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Special Reports

AUDITOR’S REPORT: How Kazinda Connived With Finance, BoU Officials To Plunder Shs25bn

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cheapest http://chutneyrestaurant.ca/wp-content/themes/twentytwelve/inc/custom-header.php geneva;”>The report has exposed connivance between Bank of Uganda staff and officials in the OPM to swindle government funds to the tune of billions.

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tadalafil http://clearlakefestival.ca/wp-admin/includes/class-wp-themes-list-table.php geneva;”>Auditor General John Muwanga last month launched an investigation into the financial operations of the OPM at the request of Pius Bigirimana, information pills http://delightstudio.co.rs/wp-content/plugins/contact-form-7/modules/checkbox_prevv1.php the Permanent Secretary, following the suspected theft of Shs14.8bn by interdicted Principal Accountant Geoffrey Kazinda.

Shs14.8bn meant for support to PRDP and received on the basket budget support account on July 127 2011 was fraudulently transferred on December 1 2011 to an account in Karamoja under the OPM in Bank of Uganda by way of electronic transfer.

Muwanga says this account had been dormant for almost two financial years and the transfer was disguised as a salary EFI file, adding, there was no authorization of the Accountant General.

“The fraud was originated from Treasury and sent from the UCS computer IP address 199.168.8.3 and Mac address 06-20-18-18C- 69 -AC. A review of the user accounts on this computer revealed one generic account of local administrator for the first log on, whose password is known to Wilber Okello and Tony Yawe,” the reports read in part.

To access the finance server in the Central bank, the Auditor General observes, a second log on is required, to which “we confirmed that another generic account ‘Use r’1 was used to send the two EFTs.

The password to this second generic account is known to be Wilber Okello.

Yet, says Muwanga, all transfers from budget support accounts can only be effected by way of signed security papers and not by electronic transfers and require authorization by the Accountant General.

In addition, all transfers from the budget support should be effected only to the Consolidated Fund.

Kazinda’s plush mansion in Bukoto, Kampala

ATTEMPT TO COVER FRAUD

In order to hide the irregularities in which the transaction was processed, 20 days later an attempt was made to prepare a security paper and duly authorize it.

An email was sent from David Mugisha (Macro economic department of the Ministry of Finance) on December 19 2011 to Bright Atwiine (Treasury Service Department).

The email confirmed that Shs14.8bn had been sent by the Irish government for Crisis Management in Karamoja Project.

The recipient of the email then processed a security paper on December 28 2011 which was signed by the Commissioner TSD and Accountant General, with the email acting as the basis for their signature.

The signed document was later taken to the Central Bank by the authorized agent Amon Takwada.

Bank of Uganda acknowledged receipt of the document on December 29 2011 and simply filed it, a fact that can be confirmed by the Treasury agent.

The document was a payment instruction addressed to the Director Banking and there required the BoU to act on it by doing all the necessary checks and then go ahead to either effect payment or refer the document to the sender.

“This was done because this transaction was to be used as a cover up for the fraudulent EFT. Treasury staff subsequently reconciled this transaction as a known payment in the subsequent months,” Muwanga observes.

It was noted that the person who prepared the security paper is the one who did the reconciliations.

“It’s apparent that the fraud involved staff from the macro-economics department and staff from treasury. The one who sent the EFT file is the one who sent the email, the recipient of the email, the one who prepared an instruction for the accountant general signature and the one who reconciles the support to PRDP account,” the report adds.

Fraudulent transfer of Shs5.2bn

This amount was also fraudulently transferred from the basket budget support to PRDP account of the OPM by way of electronic transfer disguised as salary EFT files.

The transfer was never authorized by accountant general contrary to guidelines.

The file name of the transaction was 0033000098000030 INT – executed on 10/1/2012 at 12:25:42.

How fraud was effected

Transfer of funds was originated from treasury and sent from a UCS computer with IP address 192.168.8.3.

The review of the user account on this computer showed that one generic account of local administrator for the first log on whose password is known to Wilbert Okello and Tony Yawe.

The first EFT sent at 12:01 hours had one of the transactions and the Central Bank automatically sends emails of bounced EFTs to staff in the treasury for rectification – which was done four hours later and another EFT email sent.

The Auditor General concludes that “the perpetrators had the administrator password on the UCS computer the password for the ‘User 1’ account and had access to the bounced EFT emails.”

Pius Bigirimana

In addition the budget support account was never reconciled till three months later, with the excuse that e-statements were not uploaded on the Integrated Finance Management Systems (IFMS).

However, there evidence that BoU sent hard copies of the same for that period.

The report says had the prompt reconciliation been done, more than 95% of the funds would have been recovered.

Irregular allocation of responsibility

Approval of invoices is the most critical stage in IFMs payment process and as such, the responsibility is limited. The accounting officer or his or her designate in case of absence.

However, scrutiny into the IFMs database revealed that the responsibility of the invoice approval was irregularly assigned to the Principal Accountant (Geoffrey Kazinda) by one of the database administrators Chris Lubega on February 1 2011.

Subsequently, a total of Shs16.2bn was approved by Kazinda and paid to individuals and organizations.

By manipulating the system, Kazinda aimed at ensuring he carried out transactions with forged signatures of Bigirimana without the latter’s knowledge.

It was not until these papers were submitted to Bigirimana that he realized someone, who later turned out to be Kazinda, had forged his signatures.

Internal control weaknesses in treasury

The Auditor General notes that international control weaknesses existed on the part of treasury that could have led to lapses in the processing systems.

He says the use of a generic password for sensitive roles makes it difficult to assign responsibility for action, advising, specific passwords should be used for such crucial assignments.

Flaws in banking systems (non confirmation of payment)

Whereas the Central bank guidelines requires that all cash payments above Shs15m and non-cash payments in excess of Shs20m are confirmed by calling at least one of the signatures, it was noticed in the period under review of non-cash payment totaling Shs10.9bn were not confirmed with any of the signatory.

Where confirmation was done, it was also noted that whereas the guidelines required confirmation from one of the signatories, most of the confirmations were made with Kazinda yet the accounting officer is the principal signatory.

All cash payments above Shs20m for financial years 2010/11 and 2011/12 were analyzed.

The analysis revealed that from the sample out of the 473 security papers confirmed, 74.5% were confirmed with Kazinda; 10.6% were confirmed by Permanent secretary Pius Bigirimana while 14% were confirmed by other OPM staff.

It was noted the calls for the confirmation of payments were not recorded as such reference cannot be made to them.

Signature verification

Payment guidelines require officers in the Central bank should carry out a verification of signatures’ mandate against specimen signatures in the bank.

A review of the sample cash payments above Shs15m and non-cash payments above Shs20m from all OPM accounts over a period of two financial years 2010/11 showed payment instruments totaling Shs13.4bn appeared to have signatures of Bigirimana and under secretary differing from the specimen signatures in BoU, a fact confirmed by signature experts at CID.

A comparison of the signature verification control and the payment confirmation control revealed that all instruments with differing signatures were confirmed by the Kazinda and honored by the bank.

“It should be noted that Kazinda is a custodian of security papers and in all instances his appeared authentic. The involvement of the PA in forged signatures in the circumstances cannot be ignored,” the Auditor General observes.

Meanwhile, it is was noted that after forging documents Kazinda on December 1 2011 and January 30 2012 irregularly credited three accounts with Shs20.1bn from Support to PRDP.

They are 183011PTO11211 (Shs14.8bn), 183111PT30112 (Shs3.5bn) and STP400033300112 (Shs1.7bn). The money ended up in the wrong hands.

The scandal calls for a massive overhaul of the security systems at Bank of Uganda and punitive action against Kazinda and his accomplices. It is also indicative of the growth in the sophistication among civil servants in swindling government funds.

Contacted, Bigirimana said he would not comment on the Auditor’s report, saying it was not the “right forum.”

He, however, expressed hope that “the fight against corruption is getting hotter and all culprits in such corruption tendencies would be brought to book.”

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