The House Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has put the Microfinance Support Centre (MSC) in the spotlight over alleged mismanagement of funds meant for different loan schemes.
COSASE on Tuesday started interfacing with the officials from MSC over queries in the Auditor General’s report for financial years 2020/21 and 2021/22.
The MSC team was led by Deputy Executive Director, Hellen Petronila Masika who is currently the Acting Execuive Director in the absence of the substantive accounting officer, John Peter Mujuni who is on leave.
One of the queries that the committee is investigating is the alleged understatement of the money received and disbursed for Emyooga programme. Auditor General John Muwanga in his report to Parliament found that MSC received Shs100b of which Shs78b was disbursed to beneficiaries but the entity in its financial statement indicated it had received only Shs55b.
Rukiga County Member of Parliament, Roland Bish Ndyomugyenyi observed that; “accounting starts and ends with figures, and on record, they (MSC) have a potential fraud of Shs45b. When you go to the financial statement on page 7, they say they received emyooga money of Shs55b yet the Auditor General’s report syas they received Shs100b”
While responding to the concern, Masika, the Acting Executive Director informed the Committee that the team should be given more time to reconcile the statements but confirmed the figure of Shs78m disbursed as indicated in the Auditor General’s report.
“The Cooperatives (that received Emyooga money) have to be registered and there is verification that goes on to confirm that the members are there before disbursing the money. At the time of the Audit, we had disbursed Shs78.8m but the process was ongoing” said Masika.
Other issues
Legislators tasked the MSC team to explain how money was disbursed to the Kasolo Foundation whose director they allege is the State Minister of Finance (in charge of Microfinance), Haruna Kasolo, who by the virtue of being a member of the Board does not qualify to benefit from any loans.
From the Audit report, it was found that Kasolo Foundation received a loan of Shs2b in the 2020/21 financial year something that has become a major concern to the Committee.
Peter Kibirango, the Head of Business Development Services, informed the Committee that they did not issue the loans to the Kasolo Foundation but it was that guarantor for many cooperatives in Kyotera District which benefited.
“It is the Chief Executive Officer (CEO) of the Kasolo Foundation that brought the request for loans for the groups which had registered and were saving with the foundation. The money went direct to the accounts of the groups and they are paying back” he said.
Pressed further, Kibirango told the COSASE that the due diligence on the groups was not done by MSC because they were convinced that Kasolo Foundation had carried out the relevant assessments.
The Committee then asked the MSC team to prepare all the documents related to the Shs2b that was disbursed to the groups under Kasolo Foundation so that they are examined further before the Minister appears later in the investigations.
Committee Chairperson Joel Ssenyonyi also tasked the MSC officials to prepare to give explanations in the course of investigations on the allegations by a whistle-blower that loans amounting to Shs31.1b had been given out groups without security while loans of Shs29.1b were issued to individuals without security.
Ssenyonyi mentioned the Deputy Resident City Commissioner (RCC) for Rubaga Division, Anderson Burora as one of the beneficiaries having allegedly received Shs110m and Shs83m on separate occasions.
“Most of these loans were disbursed without board approval while others the beneficiaries had not security. So, because they are big people in government, you just went ahead to give them loans and no one is sure whether they are paying back or not” said Ssenyonyi.
In response to these allegations, Masika said that she could not give definite answers because they were hearing of the whistle-blower’s list for the first time while appearing before the Committee.
The Committee will for the whole of this week and beyond dig into the operation of the MSC and it has summoned the Executive Director, Mujuni from his official leave to appear together with the Board of Directors.
Other Audit Queries
Despite not being given a qualified opinion by the Auditor General, the MSC has a lot of queries that now the COSASE must probe further before making a report to Parliament recommending action points to be taken by the Government.
In terms of the management of the agency, the Auditor General found that there was no strategic plan that is aligned to the National Development Plan (NDP) three which is contrary to Section 13(6) of the Public Finance Management Act, 2015. The law requires that annual budgets shall be consistent with NDPIII, the Charter of Fiscal Responsibility (CFR) and Budget Framework Paper (BFP).
In line with this, also queried is the failure for the agency to have specific and measurable strategic objectives in the strategic plans something that led to limited performance assessment.
Other queries raised by the Auditor General include; Shs126.3b in outstanding loans and advances as at June 30, 2021 hence locking funds for other benefiting clients; board approved to write-off loans amounting to Shs4.6b without following the law which requires approval of Parliament to do so; under-absorption of Emyooga funds amounting to Shs33.3b which limited service delivery; 6,326 Emyooga SACCOs validated and financed by June 2021 operated without license from Uganda Microfinance Regulatory Authority; Shs7.7b worth of loans was disbursed to 252 unregistered SACCOs; Shs500m disbursed by various SACCOs in Kayunga District was never supported by loan agreements; Shs600m found on suspense account and, Shs57.6b disbursed to various beneficiaries in form of special grants without a grant management policy.
