Article written

  • on 29.07.2012
  • at 10:00 AM
  • by Randa Ghazy

New report reveals Somalia’s missing millions 0

The report shows that over the period 2000-2011, the first Somali Transitional National Government and the subsequent Transitional Federal Governments received bilateral aid totalling $308 million that was given mainly by Arab countries, including Saudi Arabia, Sudan, Libya, Kuwait, Oman, Qatar and the United Arab Emirates.

(This figure does not include funds that came through the Arab League. It also does not cover multilateral assistance to Somalia, which is managed entirely by the United Nations Development Programme.)

Only $53 million was raised domestically during this period, mainly through the Mogadishu port and airport. However, successive governments have only been able to account for $124 million – or one-third – of the total bilateral and domestic funds they received.

The author of the report, Abdirazak Fartaag, who was head of Somalia’s Public Finance Unit in Prime Minister Omar Abdirashid Sharmarke’s office from May 2009 to September 2010 and Prime Minister Mohamed Abdullahi Farmaajo’s office from December 2010 to May 2011, claims that various Somali administrations misappropriated and mismanaged millions of dollars in donor assistance and domestic revenue by under-reporting the amounts received and by utilising funds on personal and other non-government expenses.

The Public Finance Unit was initiated by Prime Minister Sharmarke in 2009 in order to enhance the financial reporting of the Transitional Federal Government (TFG) and to coordinate the Central Bank and the Auditor General’s and Accountant General’s offices. The Unit was disbanded by Prime Minister Farmaajo in May 2011.

Fartaag’s report (which has not yet been released , but has been made available to the East African) comes in the wake of another damning report released by the World Bank in late May this year that claims that the TFG did not account for $130 million in revenues and donations it received in 2009 and 2010. The report’s author, Joakim Gundel, said that auditors found that the government had collected at least $94 million in revenue in 2009, but only reported $11 million. The report states that in 2010, the government collected $70 million in revenues but reported just $22 million.

A leaked copy of the 2012 report of the Monitoring Group on Somalia and Eritrea – a group mandated by the UN Security Council to monitor arms embargo violations – shows similar gross under-reporting of finances by the Somali government. (The report is expected to be presented to the UN Security Council sometime this month.)

The Group’s own investigations show that an additional $40 million of potential revenue may have gone uncollected or unaccounted for in 2011. President Sheikh Sharif Ahmed is quoted saying that perhaps the money never reached Somalia and was “perhaps in the pockets of other people”. The report further states that one quarter of the funds that can be accounted for are channelled through the offices of the President, Prime Minister and Speaker of Parliament.

In 2011, these three offices spent more than $12.6 million, representing almost 23 per cent of total government expenditure – almost as much as was spent on the TFG security forces ($13.4 million) or the expenditure of all the ministries combined ($15.4 million). The report further states that the TFG leaders have generally shunned a funding mechanism managed by Price Waterhouse Coopers, which was established with donor support as a confidence-building measure. It says that the fundamental problem with the Transitional Federal Institutions is that “their leaders have successfully marketed the government’s weakness, fragility and possible collapse as a lure to attract more assistance”.

As a result, “corruption, embezzlement and fraud are no longer symptoms of mismanagement, but have in fact become a system of management.”

Fartaag compares the funds that Somalia’s various administrations and the Auditor General’s Office reported the country had received and spent between 2000 and 2011 with his own findings, which reveal huge discrepancies between money received and money declared. From 2000 to 2008 (except 2007 when $32 million from Saudi Arabia was recorded by the Office of the Prime Minister), the Somalia government did not account for any of the funds it received.

The Auditor General’s Office, which was established in 2000, only started reporting revenue and expenditure in 2009. There are vast discrepancies between Fartaag’s findings and figures reported by the Auditor General’s Office. Fartaag alleges, for instance, that in 2011, more than $122 million of donor support was received by the government, but the Auditor General’s office reported only $35 million; $87 million remains unaccounted for.

The World Bank report says that not all revenues are deposited in the Central Bank of Somalia and that there is lack of proper accounting on how money is being spent. The report was released when Somalia’s top leadership and civil society representatives had gathered at the second Conference on Somalia in Istanbul.

This led to hasty denials by President Sharif Sheikh Ahmed, who was quoted on the Somali website saying: “It is simple to claim allegations but you (the World Bank) must make it clear and tangible. Where the money has gone is what we want to know also.” President Sharif Sheikh Ahmed, along with the current Prime Minister Abdiweli Mohamed Ali and former Prime Minister Abdullahi Farmaajo are contending for the presidential nominations that will take place when a new parliament is constituted in Somalia later this month.

The communiqué emanating from the Istanbul Conference, like that of the London Conference that preceded it, supported the establishment of a Joint Financial Management Board comprising donors and the government in order to stem irregularities. The Board, which is spearheaded by Britain and other European countries, along with the World Bank, aims to improve transparency and accountability in the use of public resources and ensuring that these funds go towards improved security and economic and social development.

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Direttore Responsabile Giuseppe Frangi