EXCLUSIVE: Leaked Auditor General’s Report Exposes Plunder Of Uganda


cialis 40mg geneva; font-size: small; line-height: 115%;”>Muwanga’s findings show that the country still has a long way to go in eradicating the corruption cancer as civil servants continue to swindle billions of tax payers’ money in cases ranging from abuse of office, this site outright theft, web dodgy deals to inflated compesation payments among others.

The AG is required by Article 163(3) of the Constitution of the Republic of Uganda and Section 13 and 19 of the National Audit Act 2008 to audit and report on the Public Accounts of Uganda and of all public offices including the Courts, the Central and Local Government Administrations, Universities and Public Institutions of like nature and any Public Corporations or other bodies established by an Act of Parliament.

Under Article 163 (4) of the Constitution, he is also required to submit to Parliament by 31st March annually a Report of the Accounts audited by me for the year.

The Directorate of Central Government is responsible for the audit of 21 Ministries, 28 Agencies, Commissions, Departments, 30 Uganda Missions abroad, 7 Public Universities, 15 Referral Hospitals, and the Consolidated Government of Uganda Financial Statements.

All the entities financial statements for the year ending 30th June 2010 were audited and audit reports issued separately on each of them.


A review of the budget performance revealed that the implementation of the National budget during the year was not properly aligned with the National Development Plan (NDP).

Comparison of NDP Sectoral allocations with the approved budget allocation showed huge variances at both budget and release level.

Physical performance fell short of the planned outputs in many sectors as a result of budget cuts undertaken during the year. This impairs the credibility of the budget process.

A total of shs.10billion was released by the Ministry of Finance to the Microfinance Support Centre Ltd in February 2011 to cater for the Presidential initiative for market vendors and small business operators.

There were no proper procedures put in place to ensure proper accountability and management of the funds especially with respect to Kampala based SACCOS.

As a result, I was not able to establish whether the funds were utilised on intended activities.

Between March 2006 and May 2011, UMEME offset shs.27.96 billion against lease rentals payable to UEDCL in respect of outstanding electricity bills for government ministries.

The auditor General was not able to establish whether these amounts were credited to the various ministries accounts.


The Ministry of Local Government spent a total of US$4,298,636 to open a Letter of Credit (LC) for the supply of 70,000 bicycles for the chairpersons of parish and village councils. 40% of the LC representing US$1,719,454 was paid to the suppliers following presentation of shipping documents.

Upon clearance of the LC by the Central Bank, it was discovered that the transaction was fraudulent; the clearance of the LC had been based on forged documents as the bicycles had not been delivered.

Hence the expenditure is deemed not to be a proper charge to public funds. Recovery of the funds had not been undertaken by the time of audit.


According to Muwanga, there were irregular payments of Shs.10, 501,924,831 made to the contractor for Kabale-Kisoro-Bunagana road as compensation for change of prices of basic materials and labour under the “Price Adjustment” (VOP) clause in the contract.

The payments arose from mistakes and errors made in the application of the VoP formulae used in computing the compensation amounts.

There were also overpayments totaling to Shs.837, 386,254 and Euros 255,124 to various road contractors resulting from inaccurate measurements, payments for unexecuted works and errors in measurement sheets.

The Auditor General observes that the National Road construction and maintenance continues to be constrained by funding despite commitments made by government each year.

By year end, UNRA had a total of Shs.146,264,347,800 outstanding in claims/ certificates by various contractors and consultants who worked on a number of roads.

“The claims/certificates could not be settled because of failure by government to meet the commitments made during the year. This will attract extra claims for interest by the contractors, leading to nugatory expenditure,” the Auditor General observes.

A technical audit of various civil works involving road/bridge construction and maintenance in ministry of Works revealed irregular payments amounting to Shs.4,473,003,963 to contractors resulting from payment for materials in excess of what was used, unexecuted works and multiple payments for the same work items.

This expenditure led to a financial loss for which appropriate action should have been taken for its recovery.

The Auditor General further notes that a Ministry paid a total of Shs.1,214,590,305 to four contractors in respect of interest accrued on the delayed payments for CHOGM 2007 infrastructure works maintenance projects.

This expenditure was considered nugatory as it could have been avoided if arrangements had been made to pay the certificates promptly.

A case of loss (embezzlement) of shs.521,688,900 in a ministry that occurred in 2007/2008 and involved a number of employees in the Ministries of Works & Transport, and Finance, Planning and Economic Development was dismissed by the magistrate because the State failed to present Police file in court throughout the period the case was mentioned inspite of overwhelming evidence available.

Posta Uganda

According to the AG’s findings, Government entered into a rushed memorandum of Understanding (MoU) with an unknown foreign firm for the sale of Posta Uganda Ltd.

“The MoU lacked the approval of the Attorney General and provided terms that were generally not favourable to government. The matter should be investigated to establish the circumstances leading to that decision and the implications of the MoU to government,” Says Muwanga.


In another shocking revelation, seven loans equivalent to shs.1.1 trillion had their agreements signed before their approval by Parliament contrary to Article 159 of the Constitution of the Republic of Uganda.

“Government has not yet put in place a policy or law to regulate and guide compensations, particularly those relating to war. Although government has in the past compensated various claimants for properties/assets lost during the war, new claims keep coming up time and again,” observes Muwanga.

The Ministry of Justice was in the process verifying other war debt compensation claims for Northern Uganda (Acholi, Lango, and Teso) inspite of similar verifications undertaken earlier by the Bigombe Team and another by the Ministry of Defence.

He also says the facility of granting incentives for hotel construction was initially slated to end on the 30th of June 2010.

An extension was made up to the end of December 2010. Despite this pronouncement it was observed that several hotels were granted tax incentives/rebates during the year 2011 in violation of the policy decision. A total of shs.906, 568,335 was involved.


Muwanga notes that there have been shortcomings in the implementation of the National Security information Systems (National Identity Card).

“Although shs.150,284,885,491 had been paid to the supplier for implementation of the project, no funding of the operational costs estimated at shs.72,271,834,000 had been released thereby crippling the overall implementation of the project,” he notes.

“By March 2012, only 400 cards had been personalised. The project was also not funded through the budget but rather through borrowing from BoU which has led to interest costs of over shs.3,227,538,712,” says Muwanga.


In order to minimize the impact of reduced Hydro Power generation (which is cheaper), government engaged thermal power companies to supply emergency power generated using light fuel oil (AGO) and Heavy fuel oil (HFO) in 2005-6.

Thermal Energy however still constitutes about 120MW of total power supply i.e. 41 percent of total energy supply in Uganda yet their cost constitutes 70 percent of the total cost of power generation.

Muwanga says although thermal plants were originally planned to act as emergency power supplies, their continued usage have had an upward pressure on the tariff level given that they rely on fuel which is a subject of the movement in the international oil prices.

Since 2005 GOU has incurred Shs.1,279bn in subsidies to the Electricity tariff. This is in addition to indirect subsidies in form of VAT exemption on fuel totalling Shs.773bn between 2007-2011 and an IDA Loan of SDR 139 ($221.3m) that have been used by GOU to keep the energy cost affordable.

Muwanga advises that subsidies are not sustainable and with better planning, the funds could have been utilized to set up infrastructure to produce cheaper and affordable Energy.

Since 2006 government has budgeted shs.92 billion annually for subsidies for electricity despite the fact that subsidies have been much higher.

This, says Muwanga, has created a shortfall of shs.275 billion since 2006 to date.


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