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Pension theft figure shoots to Shs150bn

By Independent Team

How Godfathers protected main player in the grand theft

On Monday, November 28, 2011, a man identified as Benon Byamukama of Kitovu LC I in Mbarara walked into Cairo International Bank main branch on Plot 30 Kampala Road to open a savings account as a member of the East African Community Beneficiaries Association (EACOBA). He presented a letter of introduction signed by the National Secretary of the association, Peter Ssajjabbi.

According to details on Byamukama’s Account Opening Form, he was born on April 5, 1949 and is currently a farmer. His pension number is 80535. His account number in Cairo Bank is given as 14699/511.

Exactly seven work days later, on Tuesday December 8, 2011, Byamukama’s account received an Electronic Funds Transfer credit of Shs 62,900,190. That same day, the manager of Cairo International Bank received a letter from Byamukama on EACOBA-headed paper asking that his account be closed and all the money on it, Shs 62 million, be transferred to the account of Peter Ssajjabi. The next day, Byamukama signed a receipt confirming he had got Shs 61,460,000 from Cairo Bank. End of story?

Not exactly because something was not right about this transaction and over 1000 others (and many thousands more – we are yet to know) that involved EACOBA National secretary, Ssajjabbi, Cairo Bank, and officials of the ministry of Public Service and the ministry of Finance, Planning and Economic Development in Kampala.

The Independent has 1,016 names of EACOBA members who “received” their pensions from Public Service through Cairo Bank. All of them were introduced to the bank to open savings accounts by Peter Ssajjabbi using one generic letter – only changing the name of the beneficiary. All of them would, upon receipt of money to their account write a generic letter saying:

“This is to request you to effect a direct cash payment accruing out of my final EAC Termination Benefits amount of Uganda Shs…. I am currently unable to maintain a bank account with Cairo International Bank due to the fact that I am presently residing outside Kampala and cannot sustain the cost of regular travel to and from the Bank. By copy of this letter, you are hereby authorized to debit my account no… and pay through Peter Ssajjabbi, the National Secretary EACOBA all amounts accruing from the above transactions less bank charges…”

The first suspicion was first raised when the Assistant Commissioner of Inspection and Internal Audit in the ministry of Finance, Fikison Akonye Okonye and several auditors analysed these transactions early this year and raised several queries. According to information obtained by The Independent, on March 12, 2012, Okonye wrote to the Permanent Secretary Ministry of Public Service, Jimmy Lwamafa, that there were ghost pensioners being paid through Cairo Bank.

According to official practice, for a commissioner in the ministry of finance to write to a PS in another ministry raising audit queries, the letter needs to be copied to the Permanent secretary/Secretary to the Treasury, the deputy, and the Accountant General. It was not. Worse still, there is no evidence that Lwamafa replied Okonye’s letter. In fact, there is no evidence that Okonye did anything about the ghost pensioners.

The question now is why did Okonye not follow through on this letter? There are many speculations. Had he been sidelined from the loot and used this letter to threaten officials in public service to include him and when they did so he went silent? It is difficult to say. However, The Independent’s investigations and exposure of this anomaly to CID was the reason police arrested Okonye last week.

But returning to the payments at Cairo Bank, a number of questions became apparent. Why would someone open an account, receive millions of shillings from the ministry of Public Service on it, and immediately terminate the account? It would be understandable if this was a one off, a two off or even a three off. But when it involved over 1,000 beneficiaries all giving their money to one person, totaling Shs 63 billion, then there surely must be a problem.

Why did all the beneficiaries open accounts in Cairo Bank? Why did they all give the same reason for closing the account? Why would a pensioner open an account with a bank that has no branch in their local town? Besides, since the money payable was on average over Shs 60 million, why would a pensioner fail to afford the travel costs? And, finally, why did they all instruct the bank to transfer all the money to one man; Peter Ssajjabbi?

When CID went to work, investigators noticed a pattern and immediately suspected fraud. In all cases, the first page in the transaction was an introduction letter of the beneficiary to the bank by Ssajjabi saying I know this person as a beneficiary of the EAC terminal benefits scheme. Ssajjabi would also issue ID for the beneficiary.

Since all the Account Opening Forms had passport photos and telephone numbers of the beneficiaries, the CID investigators shifted to these and immediately noticed anomalies. Among the pictures used to open accounts is one of Abbass Byakagaba, who is currently an Assistant Inspector of Police in charge of the Oil and Gas Protection Unit. The photos used were forgeries. CID officials new Byakagaba because he is their colleague!

Next the CID investigators decided to call the thousands of telephone numbers one by one. They found that some of the phone numbers were real and others fake. In the case of Benon Byamukama, there were two telephone numbers; 0714614713 and 0772462828. Both do not exist. The Cairo Bank customer called Benon Byamukama is, apparently, a forgery.

Crooked bank

On the Cairo Bank side, CID noticed that the letters were not acknowledged as received by the bank. Secondly, all the thousands of transactions were handled by only one cashier. Why? Surprisingly, the bank was also charging 2% of the amount for each deposit. Why? Ssajjabbi claims there was a meeting of the association which agreed that the bank takes 2% of each deposit plus Shs150,000 for opening special accounts without initial deposit.

It appears, however, that the bank violated every rule in this transaction. For example, the authorization that Ssajjabi spoke about would have required a resolution of the EACOBA association to be attached. There are no minutes of such a meeting or a notarized resolution by the association confirming such a claim. Was Cairo Bank really innocent in ignoring such glaring gaps?

According to documents seen by The Independent, it appears either the bank or its employees also decided to cash in on the scam. On some bank documents, the Electronic Funds Transfer would show money coming in for a specific account, then bank staff would alter the account number using pens and divert it to different accounts.

Initial reports being investigated by the police have focused on Shs 63 billion involved in the dubious transaction from February to October 2011. This figure, however, does not include thefts beginning in 2008 when the ministry of Public service introduced the so-called Pension Management System.

Not paid for years

The Ministry of Public Service handles the pension schemes of the former employees of the defunct East African Community who have not been paid since the 1970s. It also handles the pensions of traditional civil service, teachers, military pensioners, widows, orphans and former employees of the defunct East African Community, and army veterans from past regimes.

Most of them have not been paid a penny for decades because officials of the Public Service ministry deliberately convolute the process to make it difficult if not impossible to claimants to access their benefits. The case at hand now appears to expose some of the ways in which the ministry officials connive to steal worker’s pensions.

As early as 1999, the government put the debt owed to them in pension and gratuity at Shs 27 billion (Approx. US$54 million at the prevailing official exchange rate of Shs510 to the dollar then). Although the government releases money to pay pensions in every budget, the pension arrears component of the budget keeps ballooning and is close to a trillion shillings in the 2012/13 budget.

Last year alone, the government released Shs 63 billion between February and October. Although, there is an association of former EAC employees, the last time they were paid any money is in 2008. The Independent has learnt that the investigators now suspect that up to Shs 150 billion could have been swindled. Between July, August and September, over Shs 10 billion has gone missing.

The man at the centre of this scandal is Christopher Obey, the principal accountant in the ministry of Public Service. Coincidentally, Mr Obey holds exactly the same position as Geoffrey Kazinda, the interdicted principal accountant in the Office of the Prime Minister who is alleged to have swindled over Shs 15 billion.

In The Independent story titled: “Kazinda and his godfathers” (The Independent August 24), we reported that before the scandal, broke, at least two top accounting officials had written to Gustavio Bwoch, the Accountant General who assigns accountants to ministries and government departments, to remove Kazinda from his job because of alleged corruption. In both cases, Kazinda defied them with the support of godfathers.  The same now appears to be the case with Christopher Obey.

Godfather’s protection

Christopher Obey was posted to the Ministry of Public Service in July 1997 and was due for a mandatory rotational transfer under public service guidelines in 2002. However, as early as October 17, 2002, the Accountant General, Gustavio Bwoch, after reportedly receiving complaints of alleged corruption decided to remove Mr Obey from the ministry of Public Service. But the action resulted in a tense telephone exchange between him and PS Lwamafa who opposed the transfer.

Lwamafa wrote a tough note to Bwoch which stated in part that: “The ministry is currently in the process of re-organising and improving the pensions financial management systems. Mr. Obey Christopher is at the core of the implementation process. His immediate removal at this critical stage will disrupt this process.”

But Lwamafa was not alone is trying to block the transfer of Obey. Five days later, the Head of Public Service, John Mitala, backed Lwamafa’s position with another tough note to Bwoch.

“I would like to inform you that what the Permanent Secretary stated in his letter is true and I would like to support his request to you not to transfer away, Mr Christopher Obey at this critical time,” Mitala said in the memo that ended on a tough note: “I would like to remind you that while carrying out any transfers, you should follow the necessary procedures one of which involves consulting the Public Service Commission.”

The Accountant General, Bwoch must have escalated the issue because the Permanent Secretary/secretary to the Treasury, Chris Kassami apparently weighed in on November 15, 2002.

Kassami wrote to Lwamafa: “The shuffle of Accounts staff will remain on course to enhance efficiency in financial management in government at various levels. In regard to your request, I am deferring effective transfer of the officer up to 30th June, 2003 to enable him build capacity for the senior accountant who will be taking over.”

Nothing changed. Nine years later Mr Obey remained at the ministry of Public Service until September 24, 2012 when he was interdicted together with PS Lwamafa, the Commissioner of Pensions, Stephen Kiwanuka-Kunsa, and the Head of I.T, Richard Lubega. In the dock, they joined EACOBA boss, Peter SSajjabbi, who had already been picked by police. They are all out on bail.

The Independent has seen documents which blocked the transfer and enabled him to stay at the same station for more than 15 years contrary to regulations. The documents are signed by all the top guns in the ministry of Public Service including the Second Deputy Prime Minister and Minister of Public Service, Henry Muganwa Kajura.

The Independent has seen letters indicating that another attempt was made to remove Mr Obey from Public Service but it was also blocked by Kajura.

This time, Accountant General Bwoch wrote to Mr Christopher Obey on October 29, 2009 informing him that he had been transferred to the ministry of Gender, Labour and Social development. Mr Obey once again disobeyed and refused to move, causing the Permanent Secretary and secretary to the Treasury, Chris Kassami, to once again, weighed in.

In a memo to Mr Obey through Lwamafa dated December 15, 2009 and titled: “Failure to respond to a posting instruction”, Kassami wrote: “In event of further failure to respond to the posting instruction, payment of your salary will be suspended forthwith and necessary disciplinary action applied in accordance with existing regulations.” Nothing changed.

In fact, Kajura personally drove to the ministry of finance and asked then Minister Syda Bumba to stop Kassami from transferring Obey. According to sources in Finance, Kajura literary quarreled with Bumba until the Finance minister wrote a letter to Kassami asking that Obey’s transfer be stayed.

In the letter Kajura wrote to Kassami’s boss, the Minister of Finance on January 5, 2010, he argued that the ministry of Public service was in the midst of implementing a cabinet directive to reform the Public Service Pension Scheme and bring in a Pension Reform Advisor.

“Mr Obey has been identified to play this key role, following the various training programmes in pension reform and management that he has been exposed to. This is, therefore, to request you to ask the Permanent Secretary/Secretary to the Treasury to cancel the posting instructions.”

It is now unclear what will happen to the ministry of Public service now that Mr Obey, who is such a `critical player’, has been removed. Were all the top guns in the ministry of public service from the deputy prime minister (also minister for public service) to the head of public service, Mitala and the PS, Lwamafa, innocent? What was their motivation for keeping an accountant in the same post for 15 years contrary to established practice?

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