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.

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End of an Interesting Year
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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.

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A Lot of Money
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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.

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Criticism and Complaints
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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

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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.

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Prospects and Results
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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.

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Comment: Now Comes the Hard Part
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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