach rule:
Ukimuona mende mmoja ndani ya nyumba jua lazima kuna wengine wengi wamejificha. Hii rule inatumia na wenzetu katika kusafisha mambo machafu. Sasa sisi mpaka wanasheria wakuu na majaji na prominent lawyers wapo kwenye scandal za ubadhirifu wa kimataifa na wa hali ya juu. Kikwete atamsafisha nani wakati yeye mwenyewe ni si msafi asilimia 80% achilia mbali aslimia 100%.
Kuna mende chungu nzima kila wizara na kila idara,usafi utafanyika vipi, wala rushwa ndio viongozi wa tume za kuzuia rushwa.
Kila aliyeshika wizara ya fedha kama katibu mkuu au waziri kala donge lake. Kila alieshika nishati na madini kala donge lake nawashikaji zake. Sasa ni nani mtumishi mkubwa wa serekali asiyena ubinafsi wa kutamani kujilikimbikizia mali? Kumbe mali ni kitu kizuri sasa kwa nini tusitafute kwa njia za kufanya biashara za kweli. Siasa is a big business in Tanzania. Lowassa tajiri, Sumaye tajiri,Balali tajiri, Yona tajiri,Mkapa tajiri, nashangaa jamaa alikuwa anakuja kanisani upanga na benzi la zamani. Kuingia tu ikulu Bilionea wa Kitanzania.
January 19, 2008 at 6:10 am
The great enemies of modern progress in Bongoland are evidently not only the Western institutions like the WBG but also the elected leaders,members of contituencies,ministers,government officials,judges, and lawyers who are corrupt.
One great example of corrupt lawyers is advocate Mkono whose involvement with Bank M, BOT,parliament,high profile cases, and women is nothing but shame to the nation. There are so many Mkono’s, he is just a classic example of very corrupt people who benefits from the weak system. By analyzing the success of influencial people like him and his firm you will understand why it would take longer for people to enjoy the matunda ya uhuru after Mkoloni was kicked in the butt. Bado kuna ukoloni mambo leo na matokeo yake ni Balali Scandal.How could he do all that by himself? Obviously he was not alone.
Todays’s rulers avoid the truth and the system is so unjust in punishing wrongdoers. Poeple like Mkono, Mahalu,Mkapa,Balali,Mramba,Kikwete should have been in jail for what they did to their fellow countrymen. That is just a small sample of people who sabotage the economy through the government and elected positions. There is no true fighters for the people and there is too much individualism in the political elites. A classic example is ANBEN and FOSNIK companies. ANBEN stands for Anna and Benjamin Mkapa and FOSNIK stands for Foster and Nicholas Mkapa. Leaders care for wealth of their children and their families at the expense of Wananchi’s trust. This a big big problem in post colonial Africa. Tanzania has classic examples of wealth societies created through abuse of power and trust. There is a conflict of interests. Mkono has assisted corrupt Asian communities to establish businesses and he had the audacity to team up with corrupt and criniminal to form a bank. The BOT should feel shame for giving a license to bank M. We hope the new governor will review their applications and revoke the license for conducting banking activities. We don’t want to see the collapse of the banking industry in Bongoland. The BOT has a big mess to clean and it has to dig deeply.
February 4, 2008 at 4:37 pm
Dr.Slaa is the one to be congratulated and not any other one else.
I would like to see the full report published in the Tanzanian news papers and the parliament shuld be given a copy.
February 7, 2008 at 8:04 am
Mi naona hakuna mtu mwenye uchungu na nchi hii.
Tuliowapa dhamana ya kutuongoza msidhani kwamba huku nje hakuna wenye uwezo wa kuongoza.. wapo maginius wa kumwaga ambao wanaweza kuigeuza Tanzania ikawa kama US,UK,Japan,Sweden…China,Germany….nk.
Mmekalia viti tuuu kazi kukuza vitambi na kujilimbikizia mali bila kutia ufahamu kwamba watanzania walio wengi ni maskini kutokana na ukosefu wa elimu…Kwanini elimu isiwe bure mpaka University kama Cuba alafu muone kama mikoa yote ya Tanzania haijawa kama States za US..Hivi huko ikulu kuna biashara gani??? kusema Nyerere mtu ahonga watu aingie ikulu huyo anania njema na wewe kweli??? nauliza swali na mnijibu ndugu zangu watanzania…
Kama vipi tucharuke kama Kenya tu..tuangalie na upande mwingine huenda kikaeleweka.
Hivi nyie hamjachoka tu kudanganywa kama watoto wadogo??? Mnachekewa chekewa huku mnapewa ahadi hewa na bado mpo mtu na makofi mnapiga!!!!
Haya wizi wa trilioni 1,000 BoT budget ya Tanzania ya 6.5 trilion inaingia mara ngapi hapo ni miaka zaidi ya mia moja na hapo watanzania bado tu mnang’aa macho mmetulia tuliiii kama maji ya mtungi hivi ni nani aliyewaloga nyie??? mnadanganywa eti nchi ya amani wakati mkifurahia amani wenye nguvu wanachota matrilioni ya pesa wanaenda ficha Uswiss utajiju na kipato chako cha chini ya $1 kwa siku. Tufumbue basi macho tuona jamani.. Kama hatutabadili uongozi ikaingia formation mpya Tanzania itaendelea kuibiwa na kwa taarifa yako wanawaandaa watoto wao waje wachukue nafasi zao ili waendelee kuitafuna nchi yao..nasema ni yao kwa sababu kama ingekuwa ni yako si ungekuwa na uchungu nayo…Madini yanachotwa kwa kwenda mbele mpaka mchanga wa dhahabu unabebwa acha almasi za mwadui zenye dhamani ya mabilioni ya hela wacha tanzanite zenye thamani kupita maelezo…hivi nasema nyie watanzania mmelogwa au??
Eti nyongeza ya mishahara ya watumishi wa uma inaongezwa kwa asilimia ya peremende wakati pesa zipo za kumwaga zinaishia kwenye matumbo ya manyang’, maradhuli watu wasio na uchungu na nchi yao.Tumechoka mtupe haki yetu au Tuichukue kwa nguvu. Na Uwezo tunao.
March 20, 2008 at 5:44 am
[...] demands the release of names of people involved in the scandal and their immediate prosecution. The EPA scandal consists of fraudulent payment of about TSh133 billion ($116 million) made by the Bank of Tanzania to 22 companies in the financial [...]
September 2, 2009 at 2:19 pm
[...] business, as well as to the country it is located in, in the current corruption cases involving the Bank of Tanzania are being uncovered. Not only have foreign investors removed their business from the bank, but from [...]
August 16, 2011 at 3:52 am
Tanzania has classic examples of wealth societies created through abuse of power and trust. There is a conflict of interests. Mkono has assisted corrupt Asian communities to establish businesses and he had the audacity to team up with corrupt and criniminal to form a bank.
3d design
September 9, 2011 at 2:08 am
good
November 13, 2011 at 5:14 am
mytradetwiti.com…
[...]Kikwete sacks his Central Bank Governor over Corruption « Tanzanian Common Cents[...]…
December 16, 2011 at 9:05 am
To me i dont think if we still need to proove that there are some leaders who pretend to be good once while they are not. What has the president done is the something heroically he deserves to be cogratulated.