Institute for War and Peace Reporting | Giving Voice, Driving Change

Project Funds Stalled Amid Fraud Concerns

World Bank withholds further funding for development in northern Uganda as corruption investigation continues.
By Bill Oketch

International redevelopment funds for northern Uganda could be cut depending on the outcome of a wide-ranging investigation into suspected fraud and misappropriation, said officials.

Earlier this year, a fraud investigation began into projects linked to the Northern Uganda Social Action Fund, NUSAF – a government agency tasked with managing projects to rebuild war-torn provinces in the north of the country.

World Bank officials now say that the second phase of the redevelopment project – NUSAF II – is on hold in northern Uganda until the fraud allegations have been addressed.

“What I know is that the World Bank will not channel money to NUSAF II until the issue of financial accountability is solved,” said Emmanuel Olaro, a World Bank official in Uganda.

“The position of the World Bank is that the money, which is being given to fight poverty in the north, is utilised well and should be backed up with convincing accountability. We don’t want paper accountability, but tangible accountability of work done on the ground.”

NUSAF distributed World Bank money to fund a 131 million dollar, five-year community development programme that ended last year. The funds were intended to pay for hundreds of projects in local communities that requested support and selected their own local project leaders.

Communities opened local bank accounts into which the Bank of Uganda deposited funds, authorising local leaders to withdraw sums as needed.

The money was intended to help poor Ugandans in the north of the country, which was the battleground for Uganda’s 20-year war with the Lords Resistance Army, LRA.

However, a review of the projects last year revealed that the amount of funds withdrawn exceeded the cost and value of work that had been done, said officials.

Following the launch of a fraud investigation this year, Ugandan courts issued corruption charges against around 20 people linked to work administered by NUSAF. Ten of the suspects were arrested on August 5 and remanded in custody in advance of their trial, while the rest are thought to have fled to South Sudan.

However, some observers in the region say the corruption probe has now been stalled by venal officials.

“The investigators are accepting bribes to free suspected fraudsters,” said Lira Resident District Commissioner Joan Pacoto, who said that 22 arrested suspects had been released on police bond.

She is calling for any officials suspected of corruption to be investigated as part of the ongoing probe, “The government should issue arrest warrants for the fellows so that justice can prevail for all.”

While Pacoto declined to say why she suspected that bribes had been taken, she said she had delivered her concerns to the office of Ugandan president Yoweri Museveni.

But Raymond Otim, the Lira district police commander, denied that investigators had accepted bribes to stall the inquiry.

“For someone to say corruption has weighed down our investigation is a total lie,” Otim told IWPR. “Nobody is getting any money from the suspected fraudsters to kill cases.”

Some private aid groups have reportedly donated 8,500 dollars to the police in Gulu to investigate alleged NUSAF fraud throughout the north, IWPR has learned.

“Luck is running out for those who have mismanaged NUSAF,” said a security officer who preferred to remain anonymous.

“We have been directed by the president’s office to arrest all those who are involved in the mismanagement of reconstruction projects.”

While funds for northern Uganda may be in jeopardy, NUSAF II cash for the ethnic Teso region of eastern Uganda, which also suffered several years of fighting with the LRA, is likely to flow, World Bank official Vildan Verbeek-Demiraydin told IWPR.

“We might recommend the people of Teso for NUSAF II,” he said, explaining that an assessment of the first stage of the project showed that they had performed very well, qualifying them for the second phase.

Ismael Orot, a senior official in the town of Kumi, said, “Here in Teso, leaders were committed to delivering services to the people, unlike some other NUSAF beneficiary districts in the country, where even a [district] chairman has been accused of embezzling NUSAF money.”

As the fraud controversy rumbles on, some say that allegations of mismanagement of NUSAF funds have been exaggerated.

“Those who did not benefit from the fund thought the whole project was mismanaged, which is very wrong,” said Patrick Odongo, a farmer from Lira.

According to Odongo, the World Bank money was not enough to meet people’s needs.

“When the World Bank gave us money, the poor communities thought it was big enough to enable them rebuild their lives,” he said. “But when the fund was disbursed to the beneficiary groups, it was just too little. In fact, it was just like a drop in the ocean.”

While Odongo feels that some of the corruption claims have been overstated, he nonetheless believes there should be greater oversight of development work.

“During the implementation of the projects, [not enough officials] were involved in the procurement processes. This alone was enough for some to mismanage the funds.”

Meanwhile, farmer Charles Omara said he and others working in agriculture would much prefer to receive farming equipment than money.

“In our village, people do not know how to budget money,” said Omara.

“We are used to [relying on] farming for survival and development. If there is a rebuilding programme, we want farm tools and seeds.”

Bill Oketch is an IWPR-trained reporter.