3 December 2018

Tanzania: NBC Exonerated From Refunding Over 200m/ - Paid to Wrong Party

THE Court of Appeal has exonerated National Bank of Commerce (NBC) Limited from refunding National Oil Tanzania Limited more than 200m/- drawn and paid to a wrong party instead of Tanzania Revenue Authority (TRA).

Instead, Justices Mbarouk Mbarouk, Augustine Mwarija and Gerald Ndika placed such burden on Standard Chartered Bank (T) Limited (SCB) for being negligent and occasioning loss of 241,941,397/- debited from the company's account held at the NBC corporate branch in Dar es Salaam.

The justices of the Court of Appeal took such a path after allowing the appeal the NBC had lodged to fault the findings of the High Court of Tanzania.

At the same forum, however, the court dismissed the cross-appeal Standard Chartered Bank had filed to oppose the High Court of Tanzania's decision on the matter.

Facts show that on March 21, 2005, National Oil Tanzania Limited, a company dealing in the importation of petroleum products drew a cheque of the specified money from the NBC Bank account.

The cheque's proceeds were to be credited to the TRA Commissioner for Customs and Excise's bank account. The cheque was apparently delivered to the commissioner together with the relevant Single Bill Entry.

However, after about four months from the date of issue of the cheque, the company's Country Manager learnt that the amount had not been credited to the commissioner's account.

Upon inquiry, the manager was informed by the NBC that the proceeds of the cheque had been paid through SCB after clearance.

Later on, however, it was discovered that the proceeds were credited by the latter bank to the account of MGS International Tanzania Limited.

The crediting of the money to the MGS Company instead of the TRA commissioner was done through another cheque, which bore same particulars as those issued by NBC.

The second cheque is alleged to have been presented by Sky Oil Investment Limited, a customer of SCB.

But when determining the matter, the High Court of Tanzania having gone through the evidence given and documents tendered found both NBC and SCB to have acted negligently in debiting the company's account and they were, as a result, liable for the loss occasioned.

It is because of such findings NBC decided to appeal to the Court of Appeal, while SCB cross-appealed against the findings of the High Court of Tanzania.

When determining the appeals, the justices of the Court of Appeal found that the Sky Oils cheque was forged.

They ruled that there was no evidence showing that such a cheque was cleared either at the clearing house or by SCB and that it could not be deemed otherwise that imputation of bad intention for the part of bank officials.

"Their omission to subject the purported cheque to the clearance process, but yet used it as the basis for crediting the MGS's account is clear evidence of negligence or involvement in the perpetration of the fraudulent act," they said in the judgement.

The justices added: "This is because the perpetrators of the scam knew that the forged document will not have passed the Magnetic Ink Character Recognition (MICR) reading had the same been subjected to that process."

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