Financial documents for forensic scrutiny

DOCUMENTS allegedly used by the Bank of Tanzania (BoT) to pay 30.8 million US dollars (about 40bn/-) to a local firm, claiming to have been designated to collect funds of 12 foreign creditors, are to undergo forensic procedures to establish their authenticity.

DAILY NEWS Reporter

DOCUMENTS allegedly used by the Bank of Tanzania (BoT) to pay 30.8 million US dollars (about 40bn/-) to a local firm, claiming to have been designated to collect funds of 12 foreign creditors, are to undergo forensic procedures to establish their authenticity.

Sources close to the Treasury say that the procedure is entailed in the terms of reference drawn by the Controller and Auditor General (CAG) for the consultancy firm that would be appointed to conduct a special audit on the National Bank of Commerce External Payments Arrears (NBC-EPA).

The ‘terms of reference’ is dated May 18, 2007 and says in part: “The special auditor shall perform forensic procedures to confirm that key documents related to the allegations are valid and not forged. This includes reviewing all documents that provide the basis for making the payments subject to the allegations, and which authorised these payments”.

The BoT allegedly paid some 30.8 million US dollars (about 40bn/-) to a suspicious local company officially registered under the name of Kagoda Agriculture Limited, claiming to have been assigned to retrieve debts owed by 12 foreign creditors in 2005.

The objective of the special audit would be to provide a clear understanding of the gravity of the allegations by performing a detailed audit of the questionable transactions to determine whether the settlement of the alleged claims were valid and did not involve fraudulent documentation, among other things.

The terms of reference stipulates that the specialist auditor would perform a 100 per cent verification and validation of payments, material or unusual transactions related to the allegations, to which the payments were made, should go behind the veil of incorporation and document, the principals for the entity.

The auditor would be expected to obtain a thorough understanding of the alleged account and document the relevant debt covenants, policies, procedures, laws and regulations in the use at BoT and review all other relevant documentations.

The auditor would review the effectiveness of the monitoring process by the BoT and Treasury over the alleged account. This should include evaluating compliance with the memorandum of understanding between the Ministry of Finance and the central bank pertaining to the management of the alleged account, compliance with relevant internal control procedures.

International auditing firms registered with the National Board of Accountants and Auditors (NBAA) being scrutinised include KPMG, PriceWaterhouseCoppers (PWC), DCDM, Grant Thornton, PKF Tanzania and Ernest & Young.

The consultant would report to the CAG in the execution of the assignment and the later would make available the findings – including the full audit report – to the government and the staff of the International Monetary Fund (IMF).

According to a report by BoT’s external auditors last September, the questionable payments to the debt owed by 12 European, Japanese and US creditors were paid to Kagoda Agriculture Limited, which presented deeds of assignment signed between September 10, and November 3, 2005.

The period spent to negotiate and given the assignment of debts with 12 different foreign creditors from across the globe was too short to a point of raising eyebrows and that all the key documents were signed and witnessed in Dar es Salaam, it said.

Two deeds purported to have been signed by German companies – Lindeteves J. Export BV and Hoestch – were quoted at 1,164,402/76 euros instead of being quoted in Deutsche Mark, the German currency.

It was detected by the auditors that the papers used for the deeds had no letterheads and the names of the creditors were outdated.

None of the people alleged to have signed the deeds on behalf of the German, Italian, British, Japanese, Yugoslav, French and US companies could be identified by the creditors when contacted by the auditors.

Source: Daily News