Govt loses sh1 trillion
Oct 18, 2007
The Government has lost over sh1 trillion in loans to private companies, according to the latest report by the Auditor General, obtained by The New Vision.
By Mary Karugaba
The Government has lost over sh1 trillion in loans to private companies, according to the latest report by the Auditor General, obtained by The New Vision.
“Sh1.2 trillion on-lent is still outstanding and is considered irrecoverable, pending parliamentary approval to be written off as bad debt,†states the report, which studied the accounts of ministries and public institutions from July 2005 to June 2006.
It also revealed that sh221b government loans given to private companies in the period under review had not been recorded.
“Government loans to private enterprises amounting to sh221.6b were not recognized in government consolidated financial statements,†it said.
The audit found lack of proper utilisation of government funds, flouting of procurement guidelines and lack of accountability in almost every ministry and government institution.
It was also discovered that ministries and institutions were spending funds without the approval of parliament, leading to an increase in domestic arrears.
By the end of June 2006, domestic arrears for ministries, departments and foreign missions stood at sh279b, compared to sh266b the previous year. Topping the list were the ministry of Finance (sh55b), Defence (sh33b), Foreign Affairs (sh30b) and Justice and Constitution Affairs (sh20b).
Among the Ugandan missions abroad, the embassies in Italy and New York accumulated the most arrears, amounting to a total of sh1.7b.
Arrears for public universities amounted to sh14b, with the bulk of it accrued by Makerere University (sh10b).
Among the hospitals, Mulago and Butabika incurred domestic arrears of 1.6b and 1.4b respectively.
Advances
According to the report, laxity in control over advances in various ministries, departments and institutions still persisted.
“Regulations require that all advances be accounted for by the end of the financial year. Contrary to these regulations, some ministries and departments did not account for general advances totalling sh8.6b.â€
The Electoral Commission scored the highest, with sh2b in advances not accounted for, followed by State House (sh1.3b), Foreign Affairs (sh1.4b) and Health (sh1b).
Vehicles repair
The report noted that some ministries had attempted to set up fleet management systems as recommended in the Auditor General’s previous report. However, the report said these systems were not strictly followed.
“In many cases the log books are not up to date, vehicles are still used on unofficial activities, service is not done in time and repairs are done without proper documentation.â€
The Auditor General also pointed out that an amount of sh13b was spent by a sample of 15 ministries and departments on repair and maintenance. He attributed this huge amount to the fact that vehicles were not replaced after five years in use, as required.
The Ministry of Defence spent the highest amount in repairs and maintenance of vehicles, (sh6.4b), followed by the Ministry of Works and Transport (sh1.4b), the Police (sh1.2b) and Prisons (sh922m).
State House
The audit found that State House was over-staffed by 48 employees.
“Currently State House is staffed with a total of 607 employees, as opposed to the 559 approved by the Ministry of Public Service,†the report noted. “Some posts have been over-filled, while others are grossly under-filled.â€
The report pointed out the office of the Principal Private Secretary as being overstaffed with 69 personnel, yet “at the same time 233 vacant posts exists in the overall structure.†The report warned that this could lead to budget over-runs on salaries and allowances, difficulties in supervision and poor performance in departments where there is understaffing.
Universities
On the five public universities in the country, the Auditor General noted with concern that most budgets still lacked approval by the minister and Parliament. “The current process of approval of university budgets by Parliament is deficient in that it does not cover the budget financed by internally generated revenue.â€
It also criticised the accounting policies of the public universities. “They charge and invoice their students and clients (consultancies) for the services they provide. The existing policy does not allow them keep track of revenues invoiced, collected and outstanding.â€
Embassies
In the year under review, a number of missions abroad made procurements equivalent to sh1.1b without going through Contracts Committee, the Auditor General’s report noted. The highest irregular procurements were recorded in Uganda’s embassy in Cairo (sh306m), Paris (sh213m) and London (sh171m). The report further noted that several missions abroad were understaffed, thus undermining service delivery, while some officials had their contracts expired but continued in service. “Some of the contracts expired way back in 2001 and have never been renewed.â€
UBC
The report revealed that the contract to relocate the Uganda Broadcasting Corporation (UBC) equipment at Nakasero, with a view of installing the reusable equipment at the existing Broadcasting House, was over-valued by almost sh2b.
According to records, a contract figure of $5.8m (sh10b) was agreed on but the contract agreement signed showed $6.9m (sh12b) as contract price. “The variation was not explained,†the report said. It also pointed out that due to inadequate security during the relocation a lot of equipment was either damaged or looted. “Generally the relocation exercise was not properly planned and managed.â€
Ghost workers
The report established that out of 229,901 records verified on payroll for ministries, departments and institution, 26,473 were invalid, meaning the workers had either been transferred, retired, resigned, left or had died. Over three-quarters of ghost workers were found in schools and colleges. One-fifth were found in hospitals and 2% in ministries and departments. “Subsequently, a total of 9,199 invalid records were deleted from the payroll leading to a saving of sh1.7b in salary costs,†the report said.
CHOGM
The report revealed that a total of $750,000 (sh13b) was paid to a UK-based company in respect of consultancy services and legal fees in connection with Uganda’s bid to host the Commonwealth Summit in 2007. “The company was selected without competitive bidding as required by law. There were also no receipts procured without any bidding,†the Auditor General wrote. “I was not provided with the contract for the services to ascertain the nature of services and also there were no acknowledgment receipts from the company presented for audit.â€
Munyonyo resort
The report also criticised the way the Government entered into a joint venture with Munyonyo Commonwealth Resort to construct conference facilities and the presidential suites for hosting CHOGM. The Government contributed sh13.3b to the project or 25%. Munyonyo being a private company, the Auditor General observed that he did not have authority to audit its accounts or demand accountability for the 25% shareholding of the Government. Furthermore, he questioned the fact that the bills of quantities, prepared by the private firm, were not subjected to independent verification by the technical people at the ministries of works. “There is a risk of the Government contributing more than the amount required to execute the project,†he noted. In addition, a business plan had never been prepared and presented to the Government, neither had the Government nominated its required directors to the joint venture. “Without an approved business plan and representation on the board of directors, the Government interests in the joint venture may not be well protected.â€
Parliamentary commission
The report also found that part of the sh2.8b for constituency development funds advanced to MPs was not accounted for. “The accounting officer expressed difficulty in getting accountability especially from members who never made it to Parliament. He also expressed difficulty in ascertaining the authenticity of the accountability,†the Auditor General reported. The report also discovered that sh741m was paid to one travel agent in respect of air ticket for officials and members of the Commission for travels abroad, yet there was no confirmation of the trips.
Ministries
The defence ministry spent sh10b in excess expenditure without Parliament’s approval. The Auditor General could not ascertain the circumstances under which the expenses arose. In the Ministry of Internal Affairs, a total of sh1.5b was spent as classified expenditure although the ministry did not appear on the schedule of agencies authorised to incur this type of expenditure. In the health ministry, the Auditor General reported that sh33m was paid out to a local airline to cater for travels for monitoring activities in the North, western and West-Nile regions. However, the travels did not take place, the money was never refunded by the airline and the company had since wound up.
In the Prime Minister’s office, advances and fuel deposits totalling sh173m remained unaccounted for.
Uganda Police
The report observed that sh1.9b was paid to a firm for the purchase of 12 light anti-riot control vehicles and second-hand vehicles from a South African firm. However, only six vehicles had been delivered by the time of auditing. The remaining vehicles awaited payment of $320,400. “Examinations reveal that a technical assessment by the engineers indicated that the vehicles are very old and seemingly unstable for use in Uganda. Reports showed that the vehicles were used in the 1970s and appear to have been dumped in Uganda.†The report also revealed that sh170m meant for August 2006 salaries of Special Police Constables and advance to the Commissioner, Anti-Stock Theft, was stolen from Police custody at Katakwi Police Station.
Judiciary department
The Auditor General reported that some judges had opted for house rent instead of housing allowances, thereby varying the terms of services specified in the law. The report quoted one judge who was paid rent of sh2.5m, yet he was entitled to a housing allowance of sh2m. Another judge was being paid sh3m in rent.
The Government has lost over sh1 trillion in loans to private companies, according to the latest report by the Auditor General, obtained by The New Vision.
“Sh1.2 trillion on-lent is still outstanding and is considered irrecoverable, pending parliamentary approval to be written off as bad debt,†states the report, which studied the accounts of ministries and public institutions from July 2005 to June 2006.
It also revealed that sh221b government loans given to private companies in the period under review had not been recorded.
“Government loans to private enterprises amounting to sh221.6b were not recognized in government consolidated financial statements,†it said.
The audit found lack of proper utilisation of government funds, flouting of procurement guidelines and lack of accountability in almost every ministry and government institution.
It was also discovered that ministries and institutions were spending funds without the approval of parliament, leading to an increase in domestic arrears.
By the end of June 2006, domestic arrears for ministries, departments and foreign missions stood at sh279b, compared to sh266b the previous year. Topping the list were the ministry of Finance (sh55b), Defence (sh33b), Foreign Affairs (sh30b) and Justice and Constitution Affairs (sh20b).
Among the Ugandan missions abroad, the embassies in Italy and New York accumulated the most arrears, amounting to a total of sh1.7b.
Arrears for public universities amounted to sh14b, with the bulk of it accrued by Makerere University (sh10b).
Among the hospitals, Mulago and Butabika incurred domestic arrears of 1.6b and 1.4b respectively.
Advances
According to the report, laxity in control over advances in various ministries, departments and institutions still persisted.
“Regulations require that all advances be accounted for by the end of the financial year. Contrary to these regulations, some ministries and departments did not account for general advances totalling sh8.6b.â€
The Electoral Commission scored the highest, with sh2b in advances not accounted for, followed by State House (sh1.3b), Foreign Affairs (sh1.4b) and Health (sh1b).
Vehicles repair
The report noted that some ministries had attempted to set up fleet management systems as recommended in the Auditor General’s previous report. However, the report said these systems were not strictly followed.
“In many cases the log books are not up to date, vehicles are still used on unofficial activities, service is not done in time and repairs are done without proper documentation.â€
The Auditor General also pointed out that an amount of sh13b was spent by a sample of 15 ministries and departments on repair and maintenance. He attributed this huge amount to the fact that vehicles were not replaced after five years in use, as required.
The Ministry of Defence spent the highest amount in repairs and maintenance of vehicles, (sh6.4b), followed by the Ministry of Works and Transport (sh1.4b), the Police (sh1.2b) and Prisons (sh922m).
State House
The audit found that State House was over-staffed by 48 employees.
“Currently State House is staffed with a total of 607 employees, as opposed to the 559 approved by the Ministry of Public Service,†the report noted. “Some posts have been over-filled, while others are grossly under-filled.â€
The report pointed out the office of the Principal Private Secretary as being overstaffed with 69 personnel, yet “at the same time 233 vacant posts exists in the overall structure.†The report warned that this could lead to budget over-runs on salaries and allowances, difficulties in supervision and poor performance in departments where there is understaffing.
Universities
On the five public universities in the country, the Auditor General noted with concern that most budgets still lacked approval by the minister and Parliament. “The current process of approval of university budgets by Parliament is deficient in that it does not cover the budget financed by internally generated revenue.â€
It also criticised the accounting policies of the public universities. “They charge and invoice their students and clients (consultancies) for the services they provide. The existing policy does not allow them keep track of revenues invoiced, collected and outstanding.â€
Embassies
In the year under review, a number of missions abroad made procurements equivalent to sh1.1b without going through Contracts Committee, the Auditor General’s report noted. The highest irregular procurements were recorded in Uganda’s embassy in Cairo (sh306m), Paris (sh213m) and London (sh171m). The report further noted that several missions abroad were understaffed, thus undermining service delivery, while some officials had their contracts expired but continued in service. “Some of the contracts expired way back in 2001 and have never been renewed.â€
UBC
The report revealed that the contract to relocate the Uganda Broadcasting Corporation (UBC) equipment at Nakasero, with a view of installing the reusable equipment at the existing Broadcasting House, was over-valued by almost sh2b.
According to records, a contract figure of $5.8m (sh10b) was agreed on but the contract agreement signed showed $6.9m (sh12b) as contract price. “The variation was not explained,†the report said. It also pointed out that due to inadequate security during the relocation a lot of equipment was either damaged or looted. “Generally the relocation exercise was not properly planned and managed.â€
Ghost workers
The report established that out of 229,901 records verified on payroll for ministries, departments and institution, 26,473 were invalid, meaning the workers had either been transferred, retired, resigned, left or had died. Over three-quarters of ghost workers were found in schools and colleges. One-fifth were found in hospitals and 2% in ministries and departments. “Subsequently, a total of 9,199 invalid records were deleted from the payroll leading to a saving of sh1.7b in salary costs,†the report said.
CHOGM
The report revealed that a total of $750,000 (sh13b) was paid to a UK-based company in respect of consultancy services and legal fees in connection with Uganda’s bid to host the Commonwealth Summit in 2007. “The company was selected without competitive bidding as required by law. There were also no receipts procured without any bidding,†the Auditor General wrote. “I was not provided with the contract for the services to ascertain the nature of services and also there were no acknowledgment receipts from the company presented for audit.â€
Munyonyo resort
The report also criticised the way the Government entered into a joint venture with Munyonyo Commonwealth Resort to construct conference facilities and the presidential suites for hosting CHOGM. The Government contributed sh13.3b to the project or 25%. Munyonyo being a private company, the Auditor General observed that he did not have authority to audit its accounts or demand accountability for the 25% shareholding of the Government. Furthermore, he questioned the fact that the bills of quantities, prepared by the private firm, were not subjected to independent verification by the technical people at the ministries of works. “There is a risk of the Government contributing more than the amount required to execute the project,†he noted. In addition, a business plan had never been prepared and presented to the Government, neither had the Government nominated its required directors to the joint venture. “Without an approved business plan and representation on the board of directors, the Government interests in the joint venture may not be well protected.â€
Parliamentary commission
The report also found that part of the sh2.8b for constituency development funds advanced to MPs was not accounted for. “The accounting officer expressed difficulty in getting accountability especially from members who never made it to Parliament. He also expressed difficulty in ascertaining the authenticity of the accountability,†the Auditor General reported. The report also discovered that sh741m was paid to one travel agent in respect of air ticket for officials and members of the Commission for travels abroad, yet there was no confirmation of the trips.
Ministries
The defence ministry spent sh10b in excess expenditure without Parliament’s approval. The Auditor General could not ascertain the circumstances under which the expenses arose. In the Ministry of Internal Affairs, a total of sh1.5b was spent as classified expenditure although the ministry did not appear on the schedule of agencies authorised to incur this type of expenditure. In the health ministry, the Auditor General reported that sh33m was paid out to a local airline to cater for travels for monitoring activities in the North, western and West-Nile regions. However, the travels did not take place, the money was never refunded by the airline and the company had since wound up.
In the Prime Minister’s office, advances and fuel deposits totalling sh173m remained unaccounted for.
Uganda Police
The report observed that sh1.9b was paid to a firm for the purchase of 12 light anti-riot control vehicles and second-hand vehicles from a South African firm. However, only six vehicles had been delivered by the time of auditing. The remaining vehicles awaited payment of $320,400. “Examinations reveal that a technical assessment by the engineers indicated that the vehicles are very old and seemingly unstable for use in Uganda. Reports showed that the vehicles were used in the 1970s and appear to have been dumped in Uganda.†The report also revealed that sh170m meant for August 2006 salaries of Special Police Constables and advance to the Commissioner, Anti-Stock Theft, was stolen from Police custody at Katakwi Police Station.
Judiciary department
The Auditor General reported that some judges had opted for house rent instead of housing allowances, thereby varying the terms of services specified in the law. The report quoted one judge who was paid rent of sh2.5m, yet he was entitled to a housing allowance of sh2m. Another judge was being paid sh3m in rent.