18 November 2012

Uganda: OPM Fraud - Mutebile to Face MPs

As Parliament's inquiry into the multi-billion fraud in the prime minister's office enters a second week, MPs have assembled a curious list of witnesses to testify.

Bank of Uganda Governor Emmanuel Tumusiime-Mutebile will lead a team of subordinates to the committee today to answer queries pointing to their involvement in the financial scam. According to PAC's working document, BoU officials will have to explain why their system is so prone to manipulation.

"The Auditor General faults the Bank of Uganda's banking system to have aided the (OPM) fraud. So, we would like to know whether this was due to connivance or negligence on their part." PAC vice chairperson, Paul Mwiru told The Observer on Saturday.

The queries the committee wants answered by BoU officials include; why the bank didn't confirm payments that were fraudulently made to the OPM office and also why its people failed to verify signatures before allowing the cash withdrawals.

"Whereas the BoU payment guidelines require that all cash payments above Shs 15,000,000 and non-cash payments in excess of Shs 20 million are confirmed by calling at least one of the signatories, it was noted that in the period under review 61 non-cash payments totalling to Shs 10,928,904,340 were not confirmed with any of the signatories," a PAC briefing reads.

Besides, the committee observes that although BoU indicated that the bank did not confirm the inter-account transfers because it regards them as low risk, this was in contravention of the banking guidelines as the Auditor General indicates in a special investigation of the transactions.

The AG's report revealed that where confirmation was done, most of the confirmations were made with the Principal Accountant yet the Accounting Officer is the principal signatory.

"All cash payments above Shs 15,000,000 and non-cash payments above Shs 20,000,000 for the financial years 2010/2011 and 2011/12 were analyzed. The analysis revealed that from the sample, out of the 473 security papers confirmed, 74.5% were confirmed with the Principal Accountant (Geoffrey Kazinda), 10.6% were confirmed by the Permanent Secretary (Pius Bigirimana), while 14.9% were confirmed by other OPM staff. It was noted that the calls for confirmation of payments were not recorded; as such reference cannot be made to them subsequently," the AG notes.

The committee would also like to know the circumstances under which BoU failed to verify the signatures of the documents that supported the withdrawal of the over Shs 13 billion. Besides, the lawmakers will also seek BoU's justification for permitting the irregular transfer of funds from the budget support holding accounts to project account.

According to the memorandum of understanding between Bank of Uganda and the Ministry of Finance, Planning and Economic Development regarding the opening and management of Government accounts, all funds from the budget support holding account are required to be transferred to the Consolidated fund.

However, it was noted by the Auditor General that over Shs 75 billion was withdrawn from the budget support holding account but only Shs10bn was transferred to the consolidated fund with an identified Shs 38 billion irregularly transferred to the National Policy Disaster Management, Crisis Management and PRDP North accounts and the balance is not traceable.

"The transfers to other accounts other than the consolidated fund were contrary to the terms of the MoU between BoU and MOFPED and exposed the said funds to misappropriation. BoU did not adhere to the terms of the MoU and went ahead to effect the transfer of funds to the accounts without recourse to MOFPED as a party to the said MoU," the AG notes.

Besides, the bank will explain how it allowed the transfers to be made to the said accounts which had been considered dormant since 2009. The PAC inquiry follows a special audit by the AG that unveiled massive abuse of funds to the tune of Shs 50bn.

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