Monday, March 03, 2008



Revealed: Kagoda`s

secret money trail


-Huge funds transferred from BoT to CRDB bank account, then elsewhere

THISDAY REPORTER
Dar es Salaam


FRESH details emerging from the Bank of Tanzania’s external payment arrears account scandal show that the billions of shillings paid to the dubious Kagoda Agriculture Limited company was channelled through an account at CRDB Bank’s main Azikiwe branch in Dar es Salaam.

According to THISDAY’s latest findings, the payments of over $30.8m (approx. 40bn/-) from the EPA account to the Kagoda company during 2005/06 were made through account number 01J1021795701 at CRDB Azikiwe located in the city centre.

It is understood that after the payments were confirmed, the money was swiftly transferred to other bank accounts as part of an elaborate money-laundering operation under the supervision of a certain prominent local business tycoon.

Although the names of two virtually unknown individuals - John Kyomuhendo and Francis William are listed as directors in the company’s official documents, it has come to light that they were not the real owners of the company, but merely used to formalise legal requirements for the registration of the company, official correspondence with the BoT, and the forged deeds of assignment.

According to our well-placed sources, immediately after the EPA money was paid into Kagoda’’s account at CRDB Azikiwe, Kyomuhendo and William granted full power of attorney to the local, city-based businessman to handle all matters related to the bank account.

’’After being given power of attorney, this businessman then started moving the money around through a series of other bank accounts and bureaux de change, all being part of a complex money laundering scam,’’ explained one source.

The mysterious Kagoda Agriculture Limited company was paid a total sum of $30,732,658.82 by BoT using 12 falsified deeds of assignment it had purportedly signed with foreign creditors of the government.

Sources say detectives have successfully been able to trace the money trail from the central bank to the CRDB Bank account at Azikiwe, and finally to the businessman in question.

The sources also say the bank accounts of companies owned by this businessman were frozen after it emerged that he was the true beneficiary of the funds paid to Kagoda.

The businessman is understood to have already returned to the government several billions of shillings traced from the Kagoda bank account at the CRDB Azikiwe branch.

Insiders say CRDB is one of several major commercial banks in Dar es Salaam that were used by beneficiaries of the illegal EPA funds.

The government in January this year ordered an investigation into how local banks handled the transactions of companies implicated in the 133bn/- EPA scam.

Former finance minister Zakia Meghji told the National Assembly that the BoT’s banking supervision department had been instructed to establish whether or not the local banks complied with existing laws and regulations against money-laundering.

Serious question marks have been raised over how the EPA beneficiaries were allowed by some of the local banks and bureaux de change to move around huge sums of money without alerting relevant government regulatory and security agencies.

All the 12 forged deeds of assignment used by the Kagoda company were signed between September 10 and November 5, 2005. However, the company itself (Kagoda Agriculture Limited), was officially registered by the Business Registration and Licensing Authority (BRELA) on September 29, 2005.

This means that Kagoda signed some of the deeds of assignment with the government’s foreign creditors even before the company was actually officially registered.

All the forged documents were signed in Dar es Salaam before the same individual, B.M Sanze, an advocate & notary public & commissioner of oaths.

Two of the deeds of assignment (pictured), signed on October 18, 2005 relating to two German companies - Lindeteves J. Export BV and Hoechst - were made using the wrong currency for a total amount of 1,164,402.76 euros.

However, on November 1, 2005, the BoT wrote to the Kagoda company’s stated general manager, Kyomuhendo, to inform him that the correct currency of use in the deeds of assignment should be deutsche marks.

The euro currency was introduced on January 1, 2002 to 12 European countries, including Germany. At the time that the Tanzanian government fell into debt with the two German companies, the currency in use was still deutsche marks.

On November 14, 2005, ’Kyomuhendo’ sent written correspondence to the then BoT governor, Dr Daudi Ballali, informing him that the Kagoda company had managed to revise the deeds of assignment and instructing the central bank to ’’credit the proceeds to account number 01J1021795701 at CRDB Azikiwe Branch.’’

The BoT’s former external auditors, Deloitte & Touche of South Africa, are understood to have been appalled when they discovered that the central bank later released 8.2bn/- to Kagoda.

The current Minister for Finance, Mustafa Mkulo, has announced that around 50bn/- has so far been recovered out of the 133bn/- embezzled from the EPA account.

According to our sources, some of the recovered funds came from the businessman linked to the Kagoda company.

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