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EPA scandal: Dar law firm continues to evade prosecution

Discussion in 'Jukwaa la Siasa' started by Ujengelele, Dec 17, 2009.

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    Ujengelele JF-Expert Member

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    EPA scandal: Dar law firm continues to evade prosecution

    By ThisDay Reporter

    14th December 2009

    The BOT Twin Towers headquarters in Dar es salaam

    MYSTERY continues to surround the government's inexplicable failure so far to indict the Dar es Salaam-based Malegesi Law Chambers (Advocates) company over its apparent role in the now-infamous Bank of Tanzania (BoT) external payment arrears account looting scandal of 2005/2006.
    More than a year after the formal filing of criminal charges against over 20 suspects in the 133bn/- plus embezzlement scam, the said law firm has remained untouched despite being heavily implicated by the damning auditors report that opened the whole can of worms.
    The company's proprietor, lawyer-cum-businessman Beredy Sospeter Maregesi, is believed to have been a major player in the EPA fraud. But he has somehow managed to escape the prosecution dragnet as the various EPA scandal trials proceed at the Kisutu Resident Magistrate's Court in Dar es Salaam.
    A special BoT audit by the renowned Ernst & Young firm revealed that dubious payments to the tune of several billion shillings were made from the EPA account to Malegesi Law Chambers and another company linked to the proprietor - G&T International Limited.
    Malegesi Law Chambers and G&T International Ltd are among nine companies said to have been paid more than 42.65bn/- out of the EPA account under dubious circumstances during 2005/06.
    Government officials say Maregesi had strong personal connections with the then BoT governor, the late Dr Daudi Ballali, who personally approved the fraudulent EPA payments.
    Apart from his own alleged participation in the EPA scandal through the two companies, Maregesi is understood to be in possession of sensitive legal documents on various other aspects of the monumental scandal.
    "The government is somewhat afraid of prosecuting Maregesi over the EPA scandal...because it could open a whole Pandora's box," an informed official source told THISDAY.
    "The thinking in certain government circles is that Maregesi is untouchable, because he could reveal certain secrets that are best kept hidden if he were to be hauled to court on fraud charges," the source said.
    Government officials say Maregesi is also linked to Kagoda Agriculture Limited, which fraudulently received 40bn/- from the EPA account – making it the single biggest beneficiary company of the scam – and which like Malegesi Law Chambers has remained conspicuously absent from the high-profile EPA trials in Dar es Salaam.
    According to the Ernst & Young audit report, Bhyidinka Michael Sanze - a lawyer working for Malegesi Law Chambers (Advocates) - signed 12 forged documents that were used by Kagoda to receive fraudulent payments via the EPA coffers.
    All the documents (deeds of assignment) were signed between September 10, 2005 and November 5, 2005 in Dar es Salaam before Sanze, as an advocate & notary public & commissioner of oaths.
    A high-level probe team appointed by President Jakaya Kikwete to investigate the EPA scandal - in the wake of the damning audit report - is reportedly yet to conclude its work. However, it remains unclear at this stage why neither Kagoda nor Malegesi Law Chambers have not been brought to book alongside other earmarked suspected culprits.
    There are over 20 people currently on trial over the EPA scandal, including prominent business tycoons Jeetu Patel and Johnson Lukaza. All were arraigned in court on the basis of evidence uncovered by the auditors and subsequent police/probe team investigations.
    Why authorities appear reluctant to use the same evidence adduced so far to charge anyone behind Malegesi Law Chambers or Kagoda, has become the proverbial billion-shilling question.
    Using its contacts with the late Ballali, Malegesi Law Chambers was also hired by the BoT to provide legal opinion on two high-profile civil cases involving Devran Valambhia and Rajani Industries against the central bank.
    The new BoT management under the current governor, Prof. Benno Ndulu, uncovered that Malegesi Law Chambers was paid a staggering $998,000 (approx. 1.3bn/-) in legal fees by Ballali in dubious circumstances, and subsequently sued the law firm for wrongful payment.
    The Ndulu team has asked a Dar es Salaam court to declare unlawful the agreement that Ballali entered with the law firm.

    The long-running Valambhia and Rajani Industries civil cases are pending at the Court of Appeal and High Court, and the amounts involved are $55m and $19.8m respectively.

    In 2007, the BoT under Ballali's watch instructed Malegesi Law Chambers to conduct a thorough review in respect of both cases that posed a potentially huge liability for the central bank.
    But it has since emerged that the agreement between the Ballali-BoT and the law firm was reached through a misrepresentation of the basis for charging legal fees.

    The Ndulu-BoT now wants Malegesi Law Chambers to refund the $998,000 paid to the law firm two years ago as consultancy fee.
    Available documents show that BoT first credited the law firm with $499,000 in April 2007, being half of the total fee, to its account number 011105010522 operated at the National Bank of Commerce (NBC) corporate branch.

    A month later, on May 18, 2007, the legal firm submitted part of the report of the independent legal opinion, and a week after that submitted the second part of the report, upon which the company demanded payment of the remaining 50 per cent of the fee charged.

    It took just one month for BoT to pay the second installment of $499,000.