FORENSIC AUDIT MAY UNCOVER CORRUPTION AT THE

UNCLAS KAMPALA 000985 SENSITIVE AIDAC SIPDIS USAID/W FOR GH/OHA: ROBERT CLAY AND KRISTA STEWART; GH/AA, GLORIA STEELE; AFR/EA, TORINA WAY E.O. 12958: N/A TAGS: EAID KHIV KCOR UG SUBJECT: FORENSIC AUDIT MAY UNCOVER CORRUPTION AT THE UGANDA AIDS COMMISSION REF: Kampala 00523 SUMMARY ¶1. (SBU) A forensic audit has been launched at the Uganda AIDS Commission (UAC) amid allegations of mismanagement of funds. KPMG Kenya is conducting the audit, which is expected to be completed by mid-September. This audit is being funded and led by the donor community, which contributes $2-4 million annually to a basket Partnership Fund to provide financing to UAC for HIV/AIDS coordination activities. If the audit uncovers serious malfeasance, UgandaQs already-shaky reputation as a committed partner in the fight against HIV/AIDS will be damaged further. BACKGROUND ¶2. (U) The Uganda AIDS Commission was established in 1982 and is the governmental entity tasked with coordinating the national multisectoral HIV/AIDS response in the country. UAC sits underneath the Office of the President and is headed by the Director General, Dr. David Kihumuro Apuuli. The Partnership Fund was established in 2002 and has been the major source of funding for the HIV/AIDS coordination and management efforts of UAC and other national level stakeholders. Major contributors to the Partnership Fund include Irish AID, UK Department for International Development (DFID),the Danish International Development Agency (DANIDA),the Swedish Development Cooperation Agency (SIDA),the Italian Development Cooperation and various UN Agencies. The U.S. contributes in-kind technical assistance and a USAID Officer currently chairs the AIDS Development Partner Group. HINTS OF CORRUPTION ¶3. (SBU) Over the last year, rumors of corruption and fraud related to the use of funds within UAC have been on the increase. Stories of missing equipment, costly 'ghost' projects that never take place, unauthorized interest free personal loans and shady procurement deals have become more and more prolific. In response to these rumors, the AIDS Development Partner Group began discussions early this year concerning the need for a more detailed and thorough review of the funds being channeled through UAC. Regular audits had been conducted on an annual basis, but these did not provide the depth needed to really address the unofficial accusations being made. ANONYMOUS WHISTLEBLOWER ¶4. (SBU) On June 30, an anonymous person claiming to be an employee of UAC made allegations that closely mirrored the rumors mentioned above. These allegations were made to the fraud hotlines of USAID, Irish AID, UNAIDS and DFID. The Development Partners agreed for the need to move quickly and a formal request was made to the Uganda Auditor General for a 'No Objection For a Forensic Investigation of UAC'. Concurrence by the Auditor General was quickly given and KPMG Kenya was contracted to carry out the audit. Bringing in auditors from a different country is considered crucial in trying to uncover the true nature of the allegations. The one Ugandan investigator on the team has already been removed due to personal threats. The team has also found certain UAC staff members more willing to talk openly with the Kenyans. COMMENT ¶5. (SBU) If the forensic audit uncovers serious corruption, which many expect it will, UgandaQs reputation as a reliable and honest partner in the war against HIV/AIDS will be tarnished further, just as the country seemed to be getting past the fallout stemming from the misappropriation of Global Fund monies in 2006 (reftel). If the rumors are confirmed by the audit, the ensuing scandal could prove worse in terms of perception since the UAC is, after all, the body responsible for leading the national response. It is not a "briefcase NGO," as was the case in many of the Global Fund corruption cases. Perceptions aside, at a time when the effort against HIV/AIDS is slipping in terms of rising prevalence and drug shortages, the Government of Uganda needs to do much more to ensure that the substantial inflows of donor money are protected and used for their intended purposes. HOOVER