By George Murumba

11^th July 2011:

File photo: 'Yellow Girl' Kazibwe leading MSC troops

Embattled former Vice President Specioza Kazibwe’s beleaguered Microfinance Support Centre [MSC] is once again in the spotlight for the wrong reasons after the Auditor General [AG] Mr. John Muwanga released a damning report in which top officials of the government owned microfinance centre are accused of mismanaging public funds.

In his report, a copy of which Uganda Correspondent has seen, Mr. Muwanga gives details of how his team unearthed damning evidence that suggests that top officials at MSC may have irregularly disbursed billions upon billions of shillings worth of loans in direct contravention of the organisation’s own credit policies.

“…The company disbursed a non-interest bearing loan to the Park Yard SACCO of Shs1 billion contrary to the MSC credit granting policies and procedures which state that only start-up loans shall be disbursed interest free and the amount disbursed shall not exceed Shs10 million”, the AG’s report read.

Only a few weeks ago, Finance Minister Maria Kiwanuka, in one of her very first decisions as Minister, suspended Dr Kazibwe from her post as Board Chairperson of the MSC on allegations of corruption and abuse of office.  In particular, Dr. Kazibwe and other top officials at MSC were accused of diverting public funds for personal use.

Dr Kazibwe of course vehemently denied the charges labelled against her and further declared, rather bullishly one might add, that the Minister of Finance has no powers to sack her because she was appointed to her post by President Museveni.

In this latest scandal, the AG revealed that disbursement of non-interest loans above approved thresholds could result in significant loss of potential income.  He added that loan disbursement policies should be followed and if need be, the policies and procedures should be amended to take into account special consideration loans.

The AG also faulted MSC’s management of the organisation’s loan write off policy, arguing that while the write off policy requires the MSC to write off loans that have been outstanding for more than 365 days, as at June 30^th, more than 365 days from the day the loans were taken out, the organisation still had 1.5billion Shillings worth of loans in its books.

“…We recommend that the MSC policy on write-offs be adhered to. Management should assess on a periodic basis, loan facilities that are due for write-off and present them to the Board of Directors for approval”, AG Muwanga said in his report.

The AG also said there were some instances of double posting of loans and advances.  For example, he said, a loan facility of 50million Shillings was posted twice as Mutara Development SACCO and Mutara Savings and Credit Society.  According to the AG, double posting of transactions “…could result in inaccurate financial reporting of the performance of the entity”.

Apart from the alleged corruption at the MSC, the AG has also questioned the manner in which President Museveni gave out huge cash donations to traders at old Owino Market [now St Balikuddembe] when it was razed by fire sometime in 2009.

We were unable to get a comment from the Assistant Commissioner for Microfinance Mr Henry Mbaguta by press time as his phone was switched off.  END.  Please login to www.ugandacorrespondent.com every Monday to read our top stories and anytime mid-week for our news updates.