16 November 2011

Uganda: Lessons From the LC Bicycle Scam


In case you have not been following it, the LC bicycle scam involved the loss of about Shs 4.7bn by the government of Uganda through the Ministry of Local Government.

Sometime in January 2011, the government released Shs 4.7bn as part payment for bicycles to be supplied to Local Council (LC) leaders. The suppliers of the bicycles took the money but did not deliver a single bicycle.

Whereas the bicycles were being sourced from India, the advance payment was drawn in cash from a local bank in Uganda. A parliamentary committee has been investigating the scam in the past 4 months and recently presented its report which reads like a novel about a mafia family.

Having watched the way the Ugandan government works for several years I have little faith that any of the Shs 4.7bn can ever be recovered. But there are lessons that Ugandans can learn from this scam.

The first lesson is that a bad idea cannot be improved. When something is bad or poor at the design level, even if the best implementers are hired they will not bring about a good outcome. Anselm Davis, the celebrated photographer once said that there is nothing worse than a sharp image of a fuzzy concept.

The idea of buying bicycles for LC officials was bad for at least two reasons, firstly the project was undertaken during an election year and secondly because the intended beneficiaries are difficult if not impossible to identify.

The bicycle scheme is a very fuzzy concept and it is amazing that even now some government officials still want to spend the part of the money that was not stolen. Let us get rid of the bad idea. Full stop.

The second lesson is that whenever money is stolen be very suspicious of officials who feign ignorance of the problem. These same officials were very loud at the time of requesting for the money to be released but later became even louder in proclaiming ignorance of what happened to the money. Fraud is rarely orchestrated from the outside without a hefty inside help. The question we may never be able to answer in full is how much inside help the bicycle scam received.

The third lesson is; always keep one eye open when dealing with Ugandan financial institutions. In the good old days before Ugandans started differentiating between good and bad corruption, the bicycle scam would have not succeeded.

The ease and speed with which the bicycle money was withdrawn should not have been if the financial institutions involved asked the kind of questions they ask when more honest people carry on transactions involving less money.

The fourth lesson from the bicycle scam is the lack of shock or remorse exhibited by the players in the saga. The biggest loss from the several corruption sagas that frequently fill the front pages of the major newspapers is that it no longer shocks us.

Corruption cases have become so common that it is somewhat like mourning the dead during an epidemic; the mourners get drained of emotions and concentrate on the business of burying the dead.

James Abola is a business and money coach.

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