Meghji: I was duped by governor Ballali -Minister comes clean on Kagoda Agriculture Limited payments saga THISDAY REPORTER Dar es Salaam THE Minister for Finance, Ms Zakia Meghji, yesterday disclosed for the first time how the disgraced former governor of the Bank of Tanzania, Dr Daudi Ballali, lied to her about illegal payments amounting to nearly $30.8m (approx. 40bn/-) made by the central bank to the controversial Kagoda Agriculture Limited company. Speaking exclusively to THISDAY in her office in Dar es Salaam, Ms Meghji explained how Ballali deliberately misled her into defending the fraudulent payments on the pretext that the funds disbursed in 2006 were meant for sensitive issues of national security. She revealed that Ballali told her the payments had been authorized to finance sensitive government expenditure. Ms Meghji said after deliberately giving her false advice on the matter, the BoT governor then personally drafted a letter - which she proceeded to sign - stating that the payments to Kagoda had purportedly been authorized by the government. This letter was delivered to the then BoT external auditors, Delloite & Touche of South Africa, on September 15, 2006. It effectively brought to a close serious audit queries being raised at the time by Delloite & Touche, after stumbling upon the fraudulent payments to the Kagoda company during a routine audit of payments made from the BoTs external payment arrears account during 2005/06. Said Ms Meghji: I agreed to sign the letter, drafted by the governor himself, because I trusted the governor at that time. It was only later that I realized the payments to Kagoda Agriculture Limited were not related to any government expenditure. She said she only realized she had been duped by the governor after the Permanent Secretary in the Finance Ministry, Gray Mgonja, informed her that Ballali had actually lied to her about the true nature of the payments to the Kagoda company. The minister told THISDAY that just four days after sending the first letter to Delloite & Touche, she found herself in a position of having to retract it. It was at this point, on September 19, 2006, that I wrote another letter to the auditors, this time retracting the first letter in which I had erroneously defended the payments to Kagoda, she said. Ms Meghji gave THISDAY a copy of the retraction letter to the auditors. The minister said a month after this exchange of correspondence Deloitte & Touche submitted its BoT audit report to the government, highlighting apparently massive embezzlement of funds in the sensitive financial institution. It was then (late 2006) that the Controller and Auditor General was directed to hire an international audit company to conduct a special audit of the central banks external payment arrears account, she explained. On why she had taken so long to reveal the existence of the two letters, Ms Meghji said she delayed taking any action until the latest special audit by Ernst & Young was concluded. The minister said she fully cooperated with Ernst & Young during the special audit, even giving them copies of both letters. The latest twist of events comes hardly a week after President Jakaya Kikwete formally sacked Ballali from the governorship in the wake of the special audit reports findings.