7 suspended at TRA in escrow tax probe

Dar es Salaam. Seven senior Tanzania Revenue Authority (TRA) officials have been suspended for failing to collect tax on money withdrawn from the Tegeta escrow account. The officials are in charge of supervising tax collection and inspection, Finance deputy minister Mwigulu Nchemba said in Dar es Salaam yesterday.

Their suspension paves the way for investigations into the failure to collect the right amount of tax from the deals that saw some Sh202 billion being transferred from the account held at the Bank of Tanzania to the Independent Power Tanzania Limited (IPTL) account.

“We have suspended seven senior officials at TRA effective January 1 to pave the way for the responsible organs to investigate the scandal so that legal action can be taken upon completion of investigations,” said Mr Nchemba, who doubles as deputy secretary general of the ruling Chama Cha Mapinduzi.

The seven join former Attorney General Fredrick Werema, Land and Housing Minister Anna Tibaijuka and Energy and Minerals Permanent Secretary Eliakim Maswi, who have quit because of their involvement in the scandal.

Mr Werema resigned on December 17 after MPs accused him of authorising the fraudulent transfer of about $120 million to IPTL.

He denied the allegation but said he was stepping down because the controversy had “disrupted the country’s political atmosphere”.

Addressing Dar es Salaam elders late last year, President Jakaya Kikwete said Prof Tibaijuka was asked to step down because she did not carry out due diligence before accepting a $1 million donation--allegedly part of the money withdrawn from the Tegeta Escrow Account--from the former minority shareholder in IPTL, Mr James Rugemalira.

In a televised address, Mr Kikwete said the government was still investigating allegations of impropriety against Energy and Minerals Minister Sospeter Muhongo and his permanent secretary, Mr Eliakim Maswi, but the president’s office said two days later that Mr Maswi had been suspended pending the outcome of the probe.

The decision to fire or suspend some of the officials was reached after an investigation by a parliamentary watchdog committee chaired by Mr Zitto Kabwe found that about $120 million had been taken from the escrow account, paid to IPTL and then given to various former and present government officials and religious leaders.

A group of 12 donors--including Japan, the UK, the World Bank and the African Development Bank--decided in October to withhold about $490m until the government took action over the alleged corruption.

According to Mr Nchemba, the fate of the suspended TRA staff will be clarified after the investigation is completed. TRA also submitted, on January 1, a demand letter and related tax claims to all those proved to have received part of the money that Mr Rugemalira shared after receiving his $75 million from the Escrow cash.

“The TRA has already calculated the amount of taxes that is supposed to be accrued from the beneficiaries of the Escrow monies,” he said. “Right now, I don’t have the exact figure but all the beneficiaries have already received demand letters.” The deputy minister was speaking after touring Mwananyamala Hospital’s maternity ward to mark his 40th birthday.

In his national address on 19 December, Mr Kikwete said all public institutions, including TRA, would be reviewed to establish the roles they played in the scandal. The President said all those who gained from the Escrow monies were supposed to pay VAT and other related taxes.