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Debts killing Museveni’s govt

By Haggai Matsiko

Auditor General warns on billions spent in courts, President’s Office, State House

The Anti-Corruption Court in Kampala was on April 13, the scene of ecstatic congratulatory hugs, dancing, and Jubilation. The court had just dismissed a major case involving the alleged swindling of Shs169 billion from the pensions accounts of the Ministry of Public Service in 2011. The money was paid to over 1000 fictitious pensioners. The trial started in 2013, but according to the presiding Chief Magistrate, the case was dismissed because the State had in the last two years failed to bring even a single witness to testify against the nine suspects.

The accused included former top Public Service Ministry officials, including then-permanent secretary Jimmy Lwamafa, former principal accountant Christopher Obey, and former senior accounts assistant, David Japins Oloka.

Earlier in February, then-Attorney General Peter Nyombi had advised the Director of Public Prosecution (DPP) to drop charges in a related case against Cairo International Bank which handled the pension funds. Nyombi said police had botched the investigations into the case. Police in 2012 had arrested six Cairo International Bank’s bosses.

Meanwhile, on April 10, the Supreme Court in Kampala awarded Goodman Agencies Ltd a hefty Shs21 billion (Approx.US$7 million) as compensation for 10 trucks it lost when they were confiscated by government security agencies. The award was criticised as excessive and has been compared to the Shs12.9 billion awarded to Severino Twinobusingye in 2012 in a case he pursued related to former Prime Minister Amama Mbabazi.

To reap the rewards from Uganda’s court system, one has to be patient.

The Goodman Agencies case was lodged in 1996 and it was first awarded Shs14.4 billion in a consent judgement in 2005. Since then, an appeal was lodged and over the period, award sum has attracted Shs6.6 billion in interest at 24% per year.

In Severino’s case, he has now waited three years without seeing a penny of the award.

The pension scandal was high up in last year’s Auditor General’s report which showed that up to Shs 1.6 trillion or about 20 percent of all the money spent by various government departments in the 2011/12 Financial Year was either stolen, misused, or not properly accounted for.

Just two weeks before the Anti-Corruption Court ruling, on March 31, the AG John Muwanga had tabled before parliament his latest report which highlighted similar cases from 2014. Muwanga’s team audited 1,452 huge and small government entities and projects all over the country. It points out that cases like this have left the Ministry of Justice holding a huge sum of Shs4.3 trillion in contingent liabilities in cases before the courts. The sum swelled by 95% from Shs2.2 trillion in 2012.

High levels of borrowing

The AG report also points at unprecedented high levels of debt by government departments including State House Shs530 billion, President’s Office Shs11.1 billion, Ministry of Foreign Affairs Shs32.3 billion, Ministry of Justice Shs442.1 billion, Ministry of Works Shs137.1 billion, the Electoral Commission Shs8.1 billion, KCCA Shs9.8 billion, Uganda Police Shs46.7 billion, and Uganda Prisons Shs46.5 billion. That is about Shs1.3 trillion in debt.

The same report points out that the Ministry of Justice has an outstanding sum of Shs164 billion in unsettled court rewards and compensation. Ironically, the government had allocated only Shs13 billion towards these areas. As a result, the AG notes, the interest on the sum owed has risen to Shs60 billion. Pension liability arrears have also increased by Shs81 billion.

Meanwhile, as some government departments wallow in debt, others appear unable to spend money allocated to them. Up to Shs217 billion could not be absorbed by government projects and Shs 9.4 billion was returned to the consolidated fund. AG Muwanga told MPs that failure to spend and returning money “indicates partial service delivery”. Most affected sectors include; Roads, Agro-processing, Household Income Improvement, Health, and Education.

The AG report also reveals that as a result of the mandatory validation and biometric data capture exercise for government employees, 8,589 employees have not been accounted for but remain on payroll and are paid Shs4.56 billion per month, which is a staggering Shs54 billion per year. In other words, there is a possibility these employees do not exist but this money is swindled by officials.

Unfortunately, as the AG notes, the government entities and officials who are responsible for resolving such issues do not seem concerned. In fact, it appears some of them benefit from the government losses. The AG report also noted that due to poor facilitation, the directorate of government analytical laboratories had responded to only 52.5% of court summons and resolved only 35% of cases assigned.

On April 21, just days after the Pensions case was lost, the Minister of Justice Kahinda Otafiire appeared before the Legal and Parliamentary Affairs Committee of Parliament together with the Solicitor General, Francis Atoke, and the Director of Civil Litigation, Cheborion Barishaki and MPs confronted them about the lost cases, swelling debts and unpaid arrears.

Barishaki was blunt. He told MPs that government would continue to lose more cases if more money is not allocated to his office. He said by April, the government had 6000 cases in the courts but had allocated only Shs1.9 billion for handling them. That is an average of Shs35,000 (the equivalent of the price of two reams of printing paper) for each case. Barishaki said at least Shs2 million is needed to handle each case. That would amount to Shs120 billion.

Talk without action

The government is unlikely to give the Ministry of Justice this money because it acts like it has figured out an ingenious way to deal with corruption and government inefficiency like that exposed by the AG report. It allows the rot to be exposed, cases to go to court, and lets everyone talk about it; from the media, to parliament, donors, and civil society.

However, although one corruption scandal follows on the heels of another: from money stolen from vaccine and Aids funds in 2005 and 2006 to the embezzlement of US$13-million of aid in 2012, accused officials are seldom prosecuted. Those that appear before court are usually acquitted.

This point is made in an April 7 essay by Karen Hasse, the editor of Good Governance Africa which tracks such signs of public mismanagement in Africa.

Hasse points at Uganda’s ranking on the global Open Budget Index where Uganda performs quite well. The OBI index tracks eight documents that governments should publish, ranging from a proposed budget to an audit, and scrutinises the quality of these reports.

Hasse points out how the Ministry of Finance has set up a budget website, where anyone can access historical documents, track government spending — even at the local level — and provide feedback. The finance ministry also launched a free budget hotline providing information in six languages.

“Despite these advances, Uganda still scores 26 on the 2014 corruption index, only seven points ahead of Equatorial Guinea,” she says.

Part of the problem appears to be due to the failure by the Ministry of Finance, which authorises all government spending, to play its oversight role.

Under the current accountability procedures, the Ministry of Finance is supposed to prepare what is called a `Treasury Memoranda’. This document shows what action the government has taken on Parliament’s recommendations arising from the Auditor General’s reports. Unfortunately, the last time that the Ministry of Finance presented a Treasury Memoranda to parliament was in 2012.

In its defense, the Ministry of Finance blames parliament.

The Finance Ministry can only take action on the auditor general’s reports after they have been scrutinized and approved by parliament, says Jim Mugunga, the Finance Ministry spokesman.

Once the office of the Auditor General submits their reports before parliament, Mugunga told The Independent, the reports should be scrutinised by the respective committees in parliament, which also add their input in terms of recommendations and compile reports that must be approved by the entire parliament.

Under the procedures, they are then sent to Ministry of Finance which, in liaison with other government departments, pursues action on them and prepares the Treasury Memoranda detailing what actions the government has taken.

But often, says Mugunga, parliament delays to submit their reports and as a result, the Treasury Memoranda has also delayed.

An official at the Finance Ministry, who declined to be quoted because he is not the official spokesperson of the ministry told The Independent that over the last 10 years alone, parliament has received over 30 audit reports from the auditor general but has conclusively dealt with only about ten of these.

That is why the Accountant General in the Finance Ministry, Lawrence Ssemakula, in mid-2014 wrote to parliament expressing frustrations over the delays to submit its report on the AG’s report.

“The delay to complete reports in accountability committees and the absence of approval of the said reports by Parliament affects timely preparation of Treasury Memoranda,” his July 2014 letter reads.

Mugunga, however, told The Independent that given Speaker Rebecca Kadaga’s recent directives for committees to work faster, there is hope that the AG’s reports will be dealt with much faster.

“The Treasury Memoranda cannot be prepared without parliament’s report,” Mugunga said.

Accountability committees of Parliament like the Local Government Accounts Committee, the committee on Commissions, Statutory Authorities and State Enterprises (COSASE) and the Public Accounts Committee (PAC) are the ones that scrutinise the AG reports and recommend action, including censure of the offending official.

Parliament incompetence

As he received the latest AG report, the Deputy Speaker of Parliament, Jacob Oulanya, also hinted on how the issue of backlog has haunted the AG’s reports.

Kyadondo East MP, Ibrahim Nganda Ssemujju heads the committee on Commissions, Statutory Authorities and State Enterprises (COSASE) which has to deal with backlog. He says problems start with committees wanting to produce reports on each and every entity.

“When will you finish the over 70 entities if you are producing a single report on each one of them?”

Kenya’s equivalent of COSASE, Ssemuju says, submits only one annual report.

That is why the Kyadondo East legislator decided to borrow a leaf and change tack.

COSASE, which deals with commissions, statutory authorities and corporations like Bank of Uganda (BoU), Uganda Revenue Authority (URA), Uganda Investment Authority, Electricity Regulatory Authority, among others, had a lot of backlog to deal with.

Previously, it was headed MP Reagan Okumu (Aswa County) and Ssemujju says since he took office at the end of January 2014, COSASE has submitted two reports; one on three Health Councils and another on the Uganda Coffee Development Authority (UCDA). He says that his committee has also completed another report on 28 entities, which is ready to be tabled before parliament.

Whenever a report is approved and submitted by parliament, the Finance Ministry is expected to prepare the Treasury Memoranda showing the actions taken by government.

But Ssemujju says ever since he joined parliament in 2011, he has never seen any Treasury Memoranda.

“So while you can blame MPs for delaying to finish the reports,” Ssemujju says, “It is clear even the Ministry of Finance officials are to blame because they have not tabled Treasury Memoranda for the submitted reports.”

In some cases, the backlog on entities like the National Medical Stores (NMS), dates back six years and Bank of Uganda (BoU) five years.

Ssemujju says the problem with old reports is that the people who should be held accountable for certain cases are no longer available and the evidence has long been tampered with or covered up completely.

“In one of the cases, for instance, we found that the person responsible had died long time ago and others had left the country,” Ssemujju revealed.

To address these issues, Ssemujju said, we must work differently.

“That is why I am trying to work on the backlog as I work on the new reports,” he said, “the AG must also change the way he reports to parliament.”

Ssemujju says the AG’s office, which is better equipped and skilled, has resources to hire private firms must investigate the entities thoroughly and make it easy for the committees with less experienced and unskilled legislators to quickly go through the reports without having to carry out fresh investigations on the same issues.

Paul Mwiru, the Vice chairman of the PAC told The Independent that his committee always compiles its reports with recommendations which are adopted by parliament. Mwiru says the question of why the executive does not act on them is not for the committees to answer.

Mwiru blames Ugandans for the failed accountability.

“How do Ugandans go to polls and vote for a government which the auditor general has exposed year after year as not accountable,” he asked, “which we have exposed as unaccountable, which never takes any action about the issues we keep raising?”

He also has an answer to that question.

“Politics is skewed,” he told The Independent, “votes are bought, and that is why accountability becomes elusive.”

Auditor General warns on billions spent in courts, President’s Office, State House

The Anti-Corruption Court in Kampala was on April 13, the scene of ecstatic congratulatory hugs, dancing, and Jubilation. The court had just dismissed a major case involving the alleged swindling of Shs169 billion from the pensions accounts of the Ministry of Public Service in 2011. The money was paid to over 1000 fictitious pensioners. The trial started in 2013, but according to the presiding Chief Magistrate, the case was dismissed because the State had in the last two years failed to bring even a single witness to testify against the nine suspects.

The accused included former top Public Service Ministry officials, including then-permanent secretary Jimmy Lwamafa, former principal accountant Christopher Obey, and former senior accounts assistant, David Japins Oloka.

Earlier in February, then-Attorney General Peter Nyombi had advised the Director of Public Prosecution (DPP) to drop charges in a related case against Cairo International Bank which handled the pension funds. Nyombi said police had botched the investigations into the case. Police in 2012 had arrested six Cairo International Bank’s bosses.

Meanwhile, on April 10, the Supreme Court in Kampala awarded Goodman Agencies Ltd a hefty Shs21 billion (Approx.US$7 million) as compensation for 10 trucks it lost when they were confiscated by government security agencies. The award was criticised as excessive and has been compared to the Shs12.9 billion awarded to Severino Twinobusingye in 2012 in a case he pursued related to former Prime Minister Amama Mbabazi.

To reap the rewards from Uganda’s court system, one has to be patient.

The Goodman Agencies case was lodged in 1996 and it was first awarded Shs14.4 billion in a consent judgement in 2005. Since then, an appeal was lodged and over the period, award sum has attracted Shs6.6 billion in interest at 24% per year.

In Severino’s case, he has now waited three years without seeing a penny of the award.

The pension scandal was high up in last year’s Auditor General’sreport which showed that up to Shs 1.6 trillion or about 20 percent of all the money spent by various government departments in the 2011/12 Financial Year was either stolen, misused, or not properly accounted for.

Just two weeks before the Anti-Corruption Court ruling, on March 31, the AG John Muwanga had tabled before parliament his latest report which highlighted similar cases from 2014. Muwanga’s team audited 1,452 huge and small government entities and projects all over the country. It points out that cases like this have left the Ministry of Justice holding a huge sum of Shs4.3 trillion in contingent liabilities in cases before the courts. The sum swelled by 95% from Shs2.2 trillion in 2012.

High levels of borrowing

The AG report also points at unprecedented high levels of debt by government departments including State House Shs530 billion, President’s Office Shs11.1 billion, Ministry of Foreign Affairs Shs32.3 billion, Ministry of Justice Shs442.1 billion, Ministry of Works Shs137.1 billion, the Electoral Commission Shs8.1 billion, KCCA Shs9.8 billion, Uganda Police Shs46.7 billion, and Uganda Prisons Shs46.5 billion. That is about Shs1.3 trillion in debt.

The same report points out that the Ministry of Justice has an outstanding sum of Shs164 billion in unsettled court rewards and compensation. Ironically, the government had allocated only Shs13 billion towards these areas. As a result, the AG notes, the interest on the sum owed has risen to Shs60 billion. Pension liability arrears have also increased by Shs81 billion.

Meanwhile, as some government departments wallow in debt, others appear unable to spend money allocated to them. Up to Shs217 billion could not be absorbed by government projects and Shs 9.4 billion was returned to the consolidated fund. AG Muwanga told MPs that failure to spend and returning money “indicates partial service delivery”. Most affected sectors include; Roads, Agro-processing, Household Income Improvement, Health, and Education.

The AG report also reveals that as a result of the mandatory validation and biometric data capture exercise for government employees, 8,589 employees have not been accounted for but remain on payroll and are paid Shs4.56 billion per month, which is a staggering Shs54 billion per year. In other words, there is a possibility these employees do not exist but this money is swindled by officials.

Unfortunately, as the AG notes, the government entities and officials who are responsible for resolving such issues do not seem concerned. In fact, it appears some of them benefit from the government losses. The AG report also noted that due to poor facilitation, the directorate of government analytical laboratories had responded to only 52.5% of court summons and resolved only 35% of cases assigned.

On April 21, just days after the Pensions case was lost, the Minister of Justice Kahinda Otafiire appeared before the Legal and Parliamentary Affairs Committee of Parliament together with the Solicitor General, Francis Atoke, and the Director of Civil Litigation, Cheborion Barishakiand MPs confronted them about the lost cases, swelling debts and unpaid arrears.

Barishaki was blunt. He told MPs that government would continue to lose more cases if more money is not allocated to his office. He said by April, the government had 6000 cases in the courts but had allocated only Shs1.9 billion for handling them. That is an average of Shs35,000 (the equivalent of the price of two reams of printing paper) for each case. Barishaki said at least Shs2 million is needed to handle each case. That would amount to Shs120 billion.

Talk without action

The government is unlikely to give the Ministry of Justice this money because it acts like it has figured out an ingenious way to deal with corruption and government inefficiency like that exposed by the AG report. It allows the rot to be exposed, cases to go to court, and lets everyone talk about it; from the media, to parliament, donors, and civil society.

However, although one corruption scandal follows on the heels of another: from money stolen from vaccine and Aids funds in 2005 and 2006 to the embezzlement of US$13-million of aid in 2012, accused officials are seldom prosecuted. Those that appear before court are usually acquitted.

This point is made in an April 7 essay by Karen Hasse, the editor of Good Governance Africa which tracks such signs of public mismanagement in Africa.

Hasse points at Uganda’s ranking on the global Open Budget Index where Uganda performs quite well. The OBI index tracks eight documents that governments should publish, ranging from a proposed budget to an audit, and scrutinises the quality of these reports.

Hasse points out how the Ministry of Finance has set up a budget website, where anyone can access historical documents, track government spending — even at the local level — and provide feedback. The finance ministry also launched a free budget hotline providing information in six languages.

“Despite these advances, Uganda still scores 26 on the 2014 corruption index, only seven points ahead of Equatorial Guinea,” she says.

Part of the problem appears to be due to the failure by the Ministry of Finance, which authorises all government spending, to play its oversight role.

Under the current accountability procedures, the Ministry of Finance is supposed to prepare what is called a `Treasury Memoranda’. This document shows what action the government has taken on Parliament’s recommendations arising from the Auditor General’s reports. Unfortunately, the last time that the Ministry of Finance presented a Treasury Memoranda to parliament was in 2012.

In its defense, the Ministry of Finance blames parliament.

The Finance Ministry can only take action on the auditor general’s reports after they have been scrutinized and approved by parliament, says Jim Mugunga, the Finance Ministry spokesman.

Once the office of the Auditor General submits their reports before parliament, Mugunga told The Independent, the reports should be scrutinised by the respective committees in parliament, which also add their input in terms of recommendations and compile reports that must be approved by the entire parliament.

Under the procedures, they are then sent to Ministry of Finance which, in liaison with other government departments, pursues action on them and prepares the Treasury Memoranda detailing what actions the government has taken.

But often, says Mugunga, parliament delays to submit their reports and as a result, the Treasury Memoranda has also delayed.

An official at the Finance Ministry, who declined to be quoted because he is not the official spokesperson of the ministry told The Independent that over the last 10 years alone, parliament has received over 30 audit reports from the auditor general but has conclusively dealt with only about ten of these.

That is why the Accountant General in the Finance Ministry, Lawrence Ssemakula, in mid-2014 wrote to parliament expressing frustrations over the delays to submit its report on the AG’s report.

“The delay to complete reports in accountability committees and the absence of approval of the said reports by Parliament affects timely preparation of Treasury Memoranda,” his July 2014 letter reads.

Mugunga, however, told The Independent that given Speaker Rebecca Kadaga’s recent directives for committees to work faster, there is hope that the AG’s reports will be dealt with much faster.

“The Treasury Memoranda cannot be prepared without parliament’s report,” Mugunga said.

Accountability committees of Parliament like the Local Government Accounts Committee, the committee on Commissions, Statutory Authorities and State Enterprises (COSASE) and the Public Accounts Committee (PAC) are the ones that scrutinise the AG reports and recommend action, including censure of the offending official.

Parliament incompetence

As he received the latest AG report, the Deputy Speaker of Parliament, Jacob Oulanya, also hinted on how the issue of backlog has haunted the AG’s reports.

Kyadondo East MP, Ibrahim Nganda Ssemujju heads the committee on Commissions, Statutory Authorities and State Enterprises (COSASE) which has to deal with backlog. He says problems start with committees wanting to produce reports on each and every entity.

“When will you finish the over 70 entities if you are producing a single report on each one of them?”

Kenya’s equivalent of COSASE, Ssemuju says, submits only one annual report.

That is why the Kyadondo East legislator decided to borrow a leaf and change tack.

COSASE, which deals with commissions, statutory authorities and corporations like Bank of Uganda (BoU), Uganda Revenue Authority (URA), Uganda Investment Authority, Electricity Regulatory Authority, among others, had a lot of backlog to deal with.

Previously, it was headed MP Reagan Okumu (Aswa County) and Ssemujju says since he took office at the end of January 2014, COSASE has submitted two reports; one on three Health Councils and another on the Uganda Coffee Development Authority (UCDA). He says that his committee has also completed another report on 28 entities, which is ready to be tabled before parliament.

Whenever a report is approved and submitted by parliament, the Finance Ministry is expected to prepare the Treasury Memoranda showing the actions taken by government.

But Ssemujju says ever since he joined parliament in 2011, he has never seen any Treasury Memoranda.

“So while you can blame MPs for delaying to finish the reports,” Ssemujju says, “It is clear even the Ministry of Finance officials are to blame because they have not tabled Treasury Memoranda for the submitted reports.”

In some cases, the backlog on entities like the National Medical Stores (NMS), dates back six years and Bank of Uganda (BoU) five years.

Ssemujju says the problem with old reports is that the people who should be held accountable for certain cases are no longer available and the evidence has long been tampered with or covered up completely.

“In one of the cases, for instance, we found that the person responsible had died long time ago and others had left the country,” Ssemujju revealed.

To address these issues, Ssemujju said, we must work differently.

“That is why I am trying to work on the backlog as I work on the new reports,” he said, “the AG must also change the way he reports to parliament.”

Ssemujju says the AG’s office, which is better equipped and skilled, has resources to hire private firms must investigate the entities thoroughly and make it easy for the committees with less experienced and unskilled legislators to quickly go through the reports without having to carry out fresh investigations on the same issues.

Paul Mwiru, the Vice chairman of the PAC told The Independent that his committee always compiles its reports with recommendations which are adopted by parliament. Mwiru says the question of why the executive does not act on them is not for the committees to answer.

Mwiru blames Ugandans for the failed accountability.

“How do Ugandans go to polls and vote for a government which the auditor general has exposed year after year as not accountable,” he asked, “which we have exposed as unaccountable, which never takes any action about the issues we keep raising?”

He also has an answer to that question.

“Politics is skewed,” he told The Independent, “votes are bought, and that is why accountability becomes elusive.”

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