House team orders audit agency to scrutinise NBC

Mr Zitto Kabwe.PHOTO|FILE 

By Frank Kimboy ,The Citizen Reporter

In Summary

However, Mr Malosho said the government was not made aware of details of the deal between Absa and IFC.

Dar es Salaam. Parliamentary Public Account Committee (PAC) has directed the office of the Controller and Auditor General (CAG) to audit all contracts between the government and Absa with regard to the latter’s acquisition of the National Bank of Commerce (NBC) in 1997.

The committee also directed the CAG office to conduct an audit on the performance of the bank’s management.

The committee chairman, Mr Zitto Kabwe, was forced to issue the directive after many of his team members expressed concern that the government shares at the bank might be diluted.

According to an official from the Treasury Registrar Office, Mr Domi Malosho, Tanzania government’s 30 per cent shares at NBC Tanzania Ltd might be diluted if the State fails to pay Sh22.5 billion it owes Absa, who are the bank’s main shareholder, by March 31 2015.

Mr Malosho said the South Africa-based Absa acquired 70 per cent shares in 2000. This was after the government decided to split what was known as NBC in 1997 into three separate entities; NBC Holding Corporation, National Microfinance Bank (NMB) and NBC (1997) Limited.

According to him in the same year Absa sold fifteen per cent of its shares in NBC (Tanzania) Limited to the International Finance Corporation (IFC). This, according to him, created three shareholders of the bank.

However, Mr Malosho said the government was not made aware of details of the deal between Absa and IFC.

Mr Malosho said two years after Absa had acquired NBC (Tanzania) Limited, the Bank of Tanzania (BoT) wrote to the bank directing it to raise its capital by Sh75 billion.

According to Malosho, this forced the shareholders to contribute according to the amount of their shares at the bank. With a 30 per cent stake at NBC (Tanzania) Limited, the government was supposed to contribute Sh22.5 billion.

However, since the government didn’t have that money it reached an agreement with Absa, which saw the South Africa based firm contributed on behalf of Tanzania.

In the deal it was agreed that Tanzania government will repay Absa’s money within two years.

Mr Malosho added that if Tanzania government will fail to repay the money by March 31, 2015, when the two years deal expire, Absa (currently Barclays Africa group) will acquire Tanzania shares at NBC.