Mkapa Govt to blame for Sh11.7bn loss- Mramba
By Rosina John
The tax exemption granted to an international gold production audit firm, which caused the country a loss of Sh11.7 billion, was authorised by the Mkapa administration, former Cabinet minister Basil Mramba told a Dar es Salaam court yesterday.
Mr Mramba, who was the Finance minister then, admitted that he signed the notice in favour of Alex Stewart (assayers) Government Business Corporation, but said it was on the instructions of State House.
He was testifying in the Kisutu Resident Magistrate's Court during the preliminary hearing of an abuse of office case against himself, another former Cabinet Minister, Mr Daniel Yona (Energy and Minerals), and retired Treasury Permanent Secretary Gray Mgonja.
The prosecution alleges that the three abused their powers as senior public servants, causing the government to suffer a loss of over Sh11.7 billion.
Through his lawyer, Mr Herbet Nyange, Mr Mramba said that on June 12, 2003, he instructed the Governor of the Bank of Tanzania (BoT) via letter, Reference No, TYC/M/30/2, to pay Alex Stewart (assayers) Government Business for their services.
Mr Nyange told Resident Magistrate Hezron Mwankenja that his client acted after State House authorised the payments.
His client, he insisted, wrote the letter after being directed by State House to do so. Though he did not specify which authority at State House gave the directive, when the payments were made, Mr Benjamin Mkapa, who is now retired, was the President.
"My client was only following instructions from the State House� he could not object," Mr Nyange said.
He also said that Mr Mramba wrote a letter to Mr Yona, who was the Minerals and Energy minister, advising him that the fee for hiring the independent gold assayers be included in 2003/04 financial year estimates through a supplementary budget.
Asked about the submission by his lawyer, Mr Mramba told the court that what Mr Nyange had said was true.
"All the facts that my lawyer has given the court are true," Mr Mramba stated.
For their part, Mr Yona and Mr Mgonja disputed all the facts presented by the prosecution except the positions they served in the government.
The lawyers representing the two, Prof Leonard Shaidi and Mr Joseph Thadayo, said their clients held senior positions in the government as Energy and Minerals minister and Permanent Secretary, respectively.
The prosecution, led by Senior State Attorney Fredrick Manyanda, had told the court that they intended to call 13 witnesses to prove the case when the hearing begins on May 14.
Mr Manyanda said the witnesses included officials from the Tanzania Revenue Authority (TRA), the ministry of Minerals and Energy and Prevention and Combating Corruption Bureau (PCCB) personnel.
The three former government officials first appeared in court last November, and denied 13 counts of abuse of office.
Mr Mramba and Mr Yona were initially charged jointly. Mr Mgonja had been charged separately but his case was later enjoined with that facing the former ministers.
The appearance in court of the former Mkapa Government officials was the culmination of a three-year investigation by the PCCB and the police into the suspicious hiring of Alex Stewart (Assayers) Government Business Corporation (ASA) to audit gold production in Tanzania.
The controversial assignment in 2003 saw the company receive a whopping Sh65 billion ($50 million) in payments. Its contract ended on August 2007.
The company was paid an average of Sh1.3 billion ($1 million) every month from June 2003 to August 2007.
The lucrative deal for the foreign company sparked off a public outcry, with opposition politicians accusing the government of �letting the firm take a chunk of what the country earned in royalties from gold.�
The court was told that on March 3, 2003, Mr Yona, then the minister for Energy and Minerals, through a letter, Ref. No. CDA111/338/01, sought the President�s approval to hire an independent gold assayer.
He convinced the President that the assignment would be implemented jointly by his ministry and the ministry of Finance, using alternative sources of funding because, according to him, the project was not one of the budgeted for items for the 2003/04 financial year.
On May 15, 2003, the then Deputy Minister for Finance, Alhaj Abdisalaam Khatibu, advised Mr Yona that the hiring of an independent gold assayer should wait until an expert from the Commonwealth Secretariat, gave advice to the government on whether assaying was a prudent exercise to undertaken in detail, by what means and what kind of mineral.
Despite the advice, on June 12, 2003, Mr Mramba instructed the BoT Governor to pay Alex Stewart Government Business Corporation $1 million as advance payment, the court heard.
On June 23, 2003, TRA informed Mr Mgonja that Alex Stewart was not entitled to the tax exemption applied for and insisted that the company pay tax.
In disregard of these letters, Mr Mgonja advised Mr Mramba, who was then his boss, to sign the government notices granting tax exemptions to Alex Stewart.
Acting on the advice given by Mr Mgonja, Mr Mramba signed and issued government notices 423 of 2003, 424 of 2003, 497 of 2004, 498 of 2004, 377 of 2005 and 378 of 2005, granting tax exemption to the company.
As a result, the government suffered a loss of Sh11,752,350,148
Source; The Citizen