Sloppy probe will help culprits flee
Sep 18, 2005
The damning report on how the Global fund monies for AIDS, Tuberculosis and Malaria was mismanaged, has triggered a set of actions that have further lowered the perception of this country and dented some hard earned reputations.
The damning report on how the Global fund monies for AIDS, Tuberculosis and Malaria was mismanaged, has triggered a set of actions that have further lowered the perception of this country and dented some hard earned reputations.
A probe by the government into the allegations contained in accounting firm, Pricewaterhousecoopers (PwC) brief to the Fund will form the basis of a government investigation as well as a Global Fund audit.
The report led to the suspension of $150m (sh275b) in grants due to the programme until government suspends the Project Management Unit (PMU), which was directly responsible for dispersing funds to eligible applicants.
If only for the fact that lives are at risk, I pray all the culprits are brought to book and the useful work the monies may have been employed for is resumed.
However, in the fight against corruption the irresponsibility of the investigators can end up causing the ejection of the baby with the bathwater.
The report found that there was widespread mismanagement, incompetence and total disregard for operating procedure as to suggest everything was not above board.
But one particular charge caught my attention. PwC reported a sh500m loss incurred in exchanging the aid money into shillings.
“The rates at which the PMU translated foreign exchange into Uganda shillings were lower than the market rates communicated to us by banks, who received the funds resulting in a shortfall of sh517,150,000,†the report said.
The report went on to show that the loss came about during a series of transactions amounting to $18.2m exchanged between July 2003 and March 2005. The report worked out the loss by comparing the rate the money was exchanged for to the respective bank’s ‘ruling rate.’
According to the report in eight of 10 transactions investigated the banks bought the dollars for below the banks’ ‘ruling’ rate.
“It is normal practice for beneficiaries to negotiate better rates when the volumes of dollars translated is large,†the report said.
“We would, therefore have expected the GF to have benefited from exchange rates that would have been even better...â€
However, the officials from the respective banks have dismissed suggestions they have taken unfair advantage of the fund.
The banks whose main asset is the public confidence in them were understandably miffed.
“The only thing I can confirm is that any transactions by this bank were made at the market rate,†Stanbic MD, Kitili Mbathi told The New Vision without giving further details.
Banking sources close to the events are understandably shocked at an obvious ignorance of currency dealing operations displayed by the accounting firm, going as far as suggesting PwC based their conclusions on hearsay.
According to documents related to the matter, contrary to the PwC report in the said transactions the named banks had bought dollars from the Global Fund at a higher rate than the ruling ‘board’ bid rate.
In addition the documents showed that it was not possible to determine whether there had been any underhandedness by referring to the ‘ruling’ rate. The ‘ruling’ is determined at the end of a day’s transactions, which due to the floating exchange rate may vary considerably during the period.
PwC managing partner, Joseph Baliddawa was unavailable to comment on his firm’s report.
There is very little doubt in the public’s mind that some things went wrong in the management of the Fund.
But when investigators botch up crucial parts of the investigation it raises doubt about the rest of the report. We have all heard about crooks getting away scot-free on technicalities.
The writer is The New Vision’s Business Editor
A probe by the government into the allegations contained in accounting firm, Pricewaterhousecoopers (PwC) brief to the Fund will form the basis of a government investigation as well as a Global Fund audit.
The report led to the suspension of $150m (sh275b) in grants due to the programme until government suspends the Project Management Unit (PMU), which was directly responsible for dispersing funds to eligible applicants.
If only for the fact that lives are at risk, I pray all the culprits are brought to book and the useful work the monies may have been employed for is resumed.
However, in the fight against corruption the irresponsibility of the investigators can end up causing the ejection of the baby with the bathwater.
The report found that there was widespread mismanagement, incompetence and total disregard for operating procedure as to suggest everything was not above board.
But one particular charge caught my attention. PwC reported a sh500m loss incurred in exchanging the aid money into shillings.
“The rates at which the PMU translated foreign exchange into Uganda shillings were lower than the market rates communicated to us by banks, who received the funds resulting in a shortfall of sh517,150,000,†the report said.
The report went on to show that the loss came about during a series of transactions amounting to $18.2m exchanged between July 2003 and March 2005. The report worked out the loss by comparing the rate the money was exchanged for to the respective bank’s ‘ruling rate.’
According to the report in eight of 10 transactions investigated the banks bought the dollars for below the banks’ ‘ruling’ rate.
“It is normal practice for beneficiaries to negotiate better rates when the volumes of dollars translated is large,†the report said.
“We would, therefore have expected the GF to have benefited from exchange rates that would have been even better...â€
However, the officials from the respective banks have dismissed suggestions they have taken unfair advantage of the fund.
The banks whose main asset is the public confidence in them were understandably miffed.
“The only thing I can confirm is that any transactions by this bank were made at the market rate,†Stanbic MD, Kitili Mbathi told The New Vision without giving further details.
Banking sources close to the events are understandably shocked at an obvious ignorance of currency dealing operations displayed by the accounting firm, going as far as suggesting PwC based their conclusions on hearsay.
According to documents related to the matter, contrary to the PwC report in the said transactions the named banks had bought dollars from the Global Fund at a higher rate than the ruling ‘board’ bid rate.
In addition the documents showed that it was not possible to determine whether there had been any underhandedness by referring to the ‘ruling’ rate. The ‘ruling’ is determined at the end of a day’s transactions, which due to the floating exchange rate may vary considerably during the period.
PwC managing partner, Joseph Baliddawa was unavailable to comment on his firm’s report.
There is very little doubt in the public’s mind that some things went wrong in the management of the Fund.
But when investigators botch up crucial parts of the investigation it raises doubt about the rest of the report. We have all heard about crooks getting away scot-free on technicalities.
The writer is The New Vision’s Business Editor