Monday, November 18, 2013

DECI members yet to be refunded, BOT claims of DPP appeal

AT Least over 400,000 members of the defunct Development Entrepreneurship for Community Initiative (DECI) are yet to be refunded with their money which they had sown as seeds in the company before it seized its operation. The company’s dissolution was ordered by the Kisutu Resident Magistrate’s Court in Dar es Salaam three months ago after the firm’s leaders were convicted of an offense of operating a pyramid scheme contrary to Section 911 8(2) of the Banking and Financial Institutions Act number 5 of 2006 when brought before the court.  The leaders were alleged to have conducted an illegal pyramid scheme whereby they solicited money from people and promised huge returns in the form of interest on money sown. The scheme was made operational in the country on different dates between 2007 up to when the police impounded their premises in March 2009 at their headquarter offices located at Mabibo area in Dar es Salaam. Among orders given by the magistrate in his ruling included a directive to the Bank of Tanzania (BoT) to refund members of the public who owed the company over Sh. 92bn/- after they had sown seeds with the company before it seized its operation. The court’s order followed a verdict given by Resident Magistrate Stuart Sanga in mid August this year after four officials of the organization were convicted to pay a fine of 21m/- each or go to serve a custodian sentence of six years in default of paying the fine.  This was after the court had allegedly found them guilty of operating against the country’s financial regulations. In his judgment, he also directed the Bank of Tanzania (BoT) to confiscate all accounts at various banks opened for the institution and seize all other assets owned by the company. According to the magistrate, the BoT should find ways of refunding frustrated members who had their money sown as seeds upon verification of required receipts. 

An aerial view of the twin tower buildings of the Bank of Tanzania in Dar es Salaam.

However, a follow up was made by this paper following the matter with a view to find out how far has the BoT gone in the execution of the court’s order and found out that, no single payment is already settled to members as ordered by the court. When contacted for comments, the BoT’s Deputy Governor Lila Mkila said that immediately after the judgment on the DECI case, the Director of Public Prosecutions (DPP) preferred a notice of appeal to High Court. He further noted that, following this notice which was filed on 23rd August, unless the appeal is determined otherwise the BoT cannot execute the order. Mkila responded after this paper had earlier sent a request of information to the Governor of the Central Bank of Tanzania with a view to see how the BoT has executed the court’s order for the interest of DECI members. In addition to his response, Mkila also noted that, the BoT has in place various tools to ensure that the financial system remains safe and sound in the country. He further noted that, the BoT carries out periodic off-site and on site examinations of the institutions to enforce compliance on the provisions of the Acts and Regulations set. Mkila said when asked by this paper to clarify what strategic measures or stringent conditions which have so far been imposed by the BoT in order to ensure that other financial institutions do not break further financial regulations just like what DECI had committed. This he said included strict adherence to other two provisions namely the Banking and Financial Institutions Acrt 2006 and the Banking and Financial Institutions Regulations 2008. DECI was a financial institution which was initially established with a view to provide credit facilities and undoubtedly violated the rules of its basic operation for which it was registered, and embarked on a pyramid scheme. According to media reports, by May 14, 2009, at least half a million people had sunk billions of shillings into the scheme, some having borrowed from banks, rickety family budgets and savings and credit cooperative societies for the purpose.

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