Over sh13 billion was withdrawn on signatures that did not accurately correspond to the specimen signatures of the Office of the Prime Minister (OPM) Permanent Secretary and Under Secretary, MPs have heard.
Appearing before MPs, Bank of Uganda Deputy Governor Louis Kasekende conceded that it was a mistake not to detect the forged signatures.
"We have transferred the officer involved and investigations are still going on. If it is discovered that he colluded with the 'thieves' further action will be taken," he said.
Kasekende said one of the officers, deputy director banking Milton Opio who approved the signatures has been suspended pending further investigations.
Bank of Uganda (BOU) top officials said that they notified the Ministry of Finance twice about the abnormal financial withdraws by the Office of the Prime Minister, but finance never took any action.
They told the Public accounts committee that in March and April 2011, BOU wrote to Permanent secretary and Secretary to Treasury, complaining about the frequent cash withdraw by OPM.
The director Banking, John Chemonges told MPs that in 2010 Finance gave a blanket authority to OPM to withdraw cash up to sh100m per month. The authority according to documents submitted to the committee was given by deputy secretary to Treasury Keith Muhakanizi and Accountant General Gastavio Bwoch.
"The frequency confused us (BOU) a great deal. First, there were multiple authorization. Then, the issue of accountability before another release. We wrote to the Permanent Secretary (finance) to clarify. He failed. A month later we asked him, please clarify, he again failed," Chemonges said.
The MPs however put the team to task to explain why they continued to release money to OPM despite "the glaring irregularities."
"You had noted the irregularities and notified Finance. When Finance kept quiet, why did you again continue releasing more money? It is at this point when you should have stopped further releases," Jakob Opolot complained.
Chemonges said," We were dealing with the funds to the Leader of Government Business. When they kept quiet, in effect it implied consent."
The MPs however insisted that it was irregular for BOU to continue releasing money and they handed Chemonges to Parliament CID for further questioning.
According to the Auditors, when the OPM was given authority to withdraw money above the ceiling, at some point the Office withdrew sh3.7b within a period of eight months.
Kasekende told MPs that all electronic transfers within bank of Uganda were done after the authorization of the Accountant General Gastavio Bwoch.