Stanbic at a crossroads over escrow billions

Maboso

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Feb 18, 2013
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The Stanbic Bank headquarters at Ali Hassan Mwinyi/Kinondoni roads juntion in Dar es Salaam


Dar es Salaam. Stanbic Bank Tanzania is at a crossroads following Parliament's resolution that the bank be investigated and tasked to help recover the Tegeta escrow account billions after it was accused of gross violation of anti-money laundering rules.

All the $122 million (Sh207 billion) which was deposited in the account that was under the watch of the Bank of Tanzania (BoT) was paid into two accounts operated by Pan African Power Solutions Tanzania Limited (PAP) at Stanbic Bank in November and December, last year.

PAP falsely claimed it had acquired 70 per cent of Independent Power Tanzania Limited (IPTL) in 2010 from the Malaysian company Mechmar. This enabled PAP to win the trust of some top government officials, who, in turn, helped it to secure the remaining 30 per cent from the local shareholder, VIP Engineering, for $75 million. An audit by the Controller and Auditor General (CAG) has established that PAP did not legally acquire a 70 per cent stake in IPTL as claimed by the firm. It was stated during a heated debate in Parliament last week that the bank failed to prevent money laundering when it allowed the transfer of millions of dollars to Australia and South Africa.

MPs said the transactions were questionable because they were not backed by proper documentation to justify the movement of such vast sums.

Stanbic was also accused of allowing withdrawals totalling Sh73 billion within a "very short period", prompting investigators from the Prevention and Combating of Corruption Bureau (PCCB) to question the bank's top executives.

The transactions, Parliament was told, were captured on the bank's closed circuit televisions, whose footage showed individuals withdrawing large amounts of cash from PAP's accounts.

Parliament now wants the bank investigated, penalised and forced to return the Tegeta escrow billions.

In what could tarnish the image of one of Africa's biggest banks, especially in South Africa, Stanbic Tanzania is at a crossroads as it seeks to clear its reputation as well as cooperate with PCCB officials in tracing the whereabouts of the escrow monies.

Last Friday, Stanbic Bank Tanzania CEO Ken Cockerill wrote an internal email directing staff on how to handle the aftermath of the escrow saga

"There has been a lot of hype over the last few days in respect of the Tegeta escrow account saga, which is currently being discussed in Parliament," he wrote.

"I would like to take this opportunity to reassure you that the bank has complied with all of its fiduciary and regulatory obligations. In addition we have given our full cooperation to the relevant authorities.

"I am confident that our business will not be affected, and count on your support to convey this message to our customers…If any of you are approached by the media, please refer these queries to Desideria Mwegelo, our Head of Marketing & Corporate Affairs," Mr Cockerill concluded in his email.

But Mr Cockerill could not be reached for further clarification yesterday.

The Citizen has reliably established that after a series of interrogations by PCCB officials on how Stanbic handled the two accounts belonging to PAP, one of the bank's top officials, Mr Paul Omara, who was the head of personal and business banking (PBB), was forced to resign last month.

The Ugandan national, who had been with the bank for 11 years, was accused of sanctioning questionable transfers from PAP accounts to overseas accounts.

He was also accused of failing to notify or alert the relevant authority responsible for curbing money laundering. Mr Omara was briefly detained by PCCB officials after his resignation before he was bailed out by a local businessman, pending the final report on the escrow probe.

Speaking when Parliament was debating the escrow saga on Friday, Finance deputy minister Mwigulu Nchemba ordered the two banks that were involved in the transactions to issue official statements to the government and general public on how they handled the monies.

Only Mkombozi Commercial Bank has so far issued an official public statement detailing how it handled VIP Engineering's account as well as transfers from the account to lawyers, judges,

MPs, journalists, ministers and religious leaders, among other recipients.

Stanbic has yet to issue such as statement, contrary to the order issued in Parliament.

SOURCE:
THE CITIZEN
 

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