MALI'S AUDITOR GENERAL RELEASES 2009 REPORT

UNCLAS SECTION 01 OF 02 BAMAKO 000511 SIPDIS E.O. 12958: N/A TAGS: ECON EAID ETRD EINT EAGR ML SUBJECT: MALI'S AUDITOR GENERAL RELEASES 2009 REPORT REF: BAMAKO 00232 ¶1. (SBU) On July 13, Mali's Office of the Auditor General (BVG) released its fourth annual report. Notwithstanding a tumultuous year for the office and the Auditor General, the BVG was able to conduct 49 audits in 2008, up from 33 in ¶2007. Among the 25 entities audited, the BVG identifed 98 billion CFA (USD 200 million) of revenue lost to the Treasury between 2003-2007. Of that figure, 40.64 billion CFA (USD 81 million) was attributed to fraud, and 57.63 billion CFA (USD 75 million) was due to mismanagement. If history is any guide, the government will recover much of the money identified in the report, and the audited institutions will implement some of the changes suggested by the BVG. It is unlikely, however, that the corruption identified in the report will result in criminal prosecutions. End Summary. -------------- End of an Interesting Year -------------- ¶2. (SBU) On July 13, Mali's Office of the Auditor General (BVG) released its fourth annual report. As in the past, the Auditor General Sidi Sosso Diarra first delivered copies to the President, followed by the Prime Minister and other officials in the Government. On July 28, Diarra presented his findings to the Malian press corps and responded to criticisms of the BVG's methodology and conclusions. ¶3. (SBU) The most remarkable aspect of this year's report is that it was published at all. During the course of the year, Diarra faced what he described as a "media lynching," a major French consulting firm recommended that the BVG be scrapped, and Diarra himself was placed under arrest during a showdown with the Malian judiciary (see reftel). At the July 28 press conference, Diarra insisted the adversity only strengthened the BVG's resolve to complete its work effectively. -------------- A Lot of Money -------------- ¶4. (SBU) The BVG was able to conduct 49 audits in 2008, compared to only 33 in 2007. The 49 audits took place within 25 government entities, and identified approximately 98 billion CFA (200 million USD) lost to the Malian Treasury between 2003 and 2007. To put this figure in perspective, 98 billion CFA is equivalent to 10% of Mali's budget of 1.001 trillion CFA (2 billion USD),and almost equal to Mali's budget deficit of 128 billion CFA (256 million USD). Of the 98 billion CFA identified as lost by the BVG, 40.64 billion CFA (81 million USD) was due to fraud (defined as theft, deviations of funds, and double and/or unjustified payments), and 57.63 billion CFA (75 million USD) was due to mismanagement. In all, the BVG estimated that 89.5 percent of that money, or almost 88 billion CFA (176 million USD) could still be recovered by the government if certain steps were taken. Comment: Given the limited resources of the Malian government, this seems like a very high estimate. End Comment. ¶5. (SBU) Remarkably, 76 billion of the 98 billion CFA identified by the BVG as lost to the Malian state were the responsibility of just three audited entities: the INPS (Social Security),Customs, and the Treasury itself. The BVG determined INPS was responsible for losing 22 billion CFA (44 million USD) by failing to pursue employers who did not regularly pay social security contributions for their employees. The Treasury as an institution was the greatest culprit of all, costing itself 44 billion CFA (88 million USD). The greatest problem identified at Treasury consisted of 25.5 billion CFA (51 million USD) of payments for which no documentation existed to explain or justify the expense. -------------- Criticism and Complaints -------------- ¶6. (SBU) The BVG has frequently been criticized for being a redundant agency duplicating audit mechanisms already in place in Mali, such as the Accounting Section of the Supreme Court. In addition, the entities audited often take issue with the conclusions of the report, particularly when the conclusions of the report conflict with audits conducted by other entities. In this year's report, for example, the National Agency for Provincial Investment (ANICT) was blamed for the loss of 40 million CFA (80,000 USD),notwithstanding the Agency having been audited by a European Union service that found no financial impropriety. ¶7. (SBU) The BVG, in turn, points out that each entity audited has an opportunity to present written objections and BAMAKO 00000511 002 OF 002 explanations to the auditing teams; and after the draft audit is written, the audit team meets with management to discuss disagreements. The Auditor General told the press July 28 that entities are fully able to voice their concerns, even if at the end of the day, the BVG does not agree. Diarra further noted that some entities abuse the consultative process to delay the completion of the BVG's report, and that in the case of such delay, at some point a decision must be made. Diarra attributed inconsistencies with other reports to the fact that different auditors use different methodologies. -------------- Prospects and Results -------------- ¶8. (SBU) To date, there has not been a single criminal prosecution resulting from the investigations of the BVG. However, the Auditor General can point to other tangible results of the BVG's work. Each year, the BVG conducts follow-up studies of entities audited in years past, in order to see if the recommendations of the BVG have been put into place. Of the nine such examinations conducted in 2008, the BVG reported that 74 percent of its recommendations, or 98 of 132 recommendations, had been implemented by the audited entities, resulting in better financial management and decreased opportunity for fraud. In addition, the Auditor General frequently remarks that the work of the BVG has allowed the state to recover billions of CFA that would otherwise have been lost. -------------- Comment: Now Comes the Hard Part -------------- ¶9. (SBU) Given the tumultuous nature of the year just past, it is significant that the Auditor General has succeeded in completing significant audits and in producing what appears to be a thorough and far-reaching report. The Auditor General was only able to overcome the trials and tribulations of the past year because of significant and public support from the Government. Nonetheless, President Toure should go further. In addition to outwardly expressing support for the BVG's work, President Toure should give that work teeth by encouraging criminal prosecutions against the acts of corruption identified in the report. MILOVANOVIC