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Inside govt payroll fraud that costs taxpayers billions
President Museveni (right) with the Inspector General of Government, Ms Beti Kamya (left), at the launch of the lifestyle audit campaign during the International Anti-Corruption Day at Kololo Independence Grounds in Kampala in December last year. Photo/FILE
After ascending to power 36 years ago, President Museveni promised to rid the country of corruption and other ills in society that drove him to pick up arms to fight a costly war in the Luweero jungles where thousands perished.
Nearly four decades in power, corruption remains the Achilles heel of the National Resistance Movement (NRM) government. Among others, endemic corruption has permeated every pocket of society.
Even with the increased adoption of automated systems to detect and curtail graft, unscrupulous officials are always escaping the checks and balances.
Opatte Primary School in Atanga Sub-county in Pader District is another tumbledown government school, where Charles Okongo eked a living for 12 years until one day in 2012 when he disappeared from duty without trace for months.
His supervisors later established that Okongo had been charged in court. They summarily deleted him from the payroll in February 2014.
Without interdiction as per the standing orders, his case was dismissed in January 2020.
Okongo then went to the Pader District local government seeking salary arrears for nine years, totalling up to Shs69 million. Officials agreed to pay his money or so he thought. Shs32m was advanced to him in late June, but not through his account.
On July 1, Harriet Oyella, who reportedly works as an office attendant in the office of the Pader Chief Administrative Officer (CAO), reportedly called Okongo with instructions to meet in the banking hall to pick his money.
Officials at dfcu Bank where Ms Oyella holds an account immediately developed cold feet about drawing Shs32m at once and from an account whose holder’s monthly salary was meagre. After several discussions, including Ms Oyella presenting a support letter from the office of the chief administration officer, the withdrawal was given the green light.
After withdrawing the money, Oyella requested Okongo to follow her to her home.
Okongo said he was then given Shs15m, which was much lower than what he expected. Oyella reportedly informed Okongo that other officials including the internal auditor and human resource manager, who had negotiated for the payment of his salary arrears, needed a kickback. He was also told to accept the money or else he would be in trouble.
The Inspectorate of Government (IG) is currently probing the matter. Okongo said he went to the IG after police and other local authorities turned him away. Okongo is owed Shs37m as part of his salary arrears.
However, according to a December 2021 audit of the payroll—for salaries, pensions, and gratuity, Pader is one of the local governments that had few audit queries. Pader local government prepared its payroll in time, with variance of only four days, for submission to the Ministry of Public Service in Kampala.
Local governments are required to prepare and submit payrolls to Ministry of Public Service by the end of every September. However, an analysis of several district local government records shows that some districts delayed to submit their documents which affected payment of salaries, pensions and gratuity.
There are no sanctions for inordinate delays or incompetence in processing of the payrolls which, according to the Auditor General John Muwanga’s annual audit, cost tax payers billions.
The Auditor General is by law required to submit audit findings on all public accounts to Parliament but the process of scrutiny is often a post-mortem that may not reverse acts of corruption.
Plundering and squandering
Last week, Uganda joined the rest of the world to commemorate the International Anti-Corruption Day—December 9— to raise awareness about corruption. This year’s celebrations shone light on the crucial link between anti-corruption, peace, security, and development.
The anti-corruption agencies revealed last Tuesday that they had over the past three years recovered about Shs241b stolen by bureaucrats, while estimates of how much is exactly swindled through the various schemes remains indeterminate.
However, in Uganda, many believe, the war against corruption was long lost amid little political will to contain the vice. Like a pet subject, President Museveni and his technocrats continue to pledge to tame graft.
“One of the biggest challenges is there are more allegations which are not easy to substantiate and cases when easily committed to court cannot stand,” Ms Beti Kamya, the Inspector General of Government (IGG), said.
Ms Beti Kamya, the Inspector General of Government (IGG)
She added: “Often you hear the public outcry that, ‘why don’t you get us the big fish’, but the big fish don’t do things just like that; they don’t leave trails. Moreso, corruption is discussed underground so sometimes they (big fish) use proxies, but slippery as they can be they leave a trail of wealth, which is why we think we need lifestyle audit.”
Upon assuming office late last year, Ms Kamya vouched for a lifestyle audit which has been met with both disdain and resistance.
During commemoration of the anti-corruption day last December, President Museveni told the IGG to halt plans to roll out the lifestyle audit, which would target sophisticated cartels of graft orchestrated by senior public servants and ministers.
Uganda already has good laws and policies as well as offices to fight graft. But often anti-graft campaigns are reduced to jesters, too pliant to take action, selectively target and prosecute for political gain or if they go after regime cronies, they are sidelined.
Also, one does not require to conduct a lifestyle audit to prove how corrupt officials have amassed ill- gotten wealth.
The exact figure of how much money is plundered is difficult to come by, as officials say corruption has now become complex and syndicated both within the country and around the world. Across both the central government and local government, officials are escaping scrutiny of the checks and balances in place.
One of the ways is fiddling with the automated payroll systems. Despite numerous reforms to curb wastage and misappropriation of resources, several snags including inadequacies in budgeting for employee and pension costs, inappropriate disclosure of payroll transactions in the financial statements, inaccurate deductions and delayed remittances, irregular payments and weak internal controls, persist.
Yet, chronically the Auditor General and IGG raise red flags over the same issues.
“The reforms are meant to offer a certain degree of comfort to tax payers and donors that something is being done about the squandering. But the truth of the matter is that it is not what it seems; people have to eat,” a senior official in Ministry of Finance who asked not to be named, told this newspaper. “We do our part to demand for accountability and demand better systems but the syndicate runs in the Ministry of Public Service to the Local Governments.”
Quandary in the opaque system
The December 2021 audit of the payrolls of 139 local governments unravelled several tricks district authorities employ to pilfer public funds. One of the ways is delayed deletion of staff from the payroll; of the 79 local governments that did not remove staff who quit public service, retired or died immediately from the payroll, Shs1.1b was paid and never recovered.
The audit also details various instances of misclassification—an instance of wrongly assigning salaries, pensions and gratuity by 34 local governments which cost tax payers Shs4b. Among others, Kalangala District local government paid Shs357m, Manafwa Shs476m, and Fort Portal City Shs413m.
Some local governments including Kamwenge, Kabarole, Kyegegwa, Ntoroko, Kyenjojo and Bundibugyo, documents show, had very poor absorption of money remitted by the Treasury meant for payment of salaries and other arrears. The unspent money are then returned to the Consolidated Fund at the end of every financial year for reallocation amidst poor service delivery.
The Kabarole District chairperson, Mr Richard Rwabuhinga who also doubles as chairperson of the Uganda Local Government Association (ULGA) told Daily Monitor that while these concerns are specific to each local government, a lot of graft is seeping across the corridors of ministries, departments and agencies in Kampala.
“We are concerned that the bigger problem is not in local governments, it is somewhere else,” Mr Rwabuhinga said, adding, “A 2018/2019 study showed that Shs3 trillion meant for service delivery actually remains at the centre. But then often you see a convoy driving from Kampala going somewhere remote to arrest someone who has misappropriated Shs20m and leaving behind people [in Kampala] who play around with billions; it is a real mockery. Justice should not be selective.”
According to Global Integrity, a Washington DC based nonprofit organisation that tracks governance and corruption trends, the police, the judiciary and procurement are areas where corruption risks are very high and under-the-table cash payments are expected.
Mr Rwabuhinga said: “As local governments we are at the tail end of so many things including big procurements, and yet often there is an attempt to put us in the spotlight.”
“That is not to say there are no issues. Among the common ones is payroll management and ghost workers but this is also not a general problem. Most districts payrolls are clean: In Kabarole for instance we introduced monthly verification exercises, where we commit all accounting officers to ascertain whether the people on the lists, from teachers to health workers, actually exist on the ground. So, the heads of departments append signatures onto the list of staff they are sure are there.”
White collar crime
Notwithstanding, a peek into the government accountability reports reveals that graft is mostly rife in local governments which has crippled service delivery, affecting infrastructure projects, the health and education sectors, among others.
The payroll management audit further details instances of both under and overpayment of pension and gratuity. Twenty two local governments of Yumbe, Zombo, Nebbi, Kabarole, Fort Portal, Kibaale, Masindi, Lyantonde, Kiruhura, and Butaleja, among others, overpaid Shs1.3b which is yet to be recovered.
There are cases of payment of salaries using the wrong grades for which 34 local government including Yumbe, Nebbi, Ntoroko, Hoima, Kakumiro, and Hoima, among others doled out Shs216m.
Auditor General John Muwanga. Photo/file
Investigations also show a growing trend of dubious and unauthorised loan deductions from workers’ salaries. For instance, according to the audit, for loan deductions amounting to Shs11.1b there were no consent letters, while for another Shs3.7b the deductions were suspect.
Daily Monitor followed a matter under investigation in Manafwa District, where authorities entered into a memorandum of understanding with Duckhill business consult international Ltd on February 6, 2013, to avail salary loans to the district staff.
The district payroll generated from the Ministry of Finance’s Integrated Personnel and Payroll System for February 2017 to February 2018 revealed that the district made deductions from the salaries of 38 employees who had obtained loans from this firm.
A total of Shs23m was supposed to have been remitted to Duckhill as loan repayments. However, the district instead transferred Shs801m to the microfinance through 14 electronic funds transfer orders between February 2017 to March 2018.
A whistleblower petitioned the IGG who swiftly commenced investigations into the suspicious deal upon which Duckhill was compelled to refund the Shs801m. The ombudsman also recommended disciplinary action against the district finance officer.
The Manafwa District chief administration officer, Mr Henry Watunya, confirmed that two civil servants were interdicted and they are in court with the microfinance firm over the matter.
A civil servant in the district local government, who requested not to be named in order to speak freely, said their money was deducted without their permission and knowledge.
“There was some money that was deducted and for us members we didn’t know that there was some money being deducted,” the official intimated, adding that had the IGG not been petitioned, perhaps that money would not have been recovered.
The IGG has arrested several local government authorities in regard to abuse of office and causing financial loss.
Ms Kamya said there is need to step up public awareness for the public to report graft cases.
“We glorify those people who live lavish styles…but they are spending tax payers’ money. So, it goes back to mindset change that if you see someone who seems to be spending or living a life style that raises suspicion, raise the flag. These people live among us and the public are the host of these squanderers.”
Mr Rwabuhinga, however, said while ULGA doesn’t condone corrupt practices, the anti-graft agencies should exercise discretion when arresting suspects.
“The arrests need to be dignified. Because any person who’s still a suspect ought to be treated as suspect. But if a civil servant is going to be arrested by stripping him and then court clears him tomorrow as we see routinely then that is also a problem. We condemn someone before investigations are completed and when you look at all cases, about 10 percent succeed while most are acquitted,” he added.
What is not in doubt is that trillions of shillings are siphoned annually which has crippled service delivery. But often, as soon as the audit or investigation reports are shared, they fulfil a ritualistic pattern and the reports are left to gather dust on the shelves.
