Uchunguzi huo ulitangazwa na Ndullu karibu mwaka mmoja sasa maana hii article toka THIS DAY iliwekwa hapa may 30th, 2008
BoT probes dubious legal fees to Mkono law firm
-Auditors also query Malegesi legal fees 8 law companies short-listed to take over
THISDAY REPORTER
Dar es Salaam
THE Bank of Tanzania (BoT) has begun an official investigation into highly-questionable legal fees amounting to more than 8bn/- paid to Mkono & Company Advocates after terminating the services of the Dar es Salaam law firm effectively from January this year.
Sources have told THISDAY that the move is based on auditors' recommendations to the BoT board of directors, stemming from serious audit queries on the legal fees paid to the Dar es Salaam-based law firm owned by Musoma Rural Member of Parliament on a CCM ticket, Nimrod Mkono.
It is understood that by June 2006, the company had been the recipients of a total of 8,128,375,237/- paid by the central bank, out of which 5,138,153,330/- was doled out during 2005/06 alone.
Mkono & Company Advocates was hired by former BoT governor Dr Daudi Ballali (now deceased) to represent the bank in the long-running Valambhia case.
But according to our sources, in the wake of the audit queries on the apparently excessive legal fees, the new BoT management under incumbent governor Prof. Benno Ndulu decided to axe the law firm as from January 22 this year.
The sources say this move has now been supplemented by the commencement of a formal investigation to establish if there was any fraud involved in the payment of over 8bn/- to the company.
It is understood that an investigation file on the case has already been opened in the BoT's own investigation and internal security department.
A well-placed source told THISDAY: ''The new BoT management under Prof. Ndulu has made it clear that if any fraud is detected in the payment of the excessive legal fees to Mkono & Company Advocates, the matter will be forwarded to the police and other relevant law enforcement agencies for further action.''
According to the findings of the latest, 2006/07 BoT audit by Ernst & Young as approved by the central bank's statutory auditor - the Controller and Auditor General (CAG) - the Public Procurement Act of 2004 appeared to have been violated in the area of legal services.
The auditors expressed concern that such a breach of the procurement law in the hiring and payment of legal services ''could possibly represent procurement fraud.''
They noted that the unusually high level of legal fees paid to Mkono & Company Advocates was equivalent to 13.5 per cent of the government�s contingent liability in the Valambhia case (60bn/-).
Apart from questioning the dubious payments to Mkono & Company Advocates, the auditors also raised suspicions over the payment of $998,000 (approx. 1.2bn/-) by the BoT to another law firm - Malegesi Law Chambers (Advocates).
Interestingly, Malegesi Law Chambers is also among the 22 companies that were scandalously paid more than 133bn/- by the BoT from the external payment arrears (EPA) account using forged documents during 2005/06.
The auditors conclusively concluded that the BoT had hired Malegesi Law Chambers contrary to the procurement law, to ''provide an opinion on the case related to Valambhia and Rajani Industries.''
They furthermore questioned why the central bank had decided to use single sourcing of the legal service.
According to our sources, the new BoT management under governor Prof. Ndulu has also terminated the services of Malegesi Law Chambers, and asked the firm to submit an itemised bill of costing to justify the payment of over 1.2bn/-.
The sources said following the termination of services of both Mkono & Company Advocates and Malegesi Law Chambers, the BoT has now short-listed eight local law firms as potential replacements in the provision of future legal services to the central bank.
Six of the short-listed firms are based in Dar es Salaam, two in upcountry regions, and all have been formally recommended by the Central Tender Board following a competitive bidding process in compliance with procurement law, the sources added.
In the meantime, it is understood that the new BoT management has now hired the services of Law Associates (Advocates), led by prominent Dar es Salaam lawyer Dr Ringo Tenga, to handle the Valambhia case to its conclusion in place of Mkono & Company Advocates.