Tanzania Parliament has ordered the central bank to submit a report on the billions of shillings held by Tanzanians in HSBC bank.

The Public Accounts committee (PAC) said the report should then be taken to relevant authorities to determine what action to take on the individuals and the bank.

PAC chairman Zitto Kabwe said he had information that HSBC officials were operating in the country illegally. This would make the bank culpable for abetting the contravention of the 1992 Foreign Exchange Act. The penalty for such an offence is Tsh4 million or six times the amount of money involved.

According to Swiss leaks 99 Tanzanians hold Tsh204.1billion ($114 million) in HSBC in Switzerland.

HSBC has no license to operate in Tanzania and is therefore not allowed either to solicit for customers in the country without permit from the central bank.

PAC Chairman Zitto Kabwe asked the Bank of Tanzania (BoT) to complete the report by December. Argentina has charged HSBC with ‘aiding tax evasion via Swiss accounts’ through a network of intermediaries and offshore accounts.

Argentina is demanding the UK bank repatriates $3.5 billion that its Argentine branch moved offshore to help clients evade taxes and move capital abroad.

Mr Kabwe said BoT and Tanzania Revenue Authority (TRA) should use the Swiss leaks to find out what legal action should be taken against the bank for violating the country's law.

HSBC, according to its website, has over 51 million customers in 73 countries and territories. The bank was established to finance trade between Europe and Asia.

HSBC might be charged using Foreign Exchange Act of 1992 in which Section 10 (1) says “except with the permission of the Governor no person shall export from or cause to be exported from the United Republic any notes or coins which are or have been at any time legal tender in the United Republic, or any gold.”

Independent law commentator, Harold Sungusia, said the issue was likely to fall under international money laundering laws making global tribunals the the most likely recourse for Dar es Salaam.

Mining firms

BoT deputy governor Juma Reli had told PAC that the Act forbids Tanzanians living in the country from having offshore accounts.

However he said that the same Act is lenient with mining companies which so long as they obtain permit from the central bank are allowed to own an offshore account.

However, it was revealed that there is no official system that allows BoT to pass on the information on monies shipped to an offshore account to TRA in order to be taxed.

Mr Kabwe said the the central bank should create a database on the mining firms holding bank accounts overseas for tax collection purposes.