The current saga at the Microfinance Support Centre (MSC) has been blamed on interference in the board's decision-making process by politicians and their family members working at the centre.
The details emerged on Tuesday when officials from MSC, among them board members, appeared for questioning and statement recording at the Criminal Investigations Directorate (CID) in Kibuli, Kampala.
According to a Police source, during interrogation, it emerged that family members of big shots in Government working at MSC were linked to the alleged mismanagement and theft of funds, whose details are under probe by the Police.
One official explained how they cannot make professional decisions at the institution because spouses of powerful government officials make the decisions, adding that some of them also sit on the board.
"We are in a mess because of them," the official said.
MSC has nine board members, according to sources.
"The biggest challenge facing the institution is conflict of interest. Family members are running the institution and that is how some money is swindled," the source said.
Sources said a select team by the government had embarked on asset tracing for all officials under probe, aimed at ascertaining their wealth in comparison to their sources of income.
Last week, four MSC bosses, including the executive director, were charged and remanded to Kitalya Prison
over theft of sh10.8b meant for the teachers' Savings and Credit Co-operative Societies (SACCOS).
The money was given to the teachers by President Yoweri Museveni as a grant in 2011. The accused are John Peter Mujuni, 51, executive director John Mwebembezi, 51, the head of finance and administration, Joan Asiimwe Baryaruha, 52, a teacher, and Julia Birungi, 27, a lawyer and the assistant credit officer.
The accused denied the charges of embezzlement and conspiracy to defraud when they appeared before the Anti-Corruption Court Grade One Magistrate, Moses Nabende, a fortnight ago.
The offence of embezzlement attracts a maximum sentence of 14 years imprisonment upon conviction, while conspiracy to defraud attracts three years in jail.
The suspects have since been granted bail.
Prosecution alleges that Mujuni, Mwebembezi and Birungi, between November 2019 and August 2020, stole the sh10.8b, a grant from the President meant for the teachers' loan fund.
The four, during the same period and while at Uganda Microfinance Support Centre in Kampala, allegedly conspired to defraud the Government of sh10b.
According to the Police investigations, Baryaruha reportedly mobilised teachers in 2010 to register a SACCOS with the commissioner in charge of co-operatives. President Museveni launched the SACCOS at a function in Jinja district in 2011 and pledged sh25b to boost the teachers' pay.
Later, the finance ministry agreed to release the funds in a phased manner, of sh5b per year. Although the money was subsequently disbursed, to date, nothing has been remitted to the intended beneficiaries.