Tanzanian Association Oslo

Investigation into BoT

funds embezzlement:

Mkapa in the frame

-Ex-president’s name pops up again and again as AG-led probe continues to determine the faces behind the scandal


THISDAY REPORTER
Dar es Salaam

FORMER president Benjamin Mkapa’s name has cropped up repeatedly in the ongoing official investigation into the embezzlement of more than 133bn/- from a key Bank of Tanzania account, THISDAY can reveal today.

As the high-level state probe explores the complex web of collusions and financial relationships amongst the key players in the scam, including senior government officials, it has emerged that the ex-president is being frequently mentioned in connection with the affair.

Former President, Mkapa

According to sources close to the investigation, it has been discovered that many of the fraudulent payments made from the BoT’s external arrears (EPA) account were either authorised or directly ordered by State House during Mkapa’s final year in office (2005).

The sources say some of the people questioned so far in the ongoing investigation have fingered the former president as allegedly having a prominent role in the matter.

’’Mkapa’s name keeps popping up again and again in relation with the EPA scandal in one capacity or another,” said one informed source, adding: ’’Indeed, it is becoming hard to imagine how payments amounting to billions of shillings could have been made from the central bank without his personal knowledge.’’

The high-level investigation into companies and individuals involved in the scandal is being led by the Attorney General, Johnson Mwanyika, working in tandem with the Inspector General of Police, Saidi Mwema, and the Prevention and Combating of Corruption Bureau (PCCB) under its director, Edward Hosea.

They are working under instructions from President Jakaya Kikwete, who has also formally fired Dr Daudi Ballali and replaced him with Prof. Benno Ndulu as BoT governor, as a direct result of confirmation of the EPA funds embezzlement through a special audit ordered by the government itself.

The special audit conducted by Ernest & Young covered the period between July 1, 2005 and June 30, 2006.

The sources say that from the investigation results so far, it is beginning to appear that much of the money siphoned of the EPA account during this period was paid out on the pretext that it would be diverted to finance covert national security operations or make secret donations to the ruling Chama Cha Mapinduzi (CCM).

’’Several of the beneficiaries of the EPA funds have told investigators that a large slice of the money went to finance CCM election campaigns during 2005, and that the payments were authorized by Mkapa himself. All this of course needs to be verified,’’ said another source.

The current CCM Secretary General, Yusuf Makamba, has been quoted by a local newspaper as stressing that the ruling party did not benefit in any way from the EPA funds, had ’’absolutely nothing’’ to do with the scandal, and was just being used as a scapegoat.

At the time the illegal EPA payments were made (2005), Philip Mangula served as CCM secretary general, while Mkapa - along with his position as head of state - was also the party’s national chairman and Igunga Member of Parliament Rostam Aziz served as CCM national treasurer.

Finance Minister Zakia Meghji told THISDAY recently that the then BoT governor, Ballali, lied to her about illegal payments amounting to nearly $30.8m (approx. 40bn/-), made from the EPA account to one particular company going by the name of Kagoda Agriculture Limited company.

According to Ms Meghji, Ballali deliberately misled her into defending the fraudulent payments to Kagoda on the pretext that the funds disbursed in 2005/6 were meant for ’sensitive’ issues of national security.

She said after giving her false advice on the matter, Ballali then personally drafted a letter which she signed - stating that the payments to Kagoda had purportedly been authorized by the government. The letter was sent to the then BoT external auditors, Delloite & Touche of South Africa, on September 15, 2006, after they had raised serious audit queries on the payments to Kagoda.

But Ms Meghji said she was obliged to retract that letter just four days later (September 19), after being told she had been duped by the BoT governor.