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Mtei: BoT has lost integrity
2008-11-08 12:37:27
By Adam Ihucha and Angel Navuri, Arusha
Former Bank of Tanzania (BoT) governor Edwin Mtei has faulted the central bank`s integrity in preventing money laundering and terrorism financing in Tanzania.
Mtei, who served between 1966 and 1974, said the BoT had lost its customary glory as the country`s trustworthy financial regulator with the backlash of the External Payment Arrears account (EPA) scandal.
``What happened to BoT is an unfortunate scenario.
It is so strange that the financial regulator has allowed EPA money to come out through illegal transactions and arrangements,`` he said.
Mtei was discussing a paper titled `Prevention of Money Laundering and Terrorism Financing: Tanzania`s Preparedness,` presented by Humphrey Moshi of the University of Dar es Salaam Economic Research Bureau (ERB).
He said that EPA scam had put BoT integrity under siege, particularly when some of the local financial institutions had dared to reject accepting the dirty money from their regulator.
EPA scandal involved fraudulent payment of about 133bn/- made by BoT to 22 dubious firms in the 2005/06 financial year, involving the repayment of the country`s external debt.
Some of the EPA debts were actually written off by foreign companies that did business with the government decades ago, but were apparently kept on record by dishonest officials at the BoT and later fraudulently assigned to local companies to facilitate the eventual misappropriation of the funds.
The scam led to sacking of the then Governor of BoT, Dr Daudi Ballali, who has since died in the US. Ballali and scores of top officials at the central bank were implicated in investigative reports carried out by the Controller and Auditor General (CAG) and an international accounting and audit firm, Ernest & Young.
In his paper, Moshi said that money laundering and the financing of terrorism were relatively new offences in the country�s criminal justice system.
He said their administration required personnel who are well versed in the intricacies of such offences, noting that at the moment there was general lack of competence in terms of skills and tools to combat such offences.
Moshi said the current statistical trend showed signs of escalation of predicate offences, which generated dirty money as manifested by increasing incidents of bank robberies and corruption.
He said the issues of money laundering and terrorist financing were yet to be mainstreamed in the country`s socio economic planning process.
``Combating crime is yet to be conceived as an integral and element of good governance. There is very limited domestic appreciation of the risk of money laundering, hence considered as foreign driven agenda,`` he said.
Elawony Kisanga, Executive Director of Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), said that Tanzania had made substantive steps towards the criminalization of money laundering.
He said the criminalization had been completed by requisite institutional framework which was still evolving in spite of the positive steps several challenges lying ahead.
Kisanga said there was lack of skilled labour, like investigators and prosecutors, who were currently not available.
He said that the size of the banking sector, specifically and the financial sector in general, was small, thus unable to be accessed by majority of the population and failing to capture most of the transactions.
The four-day 14th Financial Institutions conference, which the BoT had organized, ended yesterday.
SOURCE: Guardian
2008-11-08 12:37:27
By Adam Ihucha and Angel Navuri, Arusha
Former Bank of Tanzania (BoT) governor Edwin Mtei has faulted the central bank`s integrity in preventing money laundering and terrorism financing in Tanzania.
Mtei, who served between 1966 and 1974, said the BoT had lost its customary glory as the country`s trustworthy financial regulator with the backlash of the External Payment Arrears account (EPA) scandal.
``What happened to BoT is an unfortunate scenario.
It is so strange that the financial regulator has allowed EPA money to come out through illegal transactions and arrangements,`` he said.
Mtei was discussing a paper titled `Prevention of Money Laundering and Terrorism Financing: Tanzania`s Preparedness,` presented by Humphrey Moshi of the University of Dar es Salaam Economic Research Bureau (ERB).
He said that EPA scam had put BoT integrity under siege, particularly when some of the local financial institutions had dared to reject accepting the dirty money from their regulator.
EPA scandal involved fraudulent payment of about 133bn/- made by BoT to 22 dubious firms in the 2005/06 financial year, involving the repayment of the country`s external debt.
Some of the EPA debts were actually written off by foreign companies that did business with the government decades ago, but were apparently kept on record by dishonest officials at the BoT and later fraudulently assigned to local companies to facilitate the eventual misappropriation of the funds.
The scam led to sacking of the then Governor of BoT, Dr Daudi Ballali, who has since died in the US. Ballali and scores of top officials at the central bank were implicated in investigative reports carried out by the Controller and Auditor General (CAG) and an international accounting and audit firm, Ernest & Young.
In his paper, Moshi said that money laundering and the financing of terrorism were relatively new offences in the country�s criminal justice system.
He said their administration required personnel who are well versed in the intricacies of such offences, noting that at the moment there was general lack of competence in terms of skills and tools to combat such offences.
Moshi said the current statistical trend showed signs of escalation of predicate offences, which generated dirty money as manifested by increasing incidents of bank robberies and corruption.
He said the issues of money laundering and terrorist financing were yet to be mainstreamed in the country`s socio economic planning process.
``Combating crime is yet to be conceived as an integral and element of good governance. There is very limited domestic appreciation of the risk of money laundering, hence considered as foreign driven agenda,`` he said.
Elawony Kisanga, Executive Director of Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), said that Tanzania had made substantive steps towards the criminalization of money laundering.
He said the criminalization had been completed by requisite institutional framework which was still evolving in spite of the positive steps several challenges lying ahead.
Kisanga said there was lack of skilled labour, like investigators and prosecutors, who were currently not available.
He said that the size of the banking sector, specifically and the financial sector in general, was small, thus unable to be accessed by majority of the population and failing to capture most of the transactions.
The four-day 14th Financial Institutions conference, which the BoT had organized, ended yesterday.
SOURCE: Guardian
