Govt loses Shs18 billion in irregular salary payments

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The government will lose Shs18b that was irregularly used for the payment of salary arrears and increment for teachers and head teachers and the recruitment of health workers by districts in the financial year 2015/16.

An inquiry by Parliament’s Budget Committee found out that money was reallocated by government agencies on the orders of the Secretary to the Treasury, Mr Keith Muhakanizi, but the reallocations breached the Public Finance Management Act (PFMA).

Against the law
The Shs18b reallocations were beyond the threshold of 3 per cent of the approved budget and, therefore, in breach of Section 25(1) of the PFMA, while the tabling of the supplementary estimates was filed beyond the mandatory four months, breaching Section 25(2) of the same Act.

The ministries of Local Government, Lands and Tourism, the Electoral Commission, Director of Public Prosecution (DPP), Public Service Commission and some 37 districts benefitted from the Shs18b.

Transfer of employees, recruitment of health workers and salary enhancements-sectors that the Shs18b was used to cater for, are “clearly foreseeable and avoidable” and do not meet the criteria for supplementary expenditure, indicates the report.

The minority report recommends that Mr Muhakanizi be held “personally responsible” for the loss of the Shs18b that was spent in violation of procedures laid down in the PFMA.

“….hold the secretary to Treasury responsible, personally accountable and require him to make good of the loss of public funds. Being the accounting officer, [he] should have submitted to Parliament the supplementary schedule within the mandatory four months. This is premised on the fact that the Secretary to the Treasury is responsible and personally accountable to Parliament for activities of a vote,” reads the report.

Finance minister speaks out
But State minister for Finance (Planning) David Bahati said government was caught in a tight situation after agencies recruited workers who were not captured on the substantive budget and yet they had to be paid.
“In the middle of the year, you see accounting officers recruiting and promoting and yet they never budgeted for these resources. These are employees who are employed and need the resources. This money went to the pockets of employees, it never went anywhere else,” Mr Bahati said.

In the report, the Finance minister argues that the ministry failed to comply with Section 25(1) of the PFMA because by June 13, 2016, Cabinet ministers were not yet sworn in and in order to avoid accumulation of arrears, the Secretary to the Treasury requested the Auditor General to allow for supplementary expenditure.

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