Government pays ghost pensioners again, new inquiry shows

Sunday December 1 2013

Government pays ghost pensioners again, new inquiry shows

CIID boss Grace Akullo. Police say the government has paid a significant amount of money to ‘ghost’ pensioners since January. Photo by Abubaker Lubowa. 

By Chris Obore

A huge sum of the Shs70 billion that government paid out in pension since January has again gone to ghost pensioners.

This is a new scam that has ripped-off pensioners. Last year, police discovered a racket in which more than Shs300 billion meant for pensioners, was swindled using ‘ghost’ (non-existent) claimants and bank accounts. Several top officials in the Ministry of Public Service are on trial for alleged disappearance of the pension funds.

Sources within the police Criminal Investigations Department told Sunday Monitor that in the latest scam, the paid ‘ghost’ pensioners names were from the same old files which were the basis for the indictment of former pension officials: Principal Accountant Christopher Obey, IT expert Francis Lubega and Commissioner for Pensions Kunsa Kiwanuka, who are all on trial for fraud and corruption charges.

The new scandal was exposed by a letter from Crane Bank to the Permanent Secretary of the Ministry of Public Service. The letter contained a list of pension beneficiaries to be paid through the bank. The bank doubted the validity of 396 names out of the 769 indicated beneficiaries whose money was sent to the financial institution.

“This is to inform you that Crane Bank came across suspicious transactions relating to pension and retirement benefits during the month of October 2013],” reads the letter by SK Bablani, the bank’s General Manager to the PS of Public Service.

“Further, we took an initiative to verify the same for the monthly pensions as well. We came across a number of beneficiaries who were of the age group 25-35 and the monthly pensions are credited to their accounts,” the bank further states.


Crane Bank demanded confirmation from the Ministry of Public Service whether the list forwarded to them was for the rightful beneficiaries.

Sunday Monitor saw a copy of the list of the purported pensioners.

In response, Ministry of Public Service commended Crane Bank’s initiative to verify the doubtful monthly pension payments and told the bank:

“This is to inform you that beneficiaries who may be aged between 25-35 usually arise from the following reasons: Abolition of office; retirement on medical grounds; voluntary retirement, holders of estate accounts [deceased]; Ministry of Defence beneficiaries like orphans, widows, widowers and the relatives of the deceased military officer and retirement on marriage grounds.”

In a letter signed by Salome Nyamungu for the PS, the ministry acknowledged that even with their explanation, “a revalidation exercise has been instituted to verify the 396 beneficiaries. You will be furnished with the outcome of the exercise which is scheduled to be completed by December 2013.”

A source in Public Service said the ‘ghost’ names still on the pension payroll could be from the old files, which are still being audited by the Auditor General and that “it’s only after we get the clean payroll that we will know whether the ‘ghosts’ are still there or not”.

However, police detectives have demanded from the Accountant General in the Finance Ministry, details of the Electronic Funds Transfer System [EFTS] through which, they claim, the pension money was disguisedly paid to ghost claimants.

“This is therefore to request you to furnish us with the payment details of under-listed EFTS thus to avail payee names, request for such payments from any sector accounting officer and government account on which the funds were charged at Bank of Uganda,” reads the police letter to the Ministry of Finance on November 25.

The police are also seeking answers from the head of Uganda Computer Services [UCS] and the desk officer who handled the suspicious EFTS. Ministry of Finance recently announced they had disbanded the UCS over similar accusations.

Sources say Ministry of Finance officials dilly-dallied in giving information to the police until on Thursday when senior officials in the ministry issued orders.

Police say since January, the government had paid out Shs7.1 billion monthly to at least 20,474 pensioners but a significant number of them are ghosts.

A senior detective told Sunday Monitor that billions of shillings are still stuck in different bank accounts since January as nobody has withdrawn it. Police wonder why the beneficiaries could not withdraw their money from the accounts for such a long time if indeed they are the rightful claimants. This has led the police suspect that the money was on ghost accounts of the fraudsters who are still cautious to avoid detection and arrest.

“After getting the entire pension payment system, we found some names which are not in public service system but were being paid,” a detective in the investigations told Sunday Monitor.

There is now a simmering fight between Public Service and police detectives. Police say the systems administrators in Public Service deliberately corrupted the payment system to destroy evidence when the detectives closed in on them.

But the officials in Public Service denied and counter-alleged that it’s the police who messed up the Server System when they raided the place for evidence in the earlier scam, thus leading to its collapse.

The police deny the allegation. “We had gone to verify the beneficiaries but they shut down the system to dodge us. The bureaucrats say ‘the police had no competence in the system but still messed it up’,” a detective told Sunday Monitor.

Payment of salaries for civil servants was affected by the system breakdown last year after the arrest of the first suspects in the pension scam.

To date, several widows and pensioners flock to Public Service to inquire why they are not being paid their benefits.