Sh3bn fine looms over Stanbic

Dar es Salaam. The government is set to slap Stanbic Bank with a Sh3 billion penalty for its role in the Treasury bond sale scandal. 

The Sh3 billion penalty is separate from the $7 million—$6 million fine and $1 million in accumulated interest (about Sh14 billion)—that the Standard Bank had agreed in a London court to pay the Tanzanian government over the scandal.

According to the minister for Finance and Planning, Dr Philip Mpango, the Bank of Tanzania (BoT) has already written to Stanbic, and the financial institution has until the 30th of this month to give its defense which, if BoT will find it unsatisfactory, it will be obliged to pay the penalty.

 Dr Mpango told a press conference yesterday that BoT took the measures against Stanbic as a warning to the bank and other financial institutions in the country that they should always comply to the laws and regulations when transacting business.

“Stern measures will continue to be employed against other banks and financial institutions which will be found on the wrong side of the law,” he said.

In March 2013, Stanbic Bank paid a bribe of $6 million (over Sh12 billion) to government officials through a local company, EGMA, in March 2013, to enable Stanbic/Standard Bank to get the tender as the lead bond executioners, which was  worth $600 million.

  The arrangement of the pay-out was done by Stanbic managing director Bashir Awale who was later relieved of his duties and Ms Shose Sinare, the banks corporate affairs official who soon resigned. The chairman of EGMA is former commissioner general of Tanzania Revenue Authority (TRA), Harry Kitilya.

Chief Secretary Ombeni Sefue has since ordered an investigation to unmask all officials involved in the scam, in a bid to establish where the money went and why it was withdrawn in short time. The findings of the investigations are yet to be made public.

According to Dr Mpango, in July 2013, the BoT, in the course of its regular inspection of financial institutions’ activities, found a loss linked to the bond and was alarmed by a sudden resignation and relieving of duties of Ms Sinare and Mr Awale respectively. From there, BoT decided to make a targeted examination on Stanbic.

The central bank investigations found that there were dubious transactions, with EGMA being paid the $6 million in cash within a short period, which is contrary to banking regulations.

 “The investigation report was then forwarded to Stanbic, and BoT directed Stanbic’s board of directors to take appropriate measures to correct the flaws,” said Dr Mpango, adding: “The bank was also directed to file explanations about the EGMA transactions to the Financial Intelligence Unit as per the Anti-Money Laundering Act of 2006. The bank did as directed.”