Development minister Christian Friis Bach (Radikale) has stopped aid to Uganda until the African nation repays the millions of kroner in aid that was stolen (Photo: Scanpix)
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Museveni says we should not blend politics with emotions because it is purely scientific: Amazing positivism Mr. President; you mean even the corruption in your government as well as the harassment of opposition politicians are pure inevitable scientific processes
Uganda told to repay Irish aid funds lost in OPM fraud
Ugandan aid suspended after fraud allegations
http://cphpost.dk/ugandan-aid-suspended-after-fraud-allegations
Peter Stanners
November 1, 2012 - 07:46
Uganda's
state auditor revealed how 75 million kroner destined for that country's poor
northern region was stolen by corrupt government officials
Denmark joined Ireland and the UK in cutting off aid following the allegations that the officials working for the Ugandan prime minister had illegally siphoned off money into personal bank accounts.
“We have suspended, effective immediately, all aid payments to Uganda’s government,” the development minister, Christian Friis Bach (Radikale), said. “This has happened after tough negotiations with the country’s prime minister and finance minister in which we have demanded that the case is fully investigated.”
He added: “At the meetings we have held, promises have been made that a full investigation would be carried out, that the money would be repaid in full, that those responsible would be held accountable and that control systems would be introduced that ensure fraud like this won’t happen again.”
According to the Ugandan state auditor that exposed the fraud, half of the combined 155 million kroner that Denmark, Norway, Ireland and the UK gave to the Ugandan government was illegally transferred to the personal bank accounts of government officials – Denmark contributed 10 million kroner of the total.
The stolen aid was given for development efforts in the war-torn and poor region in northern Uganda, home of the notorious warlord Joseph Kony, who enlisted thousands of children to fight for his rebel army.
Ugandan MPs have strongly condemned the fraud and have demanded that the permanent secretary of the Office of the Prime Minister (OPM), Pius Bigirimana, should fired and charged.
According to the Ugandan daily New Vision action has already been taken after the PMO’s principal accountant, Godfrey Kazinda (left), was arrested and questioned after the state auditor accused him of signing off 35 million kroner of fraudulent money transfers.
The final report by the state auditor into the aid scandal detailed how the money was systematically stolen from the fund for northern Uganda and demonstrated to the development minister how strong Uganda’s institutions were becoming.
”Denmark has supported the development of the state accountant that has appeared stronger than ever,” Bach said. “The case clearly demonstrates that building up transparent systems takes time but it is the way forward for preventing fraud and ensuring that Danish aid money is used as effectively as possible in the poorest developing nations.”
After meetings with the international donors, Ugandan PM Amama Mbabazi expressed his regret over the scandal.
“As a country and Government, we are sorry it happened. It was obviously a criminal act. The theft was massive,” Mbabazi told New Vision.“ Ugandans are as angry as the citizens of the development partners.”
Felix Okot Ogong, the head of the North Parliamentary Forum, which is based in the region where the stolen money was intended, has called for the officials to be punished, but urged international donors not to withdraw their aid.
“The north has suffered for a long time from war and it needs to catch up with the pace of development of other parts of the country,” Ogong said according to New Vision.
Bach has only suspended aid given directly to the Ugandan government. Private organisations and charities operating in Uganda can still expect their funding.
UK cuts aid as government backs Bigirimana
http://www.monitor.co.ug/News/National/UK+cuts+aid+as+government+backs+Bigirimana/-/688334/1608656/-/xdd34g/-/index.html
By YASIIN MUGERWA
Posted Thursday, November 1 2012 at 02:00
In Summary
The British government yesterday confirmed it has frozen Shs16.6 billion in development aid to the Office of the Prime Minister over the theft accusations that have rocked the department on a day State House jumped to the defence of embattled Permanent Secretary Pius Bigirimana.
The decision by Britain is the latest indication of a fallout with the OPM after billions of shillings in international aid meant for the reconstruction and post-conflict recovery efforts in northern Uganda and Karamoja sub-region were stolen by government officials.
But commenting on why Mr Bigirimana remains in office even after the Auditor General implicated him and yet Mr Jimmy Lwamafa, the former Permanent Secretary Ministry of Public Service, was interdicted over ghost pensioners, the President’s spokesman said: “Not every person is hanged by the hangman.”
Referring to President Museveni as a “medical doctor” trying to give the kiss of life to two dying patients, Mr Tamale Mirundi said when one of the patients finally dies; “it doesn’t mean that the remaining sick person is killed”.
Two cases
He said that the two cases of Lwamafa, who has not been convicted of any crime although he was quickly suspended, and Bigirimana, were totally different and that their fate should not be confused with double standards in government.
“Let those who want Bigirimana to leave office come with facts instead of comparing the two. In doing so, they will be talking sense,” Mr Mirundi said. “There is a big difference between accusations, allegations and facts. You cannot say, because one Permanent Secretary was convicted, the rest should also be convicted without evidence.”
According to Mr Mirundi who described legislators pushing Mr Bigirimana’s exit as “spectators” in the fight against corruption, if courts of law find Mr Bigirimana guilty and conclude that he should be arrested over theft, the President will not be seen defending him.
“Sometimes personal vendetta affects the brain, these MPs are mere conductors in the fight against corruption, and the President is the driver. The problems in the Office of the Prime Minister were not identified by the donors, it was President Museveni,” Mr Mirundi said.
Mr Mirundi observed that “when a mother identifies that her daughter is pregnant and the doctor confirms the pregnancy, who takes the credit?” He said that the donor community was reacting to a problem the President identified and that “there are also scandals in Europe”.
The British government joins the Irish government in suspending aid to OPM, citing corruption. Last week Ireland suspended direct aid to Ugandans, and launched an immediate investigation, after the Auditor General’s report found that up to €4 million in aid had been misappropriated.
Mr Mbabazi has publicly apologised to Ireland and the people of Uganda and promised a cleanup. However, the premier was quick to defend Mr Bigirimana on claims that there was no evidence implicating him and that it was him who invited the police to investigate the financial impropriety at OPM.
While no British money was taken in the scam, Daily Mail, a London-based newspaper reported that Britain had suspended £4million in aid to Uganda as “a precautionary measure” but that most of the £98 million to Uganda (budget support) this year will continue.
Funds frozen
Yesterday, a British Department for International Development spokesperson said: “We take these allegations extremely seriously and have already suspended UK aid to the Office of the Ugandan Prime Minister. We have set up an independent audit to investigate alleged fraud.”
A special audit carried out by the Auditor General found substantial evidence detailing how aid from Ireland, Norway, Sweden and Denmark was transferred to unauthorised accounts in a sophisticated scam which resulted in the theft of at least Shs50 billion.
Auditor General names gov't money swindlers
Monday, 29 October 2012 05:40 By Peter Nyanzi
Racket involves
officials in Bank of Uganda, Ministry of Finance, Accountant General’s Office,
Treasury
- AG recommends prosecution, recovery of billions from private companies, Centenary Bank, district officials, army veterans and other individuals
- Probe could lead to wide ranging reforms in how ministries manage public funds
- Government awaits donor response after abuses
On December 1, 2011,
Shs 14.8 billion was disguised as a salary payment and illegally transferred by
Electronic Funds Transfer (EFT) from the Treasury in the Ministry of Finance
Planning and Economic Development to the Central Bank.
The fraudulent action
had the risk of being discovered with disastrous consequences for those
involved unless there was a well-executed cover up. To that effect, an e-mail
was sent from the Ministry of Finance to the Treasury indicating that the Irish
Government had given Uganda
a grant of the said Shs 14.8 billion as support to the Karamoja region.
The dubious email sent
to Bank of Uganda together with a Security Paper were signed off by a
commissioner and the Accountant General’s Office.
Under normal procedure,
the Central Bank is required to cross-check the document with the Finance
ministry. In this case, however, in blatant abuse of controls, the BoU
officer who prepared the security brief in the Treasury also reconciles the
transaction as a genuine payment, and files it.
This might read like an
extract from the latest Nigerian movie but it’s actually an extract from the
Special Report into the probe in the fraud in the Office of the Prime Minister
(OPM).
Prepared by the Auditor
General, the document remains top secret. However, when it goes to the
Parliamentary Accounts Community (PAC) as required by law, sparks are bound to
fly.
The damning report, a
copy of which The Independent has seen, appears to be a hard slap in the face
of those who are calling for more stringent systems and better laws to contain
graft in public office.
It shows that the fraud
in OPM, where monies far above the Shs 15 billion so far talked about are
feared to have been swindled in a racket allegedly centering on the interdicted
former Principal Accountant, Godfrey Kazinda, was not because of lack of
systems.
Instead, the report
shows that the swindlers acted in blatant abuse of the existing systems and
controls through a mafia-like ring involving the officials who are supposed to
ensure that the checks and controls work properly. The audit report documents
incredible collusion between officers who are supposed to safeguard public
funds to stuff their own pockets.
The key players
identified in the report are Godfrey Kazinda, the former Principal Accountant
in the OPM, top officials in the Ministry of Finance and incredibly the
otherwise venerable Bank of Uganda.
For example, on January
30, 2012, exactly two months after the Shs 14.8 billion was swindled, the mafia
fraudulently transferred another Shs 5.2 billion.
The Auditor General’s
report shows that another Shs 5.3 billion deal was attempted but failed.
PRDP money
All the stolen money
was from the multi-million dollar Peace, Recovery and Development Programme
(PRDP), which aimed at resettling formerly displaced people in Northern Uganda.
To facilitate the
swindle, it was fraudulently transferred to the account of Crisis Management in
Karamoja, which had been dormant for two financial years. It was then wiped
clean using forged signatures of the permanent secretary and without the
authorisation of the Accountant General.
The Shs 20 billion
cited is a lot of money in any currency. For example, the government recently
released just Shs 6.5 billion to the Ministry of Health to kick-start the
recruitment of more than 6,000 health workers in health centres III, IV and V
countrywide. That means Shs 20 billion could pay the salaries of 2,500 new
health workers in northern Uganda
for five years.
The fraudsters knew
that all money from donors, technically called Budget Support Accounts, can
only be transferred by way of signed security papers and not by EFT and
requires authorisation by the Accountant General.
In addition, they knew
that all transfers from the Budget Support Accounts must go only to the
Consolidated Fund. To go around those huge roadblocks and transfer the loot
from the safely guarded Budget Support to a dormant account, they knew that
they needed teamwork – like hungry wolves - to bring down the huge buffalo.
Consequently, the fraud
was originated from Treasury and was sent from a Uganda Computer Services
computer whose password is known to two officers only; Wilbert Okello and Tony
Yawe.
To complete the
transaction, access to the Finance server in BoU was required to send the two
EFTs. The password to the computer was traced back to Wilbert Okello.
The next step was
covering up their trail. To do this, an email was sent from David Mugisha, an
official in the Macro Economics Department in the MoFPED to Bright Atwine of
the Treasury Services Department (TSD).
The email “confirmed”
that a Shs14.8 billion grant had been sent by the Irish Government for crisis
management in Karamoja Project.
Atwine then prepared a
Security Paper, which was signed by the Commissioner TSD and the Accountant
General, of course with Mugisha’s e-mail acting as the basis for their
signatures.
According to the
Auditor General’s report, the development partners told the auditors that all
their funds released for the PRDP were by budget support and not project
support. Ironically, this arrangement was agreed as a measure to reduce
corruption, which was rampant under project support.
Sources close to the
ongoing-probe have told The Independent that while the Auditor General has seen
enough fraud in public expenditure over the years, this particular fraud was so
outlandish that it has left the whole Office of the Auditor General reeling in
shock because of its enormity and the level of collusion at the highest levels.
BoU collusion
The report notes that
there were “internal control weaknesses” on the part of Treasury that could
have led to lapses in the processing systems. For example, there is rampant use
of ‘generic passwords’ for sensitive roles, which the AG says makes it
difficult to assign responsibility for an action. To make matters even worse,
there are no cameras in the server room, which would have helped to identify
users at a specific time.
Indirectly, this means
it might be difficult to pin down one individual as the one responsible for the
loss.
Also, there is minimal
supervision in regard to bank reconciliation, which leaves the system open to
irregularities that take too long to detect.
But most importantly,
the AG identified weaknesses at the Central Bank, which made the fraud
possible. For example, the Deputy Director is supposed to confirm all
payments in excess of Shs 20 million by calling at least one of the
signatories. It was noted, however, that in the period under review, 61
non-cash payments totaling about Shs 11 billion were not confirmed with the
signatories.
Even more interesting
is the fact that where confirmation was done, most of the confirmations were
with the Principal Accountant (Kazinda) yet the Accounting Officer, Permanent
Secretary Pius Bigirimana, is the principal signatory.
The audit revealed that
121 payment instruments totaling to more than Shs 13 billion appeared to have
forged signatures of the PS and Under Secretary. However, for all
the instruments with suspicious signatures, it was Kazinda who was called by
the BoU for confirmation. The instruments were subsequently approved by Milton
Opio, the deputy director banking.
“In some instances, the
difference in signature was so apparent that the staff of the bank would have
had to confirm with the signatory whose signature differed before effecting
payment. However, this was not done and confirmations were made with the one
whose signature appeared authentic,” the report notes.
“Under the
circumstances, it can be concluded that negligence on part of the Bank is
apparent and collusion with OPM staff cannot be ruled out. The responsible
officers both in BOU and OPM should be held accountable.”
BoU is also faulted for
allowing five dormant accounts to exist illegally, two of which had been used
for the fraudulent activities.
Phony suppliers
In the report, a review
of 23 companies that supplied food for disaster stricken communities shows that
they were overpaid by Shs 8.6 billion.
In addition, the
registration papers of a number of them were questionable and irregular.
The audit appears to put the former Principal Accountant, Kazinda, who is
already on remand at Luzira Prisons, into hotter water.
Further scrutiny showed
that while the PS had the responsibility of approving invoices, this was
irregularly assigned to Kazinda by one of the database administrators, Chris
Lubega, on Feb.1, 2011. Subsequently, a total of Shs 16.2 billion was approved
by the Principal Accountant and paid to various individuals and organisations.
Also, an audit of
payments over two years revealed that Shs 34.6 billion was transferred to
personal accounts of OPM staff for undertaking Ministry activities without
following the regulations.
It was noted that
transfers onto personal accounts was authorised by the Accounting officer, Pius
Bigirimana, vide an internal memo to the Principal Accountant dated May 21,
2010. However, not even one accountability document was available. For
more than half of this money, there was no evidence that it had been accounted
for.
In one shocking
finding, Shs 3 billion was advanced to the personal accounts of two cashiers –
Boniface Obbo and Isaiah Oonyu, yet they are not officers who are mandated to
carry out field activities.
Shocking deals
In another bizarre
finding, Shs 767 million was purportedly remitted to personal accounts “in
error” and therefore was recalled by accounts. The recipients reportedly
withdrew the funds from their accounts and refunded it to accounts staff in
cash but the proof is nowhere to be seen.
The probe has also
sucked in Centenary Bank, which received Shs 1.7 billion disguised as “Kasiimo
for Luweero Veterans” (Funds for Luweero war veterans). But the auditors failed
to get a bank statement to establish the beneficiaries of the money.
Another Shs 8bn was
paid to 23 companies to supply food. It was noted that there was a particular
individual who was a shareholder and director in four of the companies that
supplied food, namely; MJZ Enterprises Ltd (1999), Mbalaba Enterprises Ltd
(2007) Bimala Enterprises Ltd (1999) and ASB Enterprises (1999). Some of
the above companies have no registered addresses with the registrar of
Companies. These include Maliaka, MJZ, Katikamu, Mbalaba, Bimala, Kapitol,
Rural Enterprises and Khadali.
The level of fraud
involving fuel was also mind-boggling. For instance, Shs 6.85 billion was paid
to New Caltex Ntinda in two years. However, according to the manager’s
admission, on a numbers of occasions the money would be withdrawn in lump sum
by the OPM officials as soon as it was deposited on the station’s account.
AG recommends
The recommendation of
the AG on this issue is unequivocal.
“Investigations should
be extended to the private companies, staff personal accounts, districts and
banks, with a view of recovering the funds and prosecuting staff involved,” the
report recommends.
Ugandans should
therefore brace for an unprecedented investigation by the Parliamentary Accounts
Committee and other anti-corruption bodies. The number of officials - and
not just in the OPM - who could face the Anti-Corruption Court over this scam is
not easy to estimate.
The Independent has
learned from sources close to the audit but preferred anonymity that the
Auditor General held an exit meeting with the various offices involved to chart
a way forward.
At the meeting, there
was consensus that those found responsible should not only be punished but
every attempt should be made to recover the money. Also, it was agreed
that the OPM scam was just an eye-opener and a mirror of what could be going on
in other ministries, according to the source. “How it would be handled could
lead to a far-reaching examination and overhaul of the current financial
management system, which is obviously too prone to abuse by the various
offices,” the source said.
While appearing before
the Presidential Affairs Committee, Bigirimana, who first raised the red flag
on Kazinda, said Kazinda’s multibillion mansion in Bukoto was “a factory of
forged documents” including blank withdraw forms with the PS’s signature
already appended on them.
However, the Auditor
General also had few kind words for Bigirimana who he accused of “failure to
secure the accounting documents of the OPM” and failing to execute his
responsibility properly.
The OPM is heavily
funded by donors who include the government of Norway,
Netherlands, Ireland,
European Union, USAID among others. Sources said the government was desperate
to see how they would react to this latest scam. This is because some of
the donors have in the past cut funding to the country in response to blatant
corruption.
Graft in Uganda
continues to be a key concern as it said to undermine good governance,
socio-economic development and service delivery. Not only does it increase the
cost of public service delivery and implementation of public projects, but it
also has the potential to lead to political instability. It was because of
these concerns that a stringent legal framework to fight the vice was
formulated.
On paper, Uganda
is said to have some of the best laws and policies to fight corruption. The
public finance controls and procedures were revised in 2003 to make them
“foolproof.” The problem though, according to corruption watchdogs, is on the
implementation. Ugandans will therefore find it absolutely disgusting that
officials in the various institutions such as Accountant General, BoU and
ministries continue to conspire to beat the systems and controls in place to
steal public funds at the expense of millions of poor people.
Apart from Kazinda, who
is on remand at Luzira, forensic police led by CID Director Grace Akullo have
swooped on the OPM and interrogated various officers.
Others lined up for
questioning are Sansa Mugenyi, the commissioner for policy implementation and
coordination, Vincent Waboya, the principal disaster preparedness officer for
northern Uganda, Abdul Muwanika, the principal economist for monitoring and
evaluation, Johnson Owaro, the technical adviser on agricultural matters for
Karamoja Region, and Raphael Lubega, the Assistant Secretary in the department
of Pacification and Development. Others are Cyprian Dhikusoka, the
disaster management officer, Benon Kigenyi, the principal Assistant Secretary
for Northern Uganda, and Richard Owiny, a
senior personal assistant.
