Court orders BOA Tanzania to pay 116m/- to local firm for negligence

The ruling followed civil case number 302 of 2002 filed by the Interbest Investment Company against BoA Tanzania Ltd alleging that bank acted negligently disregarding banking practices for corporate companies.

By BUSINESS REPORTER

THE Tanzania High Court has today ordered Bank of Africa (BoA) to pay Interbest investment Company up to 116m/- as compensation for negligence.

Judge Augustine Shangwa ruled in favor of  Interbest Investment Company after getting satisfied that BOA officers acted negligently leading to theft of the local firm’s from its account by one of its share holders.

 The ruling followed civil case number 302 of 2002 filed by the Interbest Investment Company against BoA formerly known as Eurafrican Bank (Tanzania) Ltd alleging that BOA acted negligently disregarding banking practices for corporate companies.

In the ruling, judge Shangwa ordered the bank to pay Interbest  Sh 116,769,378 the total amount of money which was stolen from the Company’s account.The money was stolen by China national Li Yong Cai who was one of the directors of the company, who illegally opened a secret account in the name of the company but without any supporting documents from the company.

According to the plaintiff’s witness, Mr Austine Masonga who was the Managing Director of the company in 1999, the company imported electronics from China which were supplied to the Tanzania Electric Supply Company (TANESCO) prompting to pay the company a cheque worth Sh 116,769,378.

According to witness, Mr Cai who was one of the directors of the company went to Tanesco and collected the said cheques and instead of depositing it in the company bank account number 6553001703 at National Bank of Commerce, City Drive, he went ahead and opened a new account number 200940008 at (BoA) by the company’s name and started operating it scretly.

According to witness Mr Cai who at time was serving a jail sentence at Keko prison depositing the money in the new account at the defendant (BoA) bank and made several withdrawal leaving a balance of Sh81, 322.25

According to the witness, Mr Cai did all that without consulting any of the other company directors adding that after withdrawing the money, he fled the Country.

In the judgment, judge Shangwa said that after assessing the evidences, BOA acted 

contrary to the law adding that the defendant (BoA) has duty to pay the stolen money to the Company.

The urged that its common knowledge, a corporate account cannot lawfully be opened by a single individual.

“However, in this case, the defendant allowed Mr Cai alone to open the account in the name of the Company and operate it without requiring him first to produce the memorandum and article of association together with the specimen signatures of the persons appointed to be signatories to it.

“In this regard, the defendant acted negligently,” the judge ruled.