The purging of Bank of Tanzania (BoT) officials implicated in the theft of Sh133 billion from the External Payment Arrears (EPA) account will continue, the central bank said yesterday.

BoT governor Benno Ndullu told The Citizen in a telephone interview that the bank would not be cowed by threats of legal action by those affected.

The remarks were in response to an exclusive report carried by this newspaper yesterday in which it was revealed that some of the five senior officials sacked recently over their role in the scandal were planning to sue the bank for billions of shillings.

Prof Ndullu said BoT would not reverse its decision to dismiss the officials despite the threats.

He stressed that the bank was determined to see to it that all those involved facilitating the fraudulent payments were dealt with in accordance BoT regulations.

BoT announced last month that it had sacked five of its workers over the irregular payment of tens of billions of shilling to 22 shadowy companies during the 2005/6 financial year.

Some of the workers have already written to the governor demanding that they be reinstated, arguing that their removal was in violation of labour laws.

One of the sacked officials, Ms Sophia Joseph Lalika, who was acting BoT secretary when the payments were effected, has already issued a demand notice to the governor.

She is demanding that the bank rescinds her termination and reinstate her, failure to which she would go to court to claim Sh5 billion in compensation.

Ms Lalika argues through a notice her lawyer wrote to the governor that her sacking was "in total violation of labour laws and was based on emotional, malice and the prevailing political climate concerning the EPA saga".

Her employment was terminated on August 20 through a letter with reference number CBD/461/513/01 signed by BoT deputy governor Juma Reli.

Ms Lalika argues that the deputy governor in terminating her service had assumed 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 not delegation of such powers to the deputy governor," her lawyer, Mr Masaka Thomas, argues in the letter to the governor.

She argues that disciplinary proceedings which led to her sacking were illegal because there was a "serious abrogation of the laid down procedures" before her employment was terminated.

The proceedings, she further argues, also violated the code of good practice under labour laws that stipulates that employee should be given verbal and written warnings before being dismissed.

But Prof Ndullu insisted yesterday that all procedures were adhered to by the bank's disciplinary committee before the final decision was reached, adding that he would not like to engage in a shouting match in the media.

"They have lodged their appeal with the disciplinary committee. Let us be patient and wait for the committee's decision," he said.

Meanwhile, impeccable sources said two workers against whom disciplinary action was recommended in a report compiled by the auditing firm Ernst &Young were still working with the bank.

The two are said to have signed several letters of clearance from BoT to local banks through which the billions were siphoned out of the EPA account.

Asked to comment, Prof Ndullu appealed to the media to let the BoT management undertake its duties without interference, adding that this was the only way it could handle the matter "efficiently".

"You know I sometimes act like a judge here. Various matters are brought at my desk here at BoT every day so bringing up this matter is likely to affect my decisions," he said.

The sacked BoT officials were accused of gross misconduct related to their failure to advise the bank properly on the EPA payments.

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.