Friday 11 January 2008

BoT Governor Changes

JK fires Balali
What started as speculation mid last year has been proved to be true beyond any reasonable doubt: The Bank of Tanzania (BoT) management has occasioned multi-billion loses to the nation mostly through dubious payments and dealing with phony companies in 2005.

The discovery has led to the sacking of BoT governor Daudi Ballali by President Jakaya Kikwete yesterday.

The shocking revelations are contained in a State House press statement released yesterday, whose contents are based on audits over the External Payment Arrears Account (EPA) done by Ernst and Young last year.

EPA had since June 1985 being under the custody of the Directorate of Economic Policy of the BoT, with the discretion of providing any amount of foreign exchange to an importer of goods and services into the country.

Such importers would then be required to reimburse BoT an equivalent in local currency. The arrangement was meant to exercise judicious management over scarce foreign exchange reserves.

The release says this arrangement had been operating quite smoothly only until 2005, when Deloitte and Touche auditors discovered sharp discrepancies, including forged payments in the operations of EPA, much so under the notarized deeds of assignments.

In the ensuing stand off between the BoT and Deloitte and Touche and, the latter`s services were abruptly and mysteriously terminated.

In the interim, the media, donor community, civil society and opposition political parties had taken up the matter head on, with calls for immediate probe and resignation of the former BoT governor Daudi Ballali.

Eventually, the government gave in to the multi-pronged pressure, ordering Controller and Auditor General (CAG) to hire the services of competent company to re-do EPA’s auditing.

The auditing process was conducted between September-December last year and handed their reports over to CAG, who in turn tabled the same to President Kikwete on Monday.

The report shows that in 2005, payments to the tune of 133,015,186,220.74/- were made to twenty two domestic companies under the EPA scheme.

Among these companies, 90,359,078,804/- were paid to 13 companies based on fake and forged documentation.
``Those companies deserved no payment at all”, it screams.

In addition, another nine companies were paid an equivalent of 42,656,107,417/- without any supporting document to authenticate such payments.

Notably, two companies, Rashtas (T) Ltd and G&T International Ltd were nowhere to be found in the books of the Business Registration and Licensing Agency (BRELA).

Consequently, President Kikwete has sacked Dr. Daudi Balali and his place taken over by the hitherto Deputy Governor Professor Benno Ndulu.

At the same time, the BoT board has been directed to reconvene immediately and take necessary disciplinary measures against all BoT officials who were accomplices to the scam, much as EPA operations have been stalled.

Furthermore, the President has directed the Attorney General, Inspector General of Police and the Director of the Prevention and Combating of Corruption Bureau to investigate all companies and individuals who were involved in the shoddy deals and take appropriate action in line with the laws of the land.

``They have to effectively apply the power and authority they have been entrusted in line with the law.

They must complete the task within three months, and the Attorney General should head this task. All the money that was paid illegally must be paid back,`` the statement quoted the President.

The President has also directed the Controller and Auditor General to cooperate with the law enforcing organs executing the task.

President Kikwete has also appointed the PS in the ministry of Infrastructure, Enock Bukuku, to be the new deputy governor of the BoT (Economy and Finance) Likewise, he has appointed Omari Chambo as the Permanent Secretary in the same ministry.



About the new BoT chief

Benno Ndulu served as Sector Lead Specialist with the Macroeconomic Unit for Eastern Africa of the World Bank.

He is best known for his involvement in setting up and developing one of the most effective researches and training networks in Africa, the African Economic Research Consortium (AERC).

He served first as its Research Director and later as its Executive Director. He received an honorary doctorate from the Institute of Social Studies (ISS) in the Hague in recognition of his contributions to Capacity Building and Research on Africa.

Following his PhD degree in economics from Northwestern University in the U.S., he taught economics and published widely on economic growth, adjustment, governance, and trade.

He has been involved in policy advisory roles worldwide and has served in a wide range of Boards locally and internationally.

* SOURCE: Guardian, 10 Jan 2008
By Lusekelo Philemon

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