10 November 2012

Tanzania: State Adopts Zitto's Motion Over Offshore Bank Accounts

Photo: The Daily News
President Jakaya Kikwete addresses delegates during Chama Cha Mapinduzi elections.

THE government has adopted a private motion tabled by opposition legislator Zitto Kabwe (Kigoma North-Chadema) on Thursday calling for a probe of alleged billions of shillings obtained illegally and hidden in foreign countries, saying that the report would be brought to the House in April, next year.

The motion was adopted amidst a heated debate that witnessed several MPs seeking the Speaker's guidance after the Attorney General, Judge Frederick Werema, had proposed that almost all the proposals in the motion be removed as the government was already working on the allegations to establish the names of Tanzanian individuals holding offshore bank accounts.

Judge Werema, thereafter, agreed with MPs that Mr Kabwe had a point and that the government would speed up the investigation. "We have already started carrying out investigations to establish the names of Tanzanian personalities holding offshore bank accounts and the amounts preserved and we intend to bring a full report in April, next year," he said.

The objective of the investigation should be to establish if the opening of the accounts followed proper procedures. The investigation should also establish if the money kept in foreign countries was legally accrued.

The Prime Minister, Mr Mizengo Pinda and Minister of State in the Prime Minister's Office (Policy, Coordination and Parliamentary Affairs) Mr William Lukuvi persuaded the House to let the government, through its state organs, to deal with the matter.

The three government officials came up with a proposal before it was finally endorsed by the House as Mr Zitto, in his original motion wanted the House to form an independent committee to investigate claims that Tanzanian individuals have stashed billions of shillings in offshore accounts.

The Speaker of the National Assembly, Ms Anne Makinda, said the House has agreed on the conditions that the government would be required to report back to Parliament in April, next year, and if MPs would not be satisfied with the findings, a Select Committee would be formed to carry out the task.

During investigation, the government agreed to use private investigators and other diplomatic means to achieve the desired results as advised by Mr Zitto. Mr Zitto said that in Kenya, France and Senegal such a technique was used successfully to bring back the stolen money through their assistance.

AG Werema told the House that the government would next year bring in Parliament what he named as Financial Transaction Bill to enact a law that would clearly spell out that all individuals keeping money abroad would be required to pay taxes. Deals surrounding the procurement of military hardware, energy and minerals are the major areas from which public officials and businesspeople generated billions of shillings before stashing it abroad, it has been revealed.

According to the document that Mr Zitto used while tabling his private motion in Parliament on Thursday evening, there was evidence that some top government officials and businessmen benefited much from the deals. The opposition MP told the House that the money now reaching 13tr/- has been kept in foreign accounts abroad including New Jersey Island, Mauritius, Cayman Islands and Switzerland.

He cited the Global Financial Integrity (GFI) report of 2008 that stated that a total of 8 billion US dollars had been stashed in foreign banks abroad between 1970 and 2008, an amount that could offset the public debt ( National debt) by 80 per cent. The National Debt as of June this year was standing at 10 billion US dollars. In 2012/2013 financial year the Parliament endorsed 1.9tr/- to service the national debt.

Until now it is not known how much money has been stashed in other countries abroad because such countries have no system of disclosing bank information of their customers as opposed to Switzerland that has such an arrangement. Zitto's document provides further that Germany and the United States managed to buy CDs from former Swiss bank officials before they learnt that there were some individuals who had stashed money in Swiss banks for the purpose of evading tax.

Germany entered into a special agreement with the Swiss government for exchanging financial information for individuals with accounts in Switzerland for tax remittance purpose. Recently, a newpaper in Greece published a list of Greek individuals, including top government officials and businesspeople who kept money in Switzerland.

The names were originally disclosed by Former French Finance Minister Christine Largade to the Greek government but Greece did not work on the list. Today, Ms Largade is the director of the International Monetary Fund (IMF). On June this year the National Bank of Switzerland released information on various people in the world possessing bank accounts in foreign countries and was revealed that Tanzanian individuals stashed a total of 196 million US dollars abroad.

According to the latest information availed to Zitto on Thursday by his whistle blowers, the amount announced by the National Bank of Switzerland in June is 20 times the exact figure. Giving an example, Zitto said UBS has 240 officials dealing with Tanzanian individuals transacting with the bank.

Each UBS official deals with a Tanzanian individual with not less than US dollar 10 million. The amount of money hidden abroad, according to Zitto, is mostly proceeds from crime. He said part of money was a result of corruption while some was a result of tax evasion.

He explained that between 2003 and 2005 Tanzania was engulfed with corruption after the Bank of Tanzania paid a total of 155bn/- to Nedbank bank of South Africa as payment for the debt that the government had guaranteed to enable Meremeta Company carry out gold extraction activities.

The amount of money paid was said to be 15 times of the money guaranteed as loan. However, Mr Zitto said investigation showed that 70 per cent of the money borrowed was diverted to Swizz banks via Mauritius. Zitto said, Meremeta Company that was later transformed into TanGold, was established as a conduit for siphoning public money by the top government officials.

However, he did not reveal the names. Other projects through which billions of money was siphoned include Buhemba Gold Mine that was claimed to belong to the Ministry of Defence and National Service. Ophir Energy, an oil exploration company, has also been mentioned as a firm that dished out hefty bribes to government officials so that it could be awarded three oil exploration blocks.

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