Mramba admits approving tax waiver to auditing firm

By Rosina John, The Citizen Correspondent

Dar es Salaam. 

Former Finance minister Basil Mramba, on trial for abuse of office and causing a Sh11 billion loss to the government, yesterday (22/09/2012) admitted he authorised Alex Stewart Assayers, a company that was hired to audit gold production, to be exempted from paying tax.

He told the Kisutu Resident Magistrate’s Court on his second day of defence that he did so to fulfill a clause in the contract that the Bank of Tanzania (BoT) had entered with Alex Stewart that it be granted tax exemption. Mr Mramba is charged along with former Energy and Minerals minister Daniel Yona and former Finance Permanent Secretary Gray Mgonja.

 “Your honour, section 4.3.1 of the contract says clearly that any payments affected in this contract will not be subject to tax,” said Mr Mramba.

He added: “We saw, and advised that the best way was to grant tax exemption because if the company took the payment with tax charged, it could take more money. That’s what we were being advised by various experts,” insisted Mr Mramba.

He said he was not party to the contract since the contract to audit gold production was entered by the Alex Stewat and BoT.

According to Mr Mramba, the BoT regulations gave the governor mandate to enter into and sign the contract on behalf of the central bank. According to Mr Mramba, the BoT regulation was clear that the contract that the bank entered relating to money was to be exempted from tax.

He said he was never advised by the Tanzania Revenue Authority (TRA) that he should not allow tax exemption to Alex Stewart as alleged by the prosecution. He said TRA’s letter on tax exemption was sent to the Treasury PS, Mr Mgonja on June 24, 2003 at a time the contract had already been signed ten days before.

“This advice did not have any significance to us by the time it reached my office,” said Mr Mramba.   

The three were arraigned following three years of investigations by the Prevention and Combating of Corruption Bureau (PCCB) and the police into the suspicious hiring of Alex Stewart (Assayers) Government Business Corporation (ASA) to audit gold production in Tanzania. The firm was in 2003 awarded a contract that saw it receive a whopping Sh65 billion ($50 million) in gold audit fees. It completed the assignment and left the country in August 2007. The case was adjourned to October 12.

Source: The Citizen (23/09/2012): http://www.thecitizen.co.tz/news/51-other-news/25158-mramba-admits-approving-tax-waiver-to-auditing-firm