We are not party to government cash bonanza, says Central Bank

Kampala

Bank of Uganda says it’s not to be blamed for increased drawing of cash by government departments in excess of the Shs20million set by the Finance Ministry. “We pay money only where there is written authority by the competent authority in Ministry of Finance. What they use money for is not our obligation,” said Mr Juma Walusimbi, BOU’s director of communications.

Sunday Monitor last week broke a story of how several government departments had failed the electronic money transfer system which was meant to minimize fraud. Instead of adhering to the cash limit of Shs20million, several ministries now cash out more than Shs20million from Bank of Uganda in one withdrawal a day. But the central bank says “there is no illegality and there is no connivance whatsoever on the part of Bank of Uganda.” Responding to our earlier story, Mr Walusimbi said every money they paid out was properly documented.

Healthy relationship
“When a customer gives instructions, we respect it and we verify before we pay,” he said, adding that the bank had a healthy relationship with the Treasury and Finance ministry. According to this paper’s investigation, the violation of the Shs20million limit was done by the Finance Ministry’s top bureaucrats who issue written instructions to BoU to allow ministries withdraw billions in cash. This means that the Finance ministry which set the rules is now negating on them.

For instance, Sunday Monitor saw an April 2010 written instruction by the Secretary to the Treasury, Mr Chris Kassami to Bank of Uganda to give Shs1billion to the Defence Ministry in cash. BoU has also been given instructions to pay excess cash to several other ministries and some now pick more Shs500million in cash.

The Accountant General, Mr Gustavio Bwoch last week said where excess cash withdrawal was done; it must have express permission by the Finance Ministry. He argued that it was difficult to avoid cash because Uganda is a cash economy. But sources say although cash couldn’t be avoided, drawing billions in cash exposed taxpayers’ money to the risk of being stolen by the bureaucrats.

Mr Walusimbi said in 2005, the bank had introduced EFT and cheque capping of Shs20million in 2007 but in 2009, Mr Kassami wrote that he was not happy with cash withdrawals by ministries. He introduced the Shs20million cash limit per day which again has been violated by many including Finance officials. “As a bank, we respect clients’ instructions in writing and we conduct the accounts on specific instructions of the client,” he said.

Bureaucrats argue that more cash was needed because some activities like seminars where individuals are invited but some never turned up, needed cash payments to avoid paying those who absented. But sources argue that taxpayers’ money was stolen in seminars where absentees are also paid, numbers inflated and signatures forged.

Our findings show that there was acrimony among various government bureaucrats over matters of “eating” public funds with specific ministries seen as “wet” grounds and others “dry” land. Compliant officers are posted to wet land while others are kept in dry land. There is now an argument in government corridors about why some accountants and auditors stay longer in their duty stations while others are quickly transferred.

Recently, the Accountant General reshuffled accountants who had served for more than three years in one station but Mr Christopher Obey remained in Public Service where he has been since 1997. There was also an outcry as to why David Nuwamanya had been kept at the Defence Ministry for 10 years, earning the nickname 'General’. Mr Denis Elton Barigye, a senior accountant, has also been at Defence for the last seven years yet the policy is to rotate accountants after every three years.