Tanzania may fail to clear $133m BoT debt

Kubwajinga · 2008-03-17T15:03:28+00:00

Tanzania may fail to clear $133m BoT debt Monday, 17 March 2008 By Daniel Said DAR ES SALAAM, TANZANIA - Following the impropriety of about US$133 million from the Bank of Tanzania (BoT) External Payment Arrears (EPA) account, it has now been established that the Central Bank may not clear the respective debts from its external debt database. This is because foreign creditors did not assign and negotiate with the 22 local Tanzanian companies which had factored the foreign creditors debts and received forged deeds of assignments, which were later presented to BoT for payment. This means the process for entry into EPA was highly flouted. According to the BoT, the process for entry into EPA had to be initiated by a Tanzanian debt assignee through a letter of application addressed to the BoT attaching the assignees company documents such as the MOU. This must be with a copy of the Certificate of Incorporation and the Deed of Assignment testifying that the respective creditors have duly assigned the particular debt to the Tanzanian Assignee. But all these were discovered to be a forgery. With BoT, the processing of EPA applications involved the Directorate of Economic Policy, the office of the secretary to the Bank and the Directorate of Finance for verification of the existence of the particular debt and its external creditor together with authenticity of the legal documents submitted by the applicants. After verification, the applications were forwarded to the Secretary of the BoT who in turn submitted the applications to the bank management for approval and the release of funds was done by the Directorate of Finance through commercial banks. When the funds are released, the Directorate of Economic Policy at BoT cleared the respective debts from the BoTs external debt database. But this would be impossible because the laid down procedures were not followed in effecting payments to the 22 local Tanzanian companies. Another school of thought has it that most of the debts were fictitious and some were in the process of being exempted or already been exempted. This makes it difficult to clear the BoTs external debt database. A lot of anomalies were discovered including all deeds of assignment that had the same terms and wording for all different creditors. None of the deeds of assignment were on company letterheads and all agreements were signed only on the last page by the alleged representative of the creditors. With all these discrepancies, the foreign creditors know nothing of what was happening in Tanzania, therefore they do not recognize such transactions, an official from the BoT told The East African Business Week last week. The official added that most of the debts were fictitious or were in the process of being exempted. He concurred with an audit report by Deloitte & Touche. For example foreign companies like Fiat Industriali (Italy), Valmet (USA), Adriano Gardella SPA (Italy) had their deeds of assignment indicating that they had been affixed, but this was not true. Auditors who did a company search had it that for about 12 foreign companies, a number of them do not exist. These include Hoechst AG that became Aventis in 1999, Daimler Benz AG which became Daimler Chrysler AG in 1998 and Fiat Veicoli Industriali became Industrial Vehicle Corporation (IVECO) on January 1, 1975. Others include Mirrlees Blackstone that became MAN B & W Diesel Limited from 2002/03 and Valmet became Metso Paper from May 10, 2000. Most doubtful, these companies signed the deeds of assignment in 2005 in the names of the old companies. Although one local Tanzanian company shows the presence of two foreign companies under the names of NS Boma and Lindeteves J, Export BV, audit search did not find such companies. Again, there was discrepancy in the names mentioned on the deeds of assignments. The auditors, Delloite, who made direct phone calls to Valmet (USA), Mirrlees Blackstone (UK), Daimler Benz AG (USA) revealed they were not aware of any individuals who had the names stated in the agreements. For instance, one Tanzanian local company, Kagoda Agriculture Limited had to negotiate and conclude contracts worth $ 30 million with separate foreign creditors from Germany, Italy, Yugoslavia, England, France, USA and Japan within weeks. In January 2008, President Jakaya Kikwete fired the BoT governor, Mr. Daudi Ballali over the EPA funds scandal. Recently, five senior BoT officials were also suspended in relation to the scandal. Following a report by an audit firm Ernst & Young, President Kikwete formed a three man team including the Attorney General, Johnson Mwanyika, Inspector General of Police, Said Mwema and Prevention, Combating of Corruption Bureau boss Edward Hosea to further investigate the matter within six months. Last week the chairman of the committee, Mr. Mwanyika told the media that about Tsh60 billion out of Tsh133 billion has been recovered. The 22 companies include Bencon International Limited, VB and Associate Company Limited, Bina Resorts Limited, Venus Hotel Limited, Njake Hotel and Tours Limited, Maltan Mining Company Limited and Money Planners and Consultants. Others were Bora Hotels and Apartment Limited, B.V. Holdings Limited, Ndovu Soaps Limited, Navy Cuts Tobacco (T) Limited, Kagoda Agriculture Limited and G and T International Limited. The list also includes Excellent Services Limited, Mibale farm, Liquidity Service Limited. EABW

Thread starter Kubwajinga
Start date Mar 17, 2008

Kubwajinga

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Tanzania may fail to clear $133m BoT debt

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