Thursday December 27 2012

2012: Why taxpayers are counting endless losses

Uganda ID project.


By Yasiin Mugerwa

New Year’s Eve has always been a time for renaissance, an opportunity for us to look back to the past, and forward to the coming year. It is a time to reflect on the changes we faced to make and resolve to follow through on those ups and downs.
Similarly, as we shall see in this 2012 luckless farewell, if there is any key resolution our leaders need to make in the new year, it is a promise to fight corruption in private and public offices that has bedevilled the nation for years and hindered service delivery. This is why our leaders must focus on self-reflection.

The latest index that measures the level of corruption in countries around the world has unsurprisingly listed Uganda among the most corrupt nations. In the 130th position, the Corruption Perceptions Index 2012 ranks Uganda with Côte d´Ivoire and Nicaragua. The world corruption trophy is with Somalia, North Korea and Afghanistan, sharing the 174th position.

Looking at this year’s Index, it is clear that corruption is a major threat facing humanity. Corruption destroys lives and communities, and undermines countries and institutions. As evidenced in the Arab Spring, corruption generates popular anger that threatens to destabilise societies and exacerbate violent conflicts.

But even with all these dangers, in Uganda as the case for other African nations, with the exception of Botswana, the only African country deemed clean, the situation is stupefying. This explains why on a scale of 0-100, Uganda managed only 29 – highlighting the severity of the crisis the country is facing today.

In the year- end, the nineth Parliament under the guidance of Speaker Rebecca Kadaga, and the media, responded to corruption like never before as ministers fell and Ugandans demanded greater rights. The challenge is what has become a song: the lack of political will to fight corruption. This explains why the response to corruption in 2012 did little to change the number of corruption scandals occupying the public sphere.

Basajjabalaba deals>
The other major corruption scandal we saw in July 2012 involved the loss of more than Shs142.6b to city businessman Hassan Basajjabalaba. This scandal brought two ministers down – former Finance Minister Syda Bbumba and former Attorney General Khiddu Makubuya. The Bank of Uganda Governor Emmanuel Tumusiime-Mutebile was saved by President Museveni.

Mr Basajjabalaba’s Haba Group of Companies, through four of its subsidiary companies, Sheila Investments, Yudaya International, Victoria International and First Merchant International Trading company, entered into lease agreements and management contracts with the government for four properties namely Nakasero market, Shauriyako market, Constitution Square, and St Balikuddembe market (formerly Owino market) during the 2009/10 financial year. However, all the agreements were later terminated by the government after the market vendors and Parliament opposed the move. An investigation by PAC found that Mr Basajjabalaba’s deal was inflated although the businessman told MPs that the President was aware of what was going on and that he approved his claim.

According to the Berlin-based organisation, Transparency, corruption is defined as the abuse of entrusted power for private gain and it harms society in many ways with adverse effects felt in different ways by people throughout society. Corruption undermines political institutions and processes violating economic and social rights by denying equal access to public services like health, and education among others.

OPM scam >
The latest, and arguably one of the most notorious corruption scandals expected to shake President Museveni’s government in 2013 is the unhindered theft in the Prime Minister’s Office. With several technocrats already suspended, the Public Accounts Committee is closing in on politicians. The abused funds were meant for the people of northern Uganda and Karamoja sub-region.

A special audit by the Auditor General found substantial evidence detailing how aid from Ireland, Norway, Sweden and Denmark was transferred to unauthorised accounts in a sophisticated scam which resulted in the theft of at least Shs50b. Over the past few years, several donor nations including the UK, Norway, Sweden, Ireland and Denmark, have provided in excess of Shs70b for reconstruction efforts in northern Uganda. The donors have since suspended aid over the scam and the government apologised to donors.

Though Parliament had passed a resolution that the Permanent Secretary, Pius Bigirimana, leave office, the government rejected the decision on claims that the PS was a whistle-blower.
To show donors that something is being done, 17 officials from OPM, Bank of Uganda and Ministry of Finance were interdicted and the former Principal Account, Geoffrey Kazinda on charges of abuse of office, among other counts, sent to prison. The Parliamentary Public Accounts Committee is still investigating this scam.

National ID deal>
Another corruption scandal that came to light this year involves the loss of more than Shs200b in a botched National Identity Cards project. Mühlbauer Technology Group, a German firm, was contracted in March 2010 on the orders of President Museveni. However, there was no competitive bidding; instead, reports claim that the then German ambassador to Uganda, Reinhard Butchnolz, lobbied the President for the contract.

This company was expected to deliver 3.5 million IDs by December 2010 and at least 21 million by the end of the project in June 2012, but the firm in March released only 400 IDs, a year after it was contracted outside procurement and given billions of taxpayers’ money. The ID project was paraded as a security matter.

The project has since been deserted on claims that they need an additional Shs87b to revitalise it. Former ministers Kirunda Kivenjinja and Nsubuga Nsambu were named in House’s Defence Committee report.
The House had recommended that the Permanent Secretary, Dr Stephen Kagoda, leaves office but the government has not taken any action.

Ghost pensioners >
There was also a police investigation, in September this year that found a racket of senior staff in the ministries of Public Service and Finance who paid out at least Sh63b to 1,000 ghost pensioners last year. The money was paid out between February and November as gratuity but detectives have established that the beneficiaries were all non-existent.

Daily Monitor investigations revealed that on January 1, last year, several alleged ghost accounts were opened in the bank on which millions of shillings were deposited on January 18. For example, individuals using the names Benson Kibuuka and Swalik Kidodo opened accounts and received Shs65.5m and Shs71.9m, respectively. In what lawmakers called selective prosecution, the Public Service Permanent Secretary, Jimmy Lwamafa, was sent on indefinite leave but his colleagues in Internal Affairs and Office of the Prime Minister remain in office.

Bicycle scandal >

A foreign-based company the government had allegedly contracted to supply bicycles for local council chairpersons, this year disappeared with close to $2m (about Shs5b) in taxpayers’ money. The company was supposed to deliver at least 70,000 bicycles meant to help LC1 and LC2 chairpersons monitor government programmes. Forged documents given to Bank of Uganda were used to filch public funds in the deal.

Ms Cornelia K. Sabiiti, the executive director of the Public Procurement and Disposal of Public Assets Authority (PPDA), told the Parliament’s Finance Committee that Amman Industrial Tools and Equipment, which is said to have been working on behalf of Amman Impex, an Indian-based firm, took part of the money and disappeared without supplying the bicycles. The Parliament’s Local Government Accounts Committee report found the Local Government Permanent Secretary, Mr John Kashaka Muhanguzi responsible. The PS and other ministry officials were interdicted.

In April 2012, a damning report compiled by the Office of the Auditor General unveiled massive rot in government ministries and departments, with taxpayers losing more than a trillion shillings to fraudulent practices in just 12 months.

The report shows that under various ministries and agencies, there were questionable expenditures totalling Shs54.7b arising from lack of supporting documentation, advances to staff not accounted for, fraudulent payments, funds diverted to ineligible activities, errors in measurements of materials used in civil works and inappropriate use of the formulae for price adjustment in computation of compensations.

The report also shows that about Shs10b released by Ministry of Finance to the Microfinance Support Centre in February 2011 to cater for the presidential initiative for market vendors and small business operators remains unaccounted for. The endless corruption scandals in 2012 and the lost billions explain why the ninth parliament, the antics of the NRM Caucus notwithstanding must clench fists hard in 2013.