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Posta audit shows billions stolen

By Rukiya Makuma

Ailing parastatal risks losing UN aid

Cash-strapped Posta Uganda is on the verge of losing vital aid from a United Nations agency that helps improve postal services in poor countries because of alleged corruption in the parastatal. Although the money involved, US$ 76,747 (approx. Shs 190 million) is not a lot compared to amounts usually associated with corruption in Posta Uganda, the loss of the UN aid would cut off vital support which was only secured four years after a long struggle.


The aid was given to Posta in 2009 by the Quality of Service Fund (QSF) of the Universal Postal Union, which is the UN body that coordinates the postal service worldwide. It was to expand Private letter boxes at Clock Tower Post office under the QSFUGA0809ATS03 project.

As part of the agreement with QSF, Posta Uganda was supposed to write a report when the project started and include the definitive project schedule, starting and completion date of the project, decisions made on implementing the project, sending pro forma invoices of supplies and original signed requests for the payment of initial installments.

The report was supposed to have been submitted to the QSF team by end of December 2010. However by December 2011, Posta Uganda had not submitted the report.

Posta’s failure to send the report has compelled  QSF, in line with article 40 of the QSF Project Management Manual, to arrive at a decision that there will be  no further QSF project proposals  for Posta Uganda unless the final report of expanding Private letter boxes at Clock Tower Post office is presented to the QSF team.

It is not clear why Posta Uganda, which was last year forced to sell off some of its land to the Inspector General of Government’s to raise Shs 2.5 billion in a case being investigated for alleged corruption, has not written the report to secure the QSF aid. Attempts by The Independent to get a comment on the issue from Posta Uganda MD, James Arinaitwe failed.

But the report of the QSF money loss comes at the same time as an auditor’s report that says more money has been lost at Posta.

An Investigative Audit carried out in 2011 by Johnson & Johnson Certified Public Accountants on its accounts shows that Posta loses about Shs 100 million per month in dubious deals.

According to the Posta-Uganda 2010 Investigative Audit of its accounts in two commercial banks, Stanbic Bank and Bank of Baroda, and its cash books,  Posta lost Shs 1.3 billion in dubious deals between March 2009 and June 2010.

The auditor general, acting on instructions from President Yoweri Museveni to investigate alleged corruption in Posta, ordered the audit.

Museveni’s intervention was reportedly prompted by a June 8, 2011 whistleblower dossier that criticised the operations of Posta Uganda and alleged rampant corruption.

The whistle-blower stated that despite the constant corruption scandals at Posta Uganda, no immediate action has been taken to reprimand the culprits.

The details

The audit report by Johnson and Johnson shows that Posta Uganda lost Shs 1,335,387,834 between March 2009 and June 2010 in dubious and fictitious payments and cash withdrawals from just two of its accounts in Stanbic Bank and Bank of Baroda. Posta has several accounts in various banks and the lost sums are likely to be higher.

According to the auditors’ findings, there was proof that money was withdrawn from different accounts but there was no evidence of accountability to show how the money was used or whether it reached its intended recipients. There were cases of missing vouchers while others lacked the Local Purchasing Orders (LPO). There was also no evidence to show that services for which the companies were being paid for had been supplied.

On three different occasions Southern Business Solutions was given Shs 126 million between July 2009 and December 2009. The company had allegedly supplied computers and IT equipment to Posta Uganda. The auditors say the payments were fraudulent because there were no receipts to prove that the service was supplied.  Uganda Christian Suppliers was paid Shs 69 million on three occasions but there is no proof of supply.

The audit report shows that some of the companies that were paid fraudulently were owned by staff and most of them could not be physically located.  Vision Dot com, owned by John Kazibwe, a former employee of Posta Uganda, surfaced again.

According to the Bank documents, Vision Dot com was paid Shs 49,837,760 on October 30, 2009 for air mail conveyance, yet the Posta documents show that Kenya Airways should have received the money. The auditors could not trace the payment voucher for the transaction.

In May 2010, Vision Dot Com was again fraudulently paid Shs 42 million for terminal dues (Shs 26 million on May 17 2010 and Shs 16 million, three days later, on May 20 2010. Vision Dot Com alone got Shs 91 million.

The Independent has written several stories alleging widespread corruption at Post Uganda with Kazibwe, Vision Dot Com and others involved.  On all occasions, the parent ministry of ICT has maintained that Posta is an autonomous body, free to act without any controls.

When the Independent contacted James Arinaitwe, the managing director of Posta Uganda, about the revelations in the report, he blamed saboteurs who, he said, are always dragging the company into scandals and ignoring the good things that the company is doing.

“We have done great things for this company, we have restructured the company and have employed some of the best skilled employees who will transform the company to better levels,” he said.

The auditors recommended to the board of directors of Posta Uganda, the Auditor General and the Ministry of ICT that with immediate effect the current restructuring at Posta Uganda be halted, and that all those in management who have been found guilty of in perpetuating the fraud be dismissed or suspended.

However, an official in the Auditor General’s office says the Johnson & Johnson report is a draft and a final copy will be released soon.

When Arinaitwe was asked to comment, he said:  “I am still at the helm of this institution despite the several accusations you people have written against me, even when you write those lies, you will still find me here, seated in my chair at Posta Uganda,” he said.

Fact file

March 4, 2011: Auctioneers acting on behalf of unpaid former Posta employees advertise for sale the famous Postal House, which has the Prime minister’s office. Arinaitwe tells New Vision, they owe the former employees “a lot of money”.    Posta Uganda has a growing debt problem. In 2010 it owed US$1.2 million (Approx.Shs 3 billion).

Shs 1.4 billion was allocated for the restructuring process in which Arinaitwe is accused of favouritism, unfair pay, and wrongful dismissal. In one case, a worker (Muganzi) was paid Shs 4.6 million as a termination package, but continued on duty.

April 2011: Posta leases land to IGG Office for Shs 2.5 billion. The IGG had offered Shs 5.4 billion for a 99-year lease. The case is being investigated for alleged corruption.

July 2011: Multiplex, a construction firm, sues Posta for US$ 242,923 (Approx. Shs 600 million)

April and June 2010: Shs 96 million went missing and police investigations found that then-Posta General Manager Accounts and Finance, John Kazibwe misappropriated the money.  Insiders say Kazibwe could not have taken the money without Muhairwe’s signature.

February 2010: Shs 2.3 billion goes missing at Posta Uganda. The money had been paid to the government parastatal by the Postal Corporation of Kenya in respect to money transfer services.

August 2008: Shs 60 million was robbed from Posta after r Arinaitwe abolished the use of the strong rooms and ordered that daily collections be kept in safes at the General Post office. Internal investigations concluded that it was an inside job.

April 1, 2008: Arinaitwe appointed MD.

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