The Independent (Kampala)

11 January 2013

Uganda: Govt to Refund Shs38 Billion in Stolen Donor Aid Money

Photo: IRIN
Women carrying cartons of oil to the distribution site at Oromi IDP camp, Kitgum District, northern Uganda, 18 May 2007.

The government of Uganda has today made it public that it will by the end of next week have refunded Sh38bn donor aid money stolen by interdicted government officials so that mutual relationships between the two parties can resume.

The announcement comes a month after major donor countries announced aid cuts to Uganda following the misappropriation of donor funds in the office of the Prime Minister.

The Auditor General in October released a special audit report indicating that up to Shs50 billion was misappropriated by staff in the Prime Minister's office. The misappropriated funds were intended for post-war recovery in Northern Uganda under the Peace, Recovery and Development Plan (PRDP).

Following the scam, Norway, Ireland, Denmark and United Kingdom, among others donor countries suspended their aid to Uganda.

Addressing a press conference at the finance ministry today (Jan.11), Keith Muhakanizi, the deputy secretary to the treasury said the government is putting in place strict measures to address financial management in government and restore confidence in the financial management system and to prove to the donors that the country is committed to fighting these vices.

The government has so far paid back Sh14.2billion to Ireland as it finalises all the necessary procedures with other donors to refund their money.

"We already have the money," Muhakanizi said. "We are getting it from the government's consolidated account."

He said government is reviewing weaknesses in the public financial management in order to strengthen the system. He said the public finance and accountability act is being amended to eliminate weaknesses currently inherent in the PFM laws.

He added that government has decided to widen the forensic investigations starting with the six big spending sectors of energy, roads and works, education, health, agriculture, and water.

He said that they have regularised the procedures for the control of general budget support donor disbursements within Bank of Uganda and Treasury, where all flow of funds will first be remitted to the Consolidated Fund Appropriation Account before they are credited to spending entities' accounts.

Muhakanizi added that all the dormant project accounts in Bank of Uganda have been closed/blocked by Bank of Uganda. "The accounts that are no longer necessary are being closed in consultation with Accounting Officers of the respective votes.

He said that government has opened an account in Bank of Uganda to commence immediate recovery of the misappropriated funds in line with the laws of Uganda. He said a specific account has been opened to recover funds lost in the OPM and another account has been opened to receive other recoveries.

Other government bodies like the police, the Uganda Revenue Authority among others are doing all it takes to ensure that all the misappropriated funds are recovered and put to proper use, Muhakanizi said.

He said that they are in talks with the donors about resumption of development assistance to the country.

"We hope by June this year, this will have come to pass," he said.

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