Cablegate: Forensic Audit May Uncover Corruption at The

VZCZCXYZ0002
RR RUEHWEB

DE RUEHKM #0985/01 2380539
ZNR UUUUU ZZH
R 260539Z AUG 09
FM AMEMBASSY KAMPALA
TO RUEHC/SECSTATE WASHDC 1724
INFO RUEHXR/RWANDA COLLECTIVE

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

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