Multi-billion bank bond scam surfaces in Parliament

CHRISTOPHER MAJALIWA in Dodoma

The Attorney General (AG), George Masaju.

THE multi-billion shillings bond deal involving Stanbic Bank has surfaced in the National Assembly, with the government asking Kigoma Urban MP (ACT-Wazalendo) Kabwe Zitto to submit any report on the scandal for further legal actions against the bank.

The Attorney General (AG), George Masaju made the remarks in the House, firmly declaring that the government was ready to involve both local and international legal experts to file criminal case against the bank if it gets a clear-cut report from the legislator.

“If the legislator has any good report that can help us take further action against the bank, I request him to bring it to us so that we can take appropriate legal measures” said the AG.

He said the Serious Fraud Office in England agreed with the bank on repayment failure of which the latter would take legal actions against the bank.

The AG was responding to a question by the Kigoma Urban legislator why the government has failed to take action against the bank, compelling it to pay more fine. Mr Zitto also questioned why the Controller and Auditor in General (CAG) has not conducted serious investigations on debts and payments in the period that the payments led to the occurance of the said scandal.

But the AG responded that CAG has constitutional obligation to carry out such investigations to ascertain loss suffered by the government. Earlier, while responding to the main question, Deputy Minister for Finance and Planning, Dr Ashatu Kijaji said Mr Zitto did not clearly state how the government lost US$ 80.0 million.

“The MP has not provided any evidence on how the government lost the alleged amount of money but instead mentions a report of the Corruption Watch that quoted in a story carried in the daily English paper”.

She said the government had taken various actions including Bank of Tanzania letter to Stanbic Bank, demanding 3bn/- fine in connection with the scandal.

“The law is very clear that the financial institution had 20 days that ended on January 30, this year to submit letter of defence and if BoT is not satisfied Stanbic has to pay the fine” she told the house.

The matter at hand stems from a Eurobond placement undertaken in 2012-2013 by Stanbic Bank Tanzania Ltd, lead manager and London-based Standard Bank Plc to raise 600 million US dollars for the government of Tanzania to implement development projects.

The government was allowed a grace period of two-and-a-half years before commencing paying back the loan -- in a period of 7 years. The money was received in 2013 but problems involving irregular financial transactions were raised by Stanbic Bank Ltd employees, prompting the BoT to conduct a special targeted examination audit.

The special audit found out that about six million US dollars was paid to a local firm, Enterprise Growth Market Advisors (EGMA) for supposed consultancy services--withdrawn within days without remitting government withholding tax.

As per the ruling by the UK court, the government of Tanzania will receive 7 million US dollars (about 14bn/-) as compensation.