News

Acting Inspector General of Government, Raphael Baku has vowed…..

Acting Inspector General of Government, Raphael Baku has vowed to make corruption a very risky and unprofitable venture. Baku noted that for a long time the inspectorate has been criticized for “catching only small fish,” when closing a five day workshop on basic investigative skills for the inspectorate staff held at Fairway Hotel Kampala. Read More
EPA: The sequence of Events......
The current legal process - 20 court cases which are still counting - surrounding the External Payment Arrears (EPA) account at the Bank of Tanzania(BOT) started in August, 2005 when the Controller and Auditor-General (CAG) made public its annual auditing books for the Central Bank.

The report revealed, among other things, that the Central Bank had paid out some $30.8 million (about 40bn/-) to a suspicious local company claiming to have been "assigned" to collect on debts owed to 12 foreign creditors by that material year (in 2005).

Immediately after, the then Finance Minister Zakia Meghji ordered that an audit be carried out on the External Payments Arrears Account, then held at National Bank of Commerce, which became famous for its acronym, NBC-EPA - which was administered by BoT on behalf of the Government.

Under the scheme, local companies negotiated settlement of foreign creditors' debts and received deeds of assignments, which they presented to the span BoT for redemption in local currency. The questionable payments in relation to debts owed by 12 European, Japanese and US creditors were then paid to Kagoda Agriculture Limited, which presented deeds of assignment signed between September 10 and November 3, 2005.

All went quiet thereafter - until September 15, last year when Chama Cha Democrasia na Maendeleo (Chadema), held a public rally in Dar es Salaam where its Member of Parliament (MP), Dr Willbroad Slaa (Karatu) announced the famous ‘list of shame' in which listed people he alleged had misused those funds - the NBC-EPA cash which was administered by BoT on behalf of the Government.. The Opposition MPs then alleged there had been ‘massive theft' of public funds within BoT, subsequently kicking of a public outcry that was soon to be echoed within the precincts of the National Assembly itself. The Executive (read President Jakaya Kikwete) ordered the CAG to facilitate an external investigation to be conducted by Ernest and Young - to be done within three short months (from September to December) of last year.

The global accounting firm presented its report to the president on January 7, this year. The report revealed that a staggering 133bn/- had been ‘improperly' paid out to 22 firms through the EPA account of the Central Bank in a record one financial year alone. On January 9, this year, President Jakaya Kikwete, fired the Governor of Bank of Tanzania, Dr Daudi Balali, after an audit investigation uncovered fraudulent transactions involving the repayment of the country's external debt.

The EPA account was originally set-up by the government to help service balance of payments, whereby local importers would pay into the account in local currency, after which foreign service providers would then be paid back by BOT in foreign currency. However, due to poor foreign currency reserves in the 1980s and 1990s, the debt within the account ballooned to $677 million by the year 1999.

Efforts under a scheme known as ‘Debt Buyback' - which involved some debt cancellations - was then 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, under which a creditor could endorse debt repayment to a third party. Read More