By Mulengera Reporters
A report by reputable international audit firm Ernst & Young has disclosed that out of the Shs681,596,477,586 technocrats at the Justice Ministry had forwarded to the Finance Ministry for payment (as court awards against government), Shs105,906,914,117 was fake and fictitious arising from litigation cases government never lost or were never filed against it in the first place.
The background to this discovery is that in 2017, Auditor General John Muwanga wrote a report showing the GoU’s total indebtedness under domestic arrears (outstanding bill) due to unpaid suppliers stood at Shs2,134,562,011,370.
As PSST, Keith Muhakanizi was alarmed and instead of beginning to pay he contracted Ernst & Young to carry out a verification to confirm the authenticity of the Shs2trn figure the OAG had presented. Ernst & Young has released a partial report showing only Shs1.3trn is authentic and the rest has been rejected as comprising fictitious claims against government.
Thousands of these claims have since been considered fictitious because the purported suppliers presenting them have failed to produce any authentic documentation as proof the respective government entities validly contracted them to supply any services to government.
Of the more than Shs1trn that has been rejected as sham, Shs105,906,914,117 relates to the Ministry of Justice & Constitutional Affairs whose technocrats had apparently connived with rogue city lawyers and judicial officers to submit fictitious claims, arising from court awards relating to court disputes that either never existed or government was never party to.
In total, the Justice Ministry had demanded for Shs681.5bn from Finance to settle pending court awards arising from court cases lost by government entities. But the E&Y report shows that only Shs575.7bn is genuine and validly acceptable. The remainder of the money (over Shs105.6bn) has since been blocked by Muhakanizi as fictitious meaning government will never pay because its surrounded by dubious circumstances. The E&Y auditors have asked for more time to verify another Shs4.5bn claim presented by the same Justice Ministry as court awards that are due.
Yet its not only the Justice Ministry whose claimed domestic arrears have been blocked by PSST. Under recurrent expenditure (basically operational expenses like stationary, rent, salaries etc), the OAG had placed government indebtedness at over Shs443bn but on verification, E&Y dropped it to Shs102bn. The rest (over Shs300bn) has been rejected as fake and not due!
Under development expenditure (basically things like contractors or heavy machinery/equipment suppliers), the Auditor General had put GoU’s indebtedness at over Shs434.8bn but on verification, the E&Y report shows the genuine figure is Shs328.6bn implying the rest (over Shs100bn) is fake and not due!
When it comes to contributions to sustain Uganda’s membership to various international organizations, John Muwanga’s audit report had put GoU’s indebtedness at over Shs166.5bn but on verification, the Muhakanizi auditors discovered the outstanding bill is just Shs133bn. This means over Shs33bn is fictitious and not due!
URA always expects and is entitled to recovering taxes from government entities especially in areas like VAT refunds and taxes arising from importation of vehicles and other machinery. But because taxation is one item the budgeting process rarely allocates adequate funding for, government MDAs are always in default to that tax obligation. Muwanga’s audit report presented the arrears around that area to be standing at over Shs127bn but on verification, the E&Y consultants discovered only Shs31.9bn was valid and due. This means over Shs96bn was fictitious and not due!
As for utilities (basically NWSC & UMEME bills), the Auditor General’s report indicated the indebtedness of the different MDAs totaled up to more than Shs85.4bn which upon verification dropped to slightly over Shs82bn implying more than Shs3bn is sham and not due!
Regarding employee costs (basically gratuity and pension that MDAs haven’t yet paid), the OAG report placed government indebtedness at over Shs79.2bn yet on verification, the E&Y consultants discovered the pending government obligation is merely Shs7.4bn. This simply means the other more than Shs72bn was fictitious and not due!
When it comes to salary arrears (mostly arising from employees being promoted but remain on the old salary or those that are erroneously deleted from the payroll etc), the OAG report had disclosed government total indebtedness at over Shs46.4bn but the E&Y consultants on verification found the validly claimed figure is a mere Shs32.2bn. This means over Shs14bn was merely exaggerated; its fictitious and not due. A larger fraction of these salary arrears relates to Makerere, Kyambogo and Mubs where staff commonly get promoted in the middle of the FY but their salary isn’t immediately increased.
On rent arrears (basically private people’s premises gov’t entities occupy and haven’t paid rent), the OAG report had put GoU indebtedness at over Shs23bn which the E&Y consultants verified and found to validly be at Shs3.7bn implying the remaining more than Shs19bn wasn’t due. It was fictitiously being claimed against GoU.
As for compensations claims against GoU, John Muwanga’s report had put GoU’s indebtedness at over Shs12bn but the verification report shows its just Shs2.2bn. This simply means GoU shouldn’t pay the other more than Shs9bn because it’s not obliged to. Under classified expenditures-related arrears (accruing through ESO & ISO), the Auditor General’s report put total government indebtedness at Shs35bn which the E&Y left intact without any scrutiny after their employer the Finance Ministry advised them not to bother perhaps fearing to be seen as violating the doctrine of classified expenditure. (For comments, call, text or whatsapp us on 0703164755 or email us at firstname.lastname@example.org).