THERE has been plenty of disturbing news for those making a keen follow-up the litanies of embezzlement and mismanagement of public funds from literally page after page of the Controller and Auditor General’s annual reports, as gleaned by various media outlets.

One such item is that there are pretty slim chances of the recovery of a 15.91bn/- loan issued to the Dar es Salaam City Council by the National Social Security Fund more than 15 years ago, which has shown that the National Audit Office diligently keeps track of the issuance and use of public funds.

In terms of the unconscionable use of public funds, this particular finding and its itinerary of how the funds were issued and agreements reached, this can be described as a gem.

It fails all tests of due diligence and was in that sense issued in order to he lost, or something of the sort, in which case there would be auxiliary explanations for the manner in which the contract for loaning was entered. It is unlikely that it was a one-person show as an individual could hardly spend that kind of money irresponsibly, fearlessly and with impunity.

There is an old expression in the banking industry that is taught in schools as an aspect of the social parameters of banking – to the effect that if an individual has a 10m/- bank debt and definitely can’t pay, that is his/her problem. However, if a small bank and in this context a social security agency is demanding to be paid 15bn/- in an unsecured loan and from another public agency for that matter, it is the lender who has a problem – not the debtor. 

This is precisely what appears to obtain in the particular case of the DCC debt to NSSF, as it is the latter’s issue to sort out and find ways of clearing it from the books or reschedule it for whatever period is agreed upon.

The CAG report says that the year 2007 saw NSSF enter into an agreement with the council to provide a loan of 10bn/- for the construction of a city business park. 

As the loan amount was insufficient to complete the project, the council made three addendums to raise an additional 3.41bn/-, taking the principal loan to 13.41bn/-. Yet an audit of the disbursed funds showed that a total of 15.91bn/- was disbursed, exceeding the agreed amount by 2.50bn/-.

It is reported that NSSF was unable to provide auditors with evidence to support the basis of disbursement of an additional 2.5bn/- as a pure add-on. 

More significantly, the council obtained neither Treasury guarantee nor the title deed of the land being placed in its name, contrary to Article 3 of the loan agreement or the demands of due diligence generally.

The state guarantee would have covered at least 60 per cent for both principal and interest, while the title deed of the land would mandatorily be in the name of the council. Both these things were not done and the total amount was issued with adds-on, implying that it wasn’t just a business transaction but horse trading.

The story can be entertaining but there is no time for that except that, as of  June 30, 2024, the NSSF demand with interest  stood at 27.61bn/- and the council had paid only 80m/- on that debt since 2014. It implies that the debt isn’t one of its ‘to do’ things before either the city director or the council as a whole. 

The detail that the loan was required to be repaid fully from January 1, 2009 to 31 December 2018 looked laughable in the circumstances and there is little hope that the two institutions can hammer out how it should be paid. It appears likely to be absorbed by the Treasury as a bad loan like various others.