Auditor reveals massive theft, wastage in state institutions

• Theft of public assets, forged signatures and open fraudulent activities are on the rise among state institutions, costing the taxpayer millions of francs and casting a dark shadow on the government’s efforts to fight corruption.
• Auditor-General says there is a need for chief budget managers to put in place appropriate mechanisms to avoid unauthorised expenditure and to watch out for thieves using sophisticated means.
• Economists believe the continuous mistakes undermine the country’s progressive economic outlook as some of errors relating to mismanagement and control of internal assets continue to widen the scope.

Theft of public assets, forged signatures and open fraudulent activities are on the rise among state institutions, costing the taxpayer millions of francs and casting a dark shadow on the government’s efforts to fight corruption.

According to the latest Auditor-General’s Report for 2013/14, which is before the Public Accounts Committee (PAC) of parliament for scrutiny, at least Rwf11 billion of taxpayers’ money is feared to have been lost due to wasteful and unauthorised expenditure.

Also, at least Rwf1.9 billion was lost through fraudulent activities, of which Rwf152 million was withdrawn from public bank accounts using forged documents or fake signatures.

Moreover, Rwf347 million was fraudulently spent on personal gains and never accounted for or was diverted before it reached its intended beneficiaries. The audit revealed that Rwf1.5 billion in fraudulent transactions had not been recovered compared with Rwf1 billion reported in last year’s report.

Fixed assets and materials worth Rwf343 million could not be accounted for by various public entities. But many of those had been stolen.

The report also points out weaknesses in controls over asset management in public entities that resulted in cases of asset theft or failure to account for some assets in the register.

“These mainly comprised of Rwf172 million of drugs that went missing from Medical Procurement and Production Division (MPPD) warehouses, mainly due to lapses in controls overstock management; and minerals (cassiterites seized by anti-smuggling unit) worth Rwf22 million stolen from the stores at RNRA premises,” reads the report.

The Rwanda Education Board (REB) is said to have been duped by a Nigerian hacker, losing Rwf346 million ($516,397) meant for tuition fees for Rwandan students on a scholarship.

According to the report, the fraudster engaged REB as a representative of the university and provided bank details different from those officially provided by the university.

“REB made a transfer payment to the bank account of the fraudster instead of transferring the fees payments to the official account of the university in Nigeria,” the report states.

Talking to Rwanda Today in a separate interview, the Auditor-General, Obadia Biraro, reiterated the need to improve controls over management of assets and stock items to minimise instances of stolen items.

“We audited one organisation that had bought a scientific tool worth Rwf5.5 million ($8,000),” said Mr Biraro. “These people did an exhibition that was supposed to show the capacity of the organisation using such tool but then they connived with some thieves to have the tool stolen.”

According to him, there is a need for chief budget managers to put in place appropriate mechanisms to avoid unauthorised expenditure and to watch out for thieves using sophisticated means.

Of particular concern is high levels of financial mismanagement in parastatals, in particular the Government Business Enterprises (GBEs) and government boards, which have been singled out as very risky after failing to account for funds as well as engaging in wasteful expenditure.

Former Energy, Water and Sanitation Authority (EWSA), which has since been split into Rwanda Energy Group (REG) and Water and Sanitation Corporation Ltd (Wasac) leads the rest of enterprises in misappropriation of allocated funds.