Tanzanian Association Oslo

Bank of Tanzania fraud was never

reported to the police

THISDAY REPORTER Dar es Salaam

Bank of Tanzania (BoT) governor Dr Daudi Ballali did not officially report to the police the occurrence of massive fraud uncovered by auditors at the central bank some two years ago, it has been learnt.

In a letter addressed directly to Ballali in September 2006, BoT external auditors Deloitte & Touche said that senior BoT officials appeared to have been involved in orchestrating the payment of foreign exchange funds to the tune of almost $30.8 million (approx. 40bn/-) under very dubious circumstances.

The auditors pointed out a series of clearly forged documents that made an apparently ’shell’ company, Kagoda Agriculture Limited, the beneficiary of the said money.

’’We are of the opinion that the matters highlighted (in our report) are highly suspicious and could point to the possibility of irregular payments from the bank (BoT),’’ said Deloitte & Touche of South Africa in its letter to the BoT boss.

The letter continued: ’’We are also concerned that the issues highlighted might not be isolated incidences. The use of old names for companies and the speed with which the transactions were approved suggest collusion with senior employees within the (central) bank.’’

The auditors advised Ballali to institute an ’’immediate and thorough investigation’’ into the matter, and also to ’’consider suspension of the employees involved with these transactions for the period of the investigation in order to avoid the possibility of files being tampered with.’’

Deloitte & Touche further recommended that forensic experts be hired to uncover other incidents of fraud following strong suspicions that the irregular payments to the Kagoda company were not isolated happenings.

However, investigations by THISDAY have established that Ballali did not take any action on the auditors’ report and recommendations. Nobody was suspended and no formal investigation was ever mounted into the scandal

Contacted for comment in Dar es Salaam, the Director of Criminal Investigation (DCI), Commissioner of Police Robert Manumba, confirmed to THISDAY that the fraud uncovered in the dubious payments by BoT to Kagoda Agriculture Limited were never reported to his office.

’’I certainly have not seen anything of such a nature,’’ Manumba said.

The DCI’s office is responsible for investigating all major crimes in the country, including fraud and forgery of documents to obtain funds.

According to the auditors, the payment was affected through the use of 12 forged documents known as deeds of assignment.

The documents were all signed between September 10, 2005 and November 5, 2005. All the deeds of assignment were signed in Dar es Salaam before the same B.M. Sanze, an advocate & notary public & commissioner of oaths.

The government announced recently that another ’’special’’ audit on the BoT’s external payment arrears account has already been concluded by another auditing firm, Massawe Ernst & Young.

Findings of the latest BoT audit have not yet been made public and there is still speculation about the current status of Ballali as central bank governor, with the government yet to issue any statement on his reported resignation.

The governor’s current medical condition also remains something of a mystery since he flew off to the United States several months ago for treatment. He has since not returned to the country.