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| The Minister for Finance & Planning, Dr. Philip Mango, addresses a news conference in Dar es Salaam yesterday at which he explained the steps taken against Stanbic Bank Tanzania Limited following a questionable transaction in which 6 million US dollars (about 12bn/-) was withdrawn in cash by a local firm, Enterprise Growth Market Advisors (EGMA) in 2013. Looking on is the Deputy Bank of Tanzania Governor, Mr Lila Mkila. |
Finance and Planning Minister Dr Philip Mpango announced the decision at a news conference in Dar es Salaam yesterday, stressing that Stanbic Bank Tanzania has until January 30, this year, to defend itself against the penalty.
“The law requires the bank to file its defence in 20 days and if the Central Bank is not satisfied, then Stanbic Bank Tanzania will be compelled to pay the fine,” Dr Mpango explained. He noted on the other hand that the Prevention and Combating of Corruption Bureau (PCCB) is still conducting investigations on individuals implicated in the scandal.
EGMA directors are alleged to have received kickbacks amounting to 6 million US dollars (about 12bn/-) for ‘facilitating’ a Eurobond of US $600 million dollars (about 1.2 trillion/-) from the parent company of Stanbic Bank Tanzania, the Standard Bank UK, now called ICBC Standard Bank.
The arrangements for the bond were made by Bashir Awale, then Chief Executive of Stanbic Tanzania and Ms Shose Sinare, then the head of corporate and investment banking. Awale was later sacked while Sinare resigned.
“The penalty should serve as a warning to other banks and financial institutions, which will fail to adhere to the Banking and Financial Institutions Act of 2006 and its regulations,” the minister stressed.
Dr Mpango said the penalty was slapped on Stanbic after the central bank satisfied itself that the former failed to put in place proper internal control mechanisms that would have stopped the payments to EGMA.
Last December, Chief Secretary Ombeni Sefue, said the government was conducting its own investigations to pin individuals behind the dubious payments in which billions of money were withdrawn in cash within few days, contrary to banking regulations.
Ambassador Sefue’s revelation came days after Standard Bank UK admitted before the High Court in London of wrongdoing by its Tanzanian branch and agreed to pay a fine to avoid more litigation.
Available information show the Chairperson of EGMA as former Commissioner General of Tanzania Revenue Authority (TRA), Mr Harry Kitilya, while the ex-Chief Executive Officer of the Capital Markets and Securities Authority (CMSA), the late Fratern Mboya, was the Managing Director.
Other shareholders and directors of the firm was a person identified as a banker one Gasper Njuu, who is the current Managing Director of EGMA, as well as Peter Nyabuti, the Managing Director of Astra Insurance Brokers Tanzania Limited.
The Chief Secretary had urged the individuals and other officials of Stanbic Bank Tanzania to cooperate with authorities in the investigations. “We want to know where the money went and what it was used for.
And once we have gathered enough evidence, legal measures will be taken against those involved in the scandal,” Ambassador Sefue told a news conference then.
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.
According to Ambassador Sefue, 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 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.
Daily News
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