Prime Minister Amama Mbabazi insisted Sunday he had no knowledge of the alleged misuse of Irish aid by officials in his office, after Dublin suspended all government assistance to Kampala.
Ireland shelved the programme on Thursday when an investigation found that four million euros ($5.2 million) had been misappropriated.
"It's true some of the payments were made to private accounts of some officials of the ministry in the office of the prime minister. But let me say this: I didn't even know," Mbabazi told Irish state radio.
"No money was ever paid to me and I never handle any money. As the prime minister, I never handle the money of government."
After an investigation, the auditor general of Uganda found significant financial mismanagement by the prime minister's office in relation to an aid programme in the country.
The Peace Recovery and Development Programme for northern Uganda was established to rebuild the region after decades of conflict and devastation.
It has been supported by Ireland and other donors, including Norway, Sweden and Denmark.
Irish officials flew to Kampala on Friday to launch an investigation, with Foreign Minister Eamon Gilmore suspending all aid to the country while the inquiry takes place.
"I regard it as intolerable that any development assistance should be misappropriated or diverted," he said Thursday.
He added that Dublin would not provide financial support under its development cooperation programme unless it is clear that the money is being spent for the purpose for which it was allocated.
"Pending the satisfactory resolution of this matter, I have instructed that no further aid funding should be provided through Ugandan government systems," he said.
Mbabazi apologised to Dublin over the matter and said further investigations were being carried out. He said he never became suspicious of the activities of his officials as his focus was limited to policy.
"I can only say sorry this happened in the Office of the Prime Minister. Of course we do understand the anger that has been expressed by the Irish authorities," he said.
"My expectation is that more and more people will face prosecution in our courts of law," he added.
While he accepted money was fraudulently paid to private accounts, he said not all of the money paid to private accounts was stolen.
"Some it's not the case, they used it for the purpose for which it was intended although it was irregularly managed but was actually used for the purpose for which it was given," he said.
The suspension of the aid will affect the reestablishment of the police, facilitation to people living with HIV/Aids and efforts to improve education in northern Uganda.
To meet donors
Mr Mbabazi is expected to meet donors over the theft in his office on Monday. The meeting is expected to take place at Mr Mbabazi’s office.