New Vision (Kampala)

19 November 2012

Uganda: Finance Stops Cash Payments Over Fraud

The Ministry of Finance has suspended cash payments from Bank of Uganda (BoU) to government ministries and departments.

The move is part of new measures to curb the theft of government funds.

Inside sources in the ministry said cash transactions will only be limited to a maximum of sh20m per month and the rest will be done through electronic fund transfers.

The measure follows reports that the Office of the Prime Minister (OPM) used the laxity in the rules and withdrew sh116m per month instead of only sh20m.

The Auditor General's forensic report on the stolen funds in the Prime Minister's office indicates that in some cases, the officers withdrew up sh800m per month.

"On September 25, 2010, the Accountant General granted an imprest warrant of up to sh96m monthly. However, it was noted that imprest amounts were drawn over and above the authorised limit in various months in some instances, drawing over sh800m in a single month," the report indicates.

The permanent secretary to the Treasury, Chris Kassami, last week told the public accounts committee that any financial transfers in Bank of Uganda to ministries' accounts must be confirmed by the respective permanent secretaries and the telephone conversation recorded.

"To make sure that they don't deny later, their conversation will also be recorded," he said.

Kassami said the Government has also solicited the services of the Police to check the Integrated Financial Management System (IFMS) to ensure that all the loopholes are closed.

"The system's problems have been identified and we are going to do things differently. Such transfers will no longer be done by individuals. The police officers are qualified in system audit and will detect any illegal transaction immediately," he said.

Kassami warned that there is a problem in the country which needs future redress.

"We are setting institutional measures to correct the mistakes that were made. I have discussed this even with the donors," he added.

Sources also said the ministry plans to hire a firm to provide security advisory services in order to enhance the security of IFMS to be able to detect security fraud and put mitigating measures.

Pension and salary payment, according to the sources, will be fully migrated to the Integrated Personnel Payroll System by December.

According to the audit report, sh14b was disguised as salary and transferred from one account to another within Bank of Uganda.

The United Kingdom, Ireland, Norway and Denmark have suspended financial support to the Government over alleged theft of money meant for northern Uganda.

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