Sacked BoT officials set for court battle By Bernard James THE CITIZEN The Bank of Tanzania (BoT) could face legal suits running into billions of shillings over the External Payments Arrears (EPA) scandal, The Citizen can reveal. Senior BoT officials sacked this year over the embezzlement of Sh133 billion from the bank's EPA account are challenging their dismissal. They were removed from their posts over irregular payments to 22 companies in what has turned out to be a major scandal that has rocked President Jakaya Kikwete's government. Five top officials have been affected in the purge. Sources in the legal circles confirmed to The Citizen that the most of the senior former employees would sue BoT to challenge their sacking, which they viewed as "unjust and politically motivated." One of them, Ms Sophia Joseph Lalika, the BoT acting secretary when the embezzlement allegedly took place, has issued a demand notice to BoT governor Beno Ndullu. She is demanding that the bank rescinds her termination and reinstates her failure to which she would go to court to claim Sh5 billion in compensation. Ms Lalika's advocate, Mr Masaka Thomas of Masaka & Co. Advocates, has termed his client�s sacking in the notice as "unconstitutional". Mr Lalika argues that the move was "in total violation of labour laws and was based on emotional, malice and the prevailing political climate concerning the EPA saga." BoT confirmed recently that it had fired senior officials in relation to the scandal. According to inside sources, those affected were accused of gross misconduct related to the failure to advise the bank properly on the EPA payments. But Ms Lalika points to "malice and ill motive" as the reasons behind her dismissal. She says such punishment could not be justified. "Take further notice that should you fail, neglect and ignore to heed to this letter I will have no option but to commence legal proceeding claiming Sh5 billion in damages," says part of the letter dated August 25, 2008. Ms Lalika's employment was terminated on August 20, 2008 through a letter with reference number CBD/461/513/01 signed by BoT deputy governor Juma Reli. Prior to the sacking, Ms Lalika had been accused of "gross negligence, misconduct and dishonesty", which led to the approval of the dubious EPA payments to shadowy firms. Disciplinary proceedings against Ms Lalika were concluded on August 20 and it was on the same day that deputy governor signed her termination notice. But Ms Lalika argues that the deputy governor in terminating her service had assumed the powers of the governor which were not vested in him, adding that this is in violation of the mandatory provisions of sections 13 and 15 (1) of the BoT Act, 2006. The sections state that the governor shall be responsible for appointment, termination of appointment and discipline of the BoT staff. "It is only the governor who can terminate and not otherwise and there was no delegation of such powers to the deputy governor," Mr Thomas said. Ms Lalika was the acting secretary to the bank from 2004 to 2006 when Sh133 billion was siphoned out of the EPA account. The disciplining and dismissal of Ms Lalika was said to be based solely on the fact that she was the acting secretary when the theft took place and this meant that she had failed to act properly. But Ms Lalika argues through her lawyer that she had never acted as BoT secretary because she was not properly appointed by the BoT appointing authority as set out by regulation 4.5 of the bank's staff by-laws. The regulation vests the powers of appointing an employee in the governor. "Therefore in the absence of any proof that she was properly appointed in terms of regulation 4.5 of the BoT staff by-laws then the whole disciplinary proceedings were nullity in the eyes of the law," part of the letter reads. According to her, disciplinary proceedings against her were illegal due to the fact that there was a serious abrogation of the laid down procedures before terminating her employment. Her disciplinary proceedings also violated the code of good practice under labour laws that stipulate that before such drastic action is taken, an employee be counselled then given verbal and written warnings before the eventual dismissal. These, she said, were not followed. It is understood that the process of EPA application involved the directorate of economic policy, the office of secretary to the BoT and the directorate of finance. The three organs were to make verification of the existence of particular debtor and its external creditor together with the authenticity of the legal documents submitted by the applicants. After verification, the applications were forwarded to the secretary of BoT who in turn submitted them to the bank management for approval and the release of funds was done by the directorate of finance through commercial banks. A report of the audit firm Ernst & Young revealed that a total of Sh133billion were embezzled from the EPA account from 2005 to 2006. Following a public outcry and pressure from development partners for the Government to act on the scandal, President Kikwete announced in January that he had sacked the then BoT governor, the late Daudi Balali. The President also formed a three-man team comprising Attorney General Johnshon Mwanyika, Inspector General of Police Said Mwema and the director general of Prevention and Combating of Corruption Bureau (PCCB), Dr Edward Hosea, to further investigate the matter. The team was given six weeks to complete the work. Chairman of the team Mwanyika told the reporters in July that Sh60 billion of the Sh133 billion that was stolen had been recovered. But addressing Parliament recently, President Kikwete said the team had recovered only Sh53 billion. He gave the suspects until October 31 to return the cash or face criminal proceedings.