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BoU Currency Scandal- URA tells BOU: “Don’t drag us into your mess”



Amidst the raging scandal in which the Statehouse anti-corruption unit is investigating how illegitimate cargo, found itself on a chartered plane carrying new BoU banknotes, the Ugadna Revenue Authority (URA) whose customs officials cleared the cargo have said they did nothing wrong and instead asked BoU to own up their mess.

Full statement by Dickson Kateshumbwa, the URA Commissioner Customs, in verbatim:

In April this year, URA Entebbe Customs was informed by BOU of an impending import of Currency and requested to facilitate quick clearance. A private chartered plane arrived and as normal practice for sensitive cargo Customs facilitated clearance of the currency at the tarmac in presence of BOU Officials, BOU Security, Aviation Security, Police and other security agencies.

The consignment was offloaded, inspected and loaded on BOU vehicles and taken to Kampala under heavy security escort.

The same plane contained other cargo which belonged to various individuals / companies / organizations. As per normal customs clearance procedure, this cargo was offloaded into the licensed bonds at the airport and subsequently the owners made customs declarations, paid applicable taxes and Customs physically verified each consignment to ascertain accuracy and consistency with the declaration and released the goods to the owners.

Each consignment had its individual airway bill. Customs was not party to the airline charter arrangements between BOU, the airline and the other owners of the goods. It is not the responsibility of Customs to concern itself in logistical arrangements of importers or exporters. Our duty is to ensure that imported cargo through the airport is received and tallied with the cargo manifest, verified and is cleared in line with the Customs Laws as established under the East African Customs Management Act (EACCMA).

In this particular consignment like all others, our Customs staff followed the procedures to the dot and we can account for the cargo cleared fully. URA has provided the details of the information required by the investigators and we are available to offer any clarification if required.  

URA should not be dragged into logistical contractual failures or mistakes of BOU and their service provider.

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Dfcu Bank confirms fraud; declines to give details



Dfcu bank, has this evening confirmed that there was indeed fraud at the bank, but declined to divulge details of how much and who was involved, but said investigations were on going.

In a series of tweets, on their official twitter account (@dfcugroup), the bank said that “In May 2019, the Bank detected a case of fraud that was immediately reported to the police (CID HDQTRS GEF 604/2019) and investigations are ongoing.”

The bank which has been mum since the story was broken on Friday, went on to claim that the incident had “been grossly and maliciously misrepresented in an attempt to damage the reputation of the Bank, destabilise the banking sector and the economy in general,” but offered nor further detail on what had been misrepresented.

Several media houses that broke the story have reported that up to $2.6m was lost to hackers who breached the bank’s system, citing unnamed bank sources.

“The Bank takes these malicious reports seriously and reserves the right to take legal action as well as to refer the authors and disseminators to the relevant law enforcement authorities,” the bank threatened in one of the tweets.

The thread of tweets issued by dfcu Bank this evening

Dfcu Bank is one of the domestic systemically important banks (DSIBs) together with Stanbic Bank, Standard and Chartered Bank and fraud at the institution would be of national interest.

DSIB is a term used to describe banks whose business failures may widely impact the economy. These are deemed too big to fail because if their broad business networks across the economy.

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U.K. Regulator Fines Deloitte £6.5 Million Over Audit Misconduct



The Financial Reporting Council, Britain’s regulator for accounting and audit, on Thursday, July 4th 2019, penalized and reprimanded Deloitte LLP, the global auditing giant, and one of its partners for shortfalls in its audits of a subsidiary of a U.K outsourcing firm, Serco Group PLC.

Deloitte was charged £6.5 million ($8.2 million) in addition to a “severe” reprimand. The fine was however reduced to £4.225 million as part of the firm’s settlement. Deloitte was also made to pay £300,000 toward the costs of the investigation.

Deloitte’s audit-engagement partner, a one, Helen George was fined £97,000 in respect to the audit of Serco Geografix’s 2011 financial statements.

In addition, Deloitte was made to arrange for all its audit staff to “undergo a training programme (designed to the satisfaction of the FRC) aimed at improving the behaviour that is the subject of the Misconduct.”

“Deloitte and Ms. George failed to act in accordance with the fundamental principle of professional competence and due care,” the FRC said in a statement.

The fine relates to three offences of fraud and two of false accounting committed between 2010 and 2013 related to the reporting to the UK Ministry of Justice (MoJ) of the levels of profitability of Serco’s Electronic Monitoring (EM) contract.

On July 3rd 2019, following an admission of responsibility and a Deferred Prosecution Agreement (DPA) with the UK Serious Fraud Office (SFO), Serco Geografix Ltd (SGL) was also fined £19.2m together with £3.7m related to the SFO’s investigation costs. The fine reflects a discount of 50% as a result of Serco’s self-reporting, as well as its significant and substantial cooperation with the investigation. Additionally, Serco was made to compensate the UK Government in respect of the offences as part of a £70m settlement paid by Serco in December 2013.

The Financial Reporting Council has taken various actions against several audit firms and companies’ internal audit teams in recent months.   The FRC in their 2017/18 said that 72% of audits done by the 8 biggest audit firms required no more than limited improvements compared with 78% in 2016/17.

“We recognize and regret that our audit work on Serco Geografix Limited in 2011 and 2012 was below the professional standards expected of us,” a Deloitte spokeswoman said. The company said its quality processes have evolved since the audits in question were performed. “We have also specifically agreed with the FRC certain actions focused on learning lessons from the shortcomings in this audit work,” the Deloitte spokeswoman said, according to the Wall Street Journal.

Pressure mounts to split up the “big 4” accountancy firms over substandard work and conflict of interest

The Financial Reporting Council has taken various actions against several audit firms and companies’ internal audit teams in recent months.   

In June this year for example, FRC also fined PricewaterhouseCoopers LLP (PwC) and KPMG, two of the world’s largest “big 4” accounting firms £4,550,000 and £6 million respectively for audit breaches in the United Kingdom.

Amidst the improprieties, there is pressure mounting in the UK to split up the “big four” accountancy firms-  PwC, EY, Deloitte and KPMG.

The House of Commons business, energy and industrial strategy select committee- in November 2018, recommended that UK’s Competition and Markets Authority (CMA) should break up the “big four” so as to avoid a repeat of a string of serious audit failures that have deeply undermined public confidence in the profession.

Although CMA resisted the calls for the breakup of the “big four” yet, it said, this option could be revisited within five years if the profession does not improve.

The CMA instead said that in the face of “serious competition problems” in the sector, the UK government should pass new laws that force accounting giants to put “greater distance between their audit divisions and their more lucrative consulting operations, to prevent conflicts of interest”, according to the Financial Times.     

The FRC in their 2017/18 said that 72% of audits done by the 8 biggest audit firms required no more than limited improvements compared with 78% in 2016/17.

The 8 are: KPMG, PwC, Deloitte, Ernst & Young and BDO GT, Mazars and Moore Stephens.

While FRC noted problems at all the “big 4” firms, it singled out KPMG for the consistent poor quality of its work.  

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Gov’t ready to shake down BoU- Finance Minister



COSASE and the Presidential Tripartite Committee have recommended a shakedown of BoU and the legal regime setting it up

After a long wait, the Minister of Finance, Planning and Economic Development (MoFPED) Hon. Matia Kasaija, has said that Government is ready to take action on the recommendations of Parliament on Bank of Uganda.

Mr. Kasaija was today quoted by Daily Monitor, Uganda’s leading independent daily saying that after the Parliamentary Public Accounts Committee on Statutory Authorities and State Enterprises (PAC-COSASE) made their recommendations, following a lengthy probe, and parliament had discussed and adopted the report, he had tasked the central bank to examine the findings and recommendations of the COSASE report and make a report to him, showing what actions they would take internally.

“We are moving, but I cannot give you the whole detail. We have received a report from Bank of Uganda showing the actions they have taken. But I cannot give you details on these actions too. The report was sent to me about three days ago,” Mr Kasaija is quoted, as having told Daily Monitor in a telephone interview.

The Hon Abdu Katuntu COSASE which faulted Bank of Uganda for mismanaging the takeover and sale of seven defunct banks, had among others recommended an amendment of critical clauses in the BoU Act as well as holding several BoU officials criminally liable.

Kasaija’s comments come on the back of another recently leaked Confidential Report of the Presidential Tripartite Committee to the President that also recommended an “urgent and comprehensive review” of what it believes is an archaic “legal regime governing the Bank of Uganda.”

“The Bank of Uganda Act Cap 51 was last amended in 1993, two years before the promulgation of the 1995 Constitution of Uganda. In the case of the Bank of Uganda by-laws established under Statutory Instrument 51-1, the situation is even worse as they were passed in 1968 and continue to be applied despite being inconsistent with the Constitution in some important respects such as the authority of the Governor versus the authority of the Board,” reads part of a leaked Confidential Report of the Presidential Tripartite Committee to the President.

The committee recommended a “splitting or separation of the functions of the Governor and the Chairperson of the Board especially with regard to administrative matters”, noting that “most of the problems caused as a result of the Governor’s decision could have been avoided if the two roles were separate with no opportunity for the Governor to function as both Board and Chief Executive Officer.”

The Committee also recommended that a new additional position of Deputy Governor be created to unburden the governor, who they said was “too overloaded in terms of responsibilities” some of which risked “exposing the position of Governor to unnecessary controversies.”

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