NSSF loses sh1b in another fraud
Jan 11, 2009
FRESH investigations into the National Social Security Fund (NSSF) indicate that the organisation lost over sh1b in under-declaration of shares traded on the stock exchange.
By Vision Reporter
FRESH investigations into the National Social Security Fund (NSSF) indicate that the organisation lost over sh1b in under-declaration of shares traded on the stock exchange.
This is one of the transactions the Auditor General is investigating in a forensic audit on all the NSSF transactions since 2007.
One of NSSF’s authorised brokers falsified share prices and the amount of money received on behalf of NSSF between October 2007 and March 2008.
The NSSF board ordered an investigation in April 2008 after learning about the fraud from a whistleblower.
Sources said the whistleblower was a top manager.
PKF Consultants, who were hired to investigate the share transactions, unearthed the scam in which the stockbroker under-priced shares, reducing NSSF earnings on the Uganda Securities Exchange (USE).
Equity (dealing in shares) is one of the fund’s investment portfolios. It buys and sells shares from which it earns proceeds.
African Alliance and Cranes Financial Services Ltd were the NSSF authorised brokers during the period when the fraud was committed.
Between February 2 and February 28 2008, Crane Financial Services Ltd sold NSSF’s 6,210,023 dfcu shares and earned sh4,338,846,400 but declared sh4,132,153,950.
To cream off the difference of sh206,692,450, the broker stated that the share price traded between sh650-675 per share. But the ruling price at the counter was between sh665 and sh700.
In another transaction on February 2, Cranes Financial Services Ltd. declared that it had sold 2,298,200 shares at sh650 each share yet the counter price was at sh700.
Another transaction on February 28 had the share price lowered by sh15. In the deal involving the sale of 3,825,560 shares, Crane Financial Services Ltd put the price at sh675 per share, down from sh700, the dfcu counter price. The broker took off sh95,639,000.
The variance between the counter and brokers’ prices raised suspicion that the NSSF top managers were involved because the stock exchange prices are public.
NSSF is the largest local player on the stock exchange. Because of its position, it is able to get regular updated share prices from the USE.
On March 18, NSSF lost sh519,350,000 when Crane Financial Services Ltd sold the Fund’s 2,077,400 shares in Bank of Baroda at sh2,995, fetching sh6,221,813,000 but declared only sh5,702,463,000.
Crane Financial Services Ltd, which has since been suspended from operating on the USE, is owned by the Ruparelia Group.
According to the NSSF board review report, the total financial loss which occurred between October 2007 and March this year, is about sh1,027,694,606.
Out of this amount, the broker refunded sh508,963,00 in April 2008.
In the last few months, NSSF has been embroiled in reports of corruption and mismanagement, which culminated in the suspension of the chief executive officer, David Jamwa and his deputy, Mondo Kagonyera.
Last year, the NSSF came under spotlight when it purchased land at sh11b in Temangalo from businessman Amos Nzeyi and a company linked to security minister Amama Mbabazi, who is also the NRM secretary general.
Jamwa succeeded Leonard Mpuuma as chief executive after the latter’s contract was terminated prematurely over abuse of office in which NSSF lost sh8b.
Mpuuma, together with former board chairman Geoffrey Onegi Obel, were charged in court over the scam.
Former labour minister Zoe Bakoko Bakoru, the supervisor of NSSF then, was also implicated in the offence but she fled abroad to avoid prosecution.
The financial loss resulted from a botched Nsimbe Housing Estate deal in which the trio were said to have hastily approved to invest billions of the workers’ money in a joint venture with Mugoya Construction Company.
FRESH investigations into the National Social Security Fund (NSSF) indicate that the organisation lost over sh1b in under-declaration of shares traded on the stock exchange.
This is one of the transactions the Auditor General is investigating in a forensic audit on all the NSSF transactions since 2007.
One of NSSF’s authorised brokers falsified share prices and the amount of money received on behalf of NSSF between October 2007 and March 2008.
The NSSF board ordered an investigation in April 2008 after learning about the fraud from a whistleblower.
Sources said the whistleblower was a top manager.
PKF Consultants, who were hired to investigate the share transactions, unearthed the scam in which the stockbroker under-priced shares, reducing NSSF earnings on the Uganda Securities Exchange (USE).
Equity (dealing in shares) is one of the fund’s investment portfolios. It buys and sells shares from which it earns proceeds.
African Alliance and Cranes Financial Services Ltd were the NSSF authorised brokers during the period when the fraud was committed.
Between February 2 and February 28 2008, Crane Financial Services Ltd sold NSSF’s 6,210,023 dfcu shares and earned sh4,338,846,400 but declared sh4,132,153,950.
To cream off the difference of sh206,692,450, the broker stated that the share price traded between sh650-675 per share. But the ruling price at the counter was between sh665 and sh700.
In another transaction on February 2, Cranes Financial Services Ltd. declared that it had sold 2,298,200 shares at sh650 each share yet the counter price was at sh700.
Another transaction on February 28 had the share price lowered by sh15. In the deal involving the sale of 3,825,560 shares, Crane Financial Services Ltd put the price at sh675 per share, down from sh700, the dfcu counter price. The broker took off sh95,639,000.
The variance between the counter and brokers’ prices raised suspicion that the NSSF top managers were involved because the stock exchange prices are public.
NSSF is the largest local player on the stock exchange. Because of its position, it is able to get regular updated share prices from the USE.
On March 18, NSSF lost sh519,350,000 when Crane Financial Services Ltd sold the Fund’s 2,077,400 shares in Bank of Baroda at sh2,995, fetching sh6,221,813,000 but declared only sh5,702,463,000.
Crane Financial Services Ltd, which has since been suspended from operating on the USE, is owned by the Ruparelia Group.
According to the NSSF board review report, the total financial loss which occurred between October 2007 and March this year, is about sh1,027,694,606.
Out of this amount, the broker refunded sh508,963,00 in April 2008.
In the last few months, NSSF has been embroiled in reports of corruption and mismanagement, which culminated in the suspension of the chief executive officer, David Jamwa and his deputy, Mondo Kagonyera.
Last year, the NSSF came under spotlight when it purchased land at sh11b in Temangalo from businessman Amos Nzeyi and a company linked to security minister Amama Mbabazi, who is also the NRM secretary general.
Jamwa succeeded Leonard Mpuuma as chief executive after the latter’s contract was terminated prematurely over abuse of office in which NSSF lost sh8b.
Mpuuma, together with former board chairman Geoffrey Onegi Obel, were charged in court over the scam.
Former labour minister Zoe Bakoko Bakoru, the supervisor of NSSF then, was also implicated in the offence but she fled abroad to avoid prosecution.
The financial loss resulted from a botched Nsimbe Housing Estate deal in which the trio were said to have hastily approved to invest billions of the workers’ money in a joint venture with Mugoya Construction Company.