Minister Bayle’s gross theft, misappropriation of funds and violation of all fiscal procedures (Part-1 + Evidence)

December 15, 2018

Reading Time: 8 minutes

MOL conducted Financial Intelligence and Financial Corruption Report Minister of Finance: Part I.
MOL will release our Financial Intelligence and Financial report of Banadir Administration end of this month December of 2018

A BRIEF INVESIGATIVE REPORT ON MISAPPROPRIATION OF FUNDS FOR THE FISCAL YEAR 2017 & 2018 BUDGET OF THE FEDERA L GOVERNMENT OF SOMALI A

Finance Minister Abdirahman Beileh presides over one of the country’s top corruption mills and must be immediately replaced and prosecuted.

MOL reported October 15, 2018 the first report of mismanagement, looting and theft of Minster of Finance. (Read) After one of investigation, This brief report presents a disturbing and critical outlook on gross theft, misappropriation of funds and utter violation of all fiscal procedures in the management of public funds in Somalia during the review period.

Central to the report is the prominent role of the Finance Minister Abdirahman Beileh whose actions in running the graft scheme run counter to the very rules and laws, which bestowed him, mandate to manage the public purse.

EXECUTIVE SUMMARY

The national budget for the fiscal years 2017 and 2018 (FY2017 & 2018) stood at $260m and $274m respectively. During these fiscal periods, a total of $85 million was looted from the public coffers.

Budget Misappropriations

The Ministry of Finance which is responsible for ensuring fiscal discipline in the execution of the budget was itself at the centre of a self-enrichment scheme and diversion of funds for personal interests.

As indicated in the Budget and Finance Committee report (2018), the Finance Minister out rightly violated the law in withdrawing over 60% of the Contingency Fund during (FY2017 & 2018) for purely personal use. The Contingency Fund is dedicated for emergency use such as during disasters thus to draw the same funds for entertainment events, bullet proof cars and trips is not just illegal but morally reprehensible. According to the Committee report, the Minister also used the Contingency Funds to ‘pay salaries’ to staff who were already covered under the Budget.

Minister Beileh used selective strategy of budget control or cash plan releasing only the funds allocated to the offices of the Presidency, Prime Minister, House of the People and his ministry while other ministries and departments were starved of funds and could not even meet utility bills such as electricity and water.

Minister Beileh also misused $3 million allocated by Parliament for payments of arrears under the sub-head of arrears. These funds were set for specific purpose and rights of individuals who served the country in the past such as members of 9th Parliament, ministries, salaries of civil servants or government workers as well as government commitments to security units.

Minister Beileh also approved double salaries for his own personnel and staff related to him as indicated in the attachment below.

In a well-choreographed scheme aimed at convenient withdrawal of funds for uses other than as directed in the budget, Minister Beileh improperly transferred over $36 million from head to head during the FY 2018 as indicated in the Committee report. This is an outright violation of financial regulations.

Wide Financial Irregularities:

As the Budget and Finance Committee has reported and confirmed by the evidence attached below, the minister illegally collected money from remittance companies and private banks and this money was deposited into a special account of the Ministry of Finance in the Central Bank as ordered by the Minister which is a violation of existing financial regulations of the country. The regulations require that all funds be deposited at the account of the Federal Government in the Central Bank (Single Treasury Account) within 24 hours. Subsequently, Minister Beileh withdrew $600,000 from the said account to finance the construction of a hotel in Hargeisa.

Minister Beileh and part of his family were also responsible for the termination of the Dryland Project financed by Islamic Development Bank to the tune of $5 million. Beileh appointed one of his family members in Somaliland as managing director for the project. According to the reports on the issue, at least $1 million disappeared in the hands of Beileh’s son. As a result of this irregularity, Islamic Development Bank suspended the project- see the attached termination letter.

The newly signed contract with World Bank which amounts to $140 million is already under the mercies of minister Beileh. He (Minister Beileh) has already entered into an agreement with Djibouti and Somaliland based companies belonging to his son. The contracts are for two projects valued at $40 million while the fate of the balance remain unknown for now.

The Minister admitted and corroborated by the Deputy Governor of the Central Bank that 35 million dollars as part of KSA budget support amounting in total to USD50 million was spent in fiscal years of 2017 and 2018 outside the respective Appropriation Bills and the without the endorsement of the Parliament.

Accounts Open in the Central Bank under the name of the MOF

There are a number of accounts open in the Central Bank in which the minister clearly uses to misuse funds. For instances, there is an account open under the name of the MOF. This account is used to deposit taxes collected by the Inland Revenue Department. Large amounts of cash are withdrawn from this account under the names of individuals working in the Ministry. A total of $1,100,917.13 was withdrawn from this account from Jan-June 2018. Because of the sensitivity of the matter, details of these bank accounts will not be shared with the public.

Staff Monitored Programs (SMP) is an agreement between Somali Government and the IMF to monitor and supervise the implementation of the country’s economic program. Even though the Minister always boastfully talks in media conferences and the social media about the SMP and the debt relief process, it is a fact that the minister gives the IMF false information about the economic and financial position of the country and the implementation of enacted financial bills. The truth will certainly come out soon.

SMP is a long process with benchmarks without which we will not go forward and it is clear that the current minister is not suited to deliver the desired results. The Finance Minister has perfected the art of false impressions and creating unrealistic hopes among the public during media briefings. It is therefore imperative that the government moves in to manage the public expectation failure to which it should prepare for a catastrophic political backlash from a betrayed public.

Unrealistic and inaccurate Currency Reform Program –

Whereas the currency reform project is sound and a welcome one, consistency, predictability and confidence are crucial to ensuring market stability and public buy-in.

However, over the course of this year, the Minister has issued very conflicting and at worst fake news causing market ripples, anxiety and speculations leading to rising inflation and hoarding of the Somali Shilling. The statements from the Ministry which are purely unsupported by solid evidence have created fear, confusion and frustration in the local market and among the international community and donors.

A case in point is a media briefing in May 2018 which led to rejection of the Somali Shilling in some parts of the country because of misleading and inaccurate information from Minister Beileh. As a result of the fake news, the Somali Shilling lost value as market pressures crept in leading to heightened demand for the US Dollar.

Wrong Information on the Revenue Collection:

In a recent media briefing, the Minister (Beileh) announced an 85% increase in domestic revenue collection despite the fact that such information was baseless and misleading and more over the minister Abdirahman Beileh promoted and publicized this misleading information on all possible media platforms, using allocated budget from the public tax.

Such irresponsible and unfounded statements could not only inadvertently amount to economic sabotage but also puts to question the responsibility and credibility of the “Nabad & Nolol” government in the eyes of the public and that of international partners.

Integrity Issues: Minister has no Credibility, Lacks Capacity, Transparency and Accountability.

While the Minister (Beileh) always talks about transparency and accountability, his actions are exactly the opposite. For example, almost all his assistants in his office are close relatives and also double up as staff in the Ministry of Foreign Affairs where he helped recruit while serving as Foreign Minister. Besides monthly salaries, the said staff receive monthly allowances (gunno) on a higher scale than the salaries from the minister. The Ministry of Finance also caters for hotel accommodation to the same staff (Minister’s kin) in addition contracts from the international partners such as the World Bank courtesy of Beileh. In effect, these Minister’s kin working for the government receive between two and three monthly cheques all approved and signed by the Ministry of Finance.

The Ministers’ monthly expenses (security, housing, food, travel and other expenses) are also comparatively huge in relation to the minimal resources available and the financial situation in the country, which is contrary to the best and effective use of resources. He spends large sums of donor funds and poor Somalia tax payers’ money on bullet proof cars, business class air tickets, travel allowances and accommodation while other government ministers and institutions are not even able to access basic running costs.

Ghost Employees at the MoF

There are 267 ghost staff who are not in the payroll system of the country; not registered under the Civil Service Commission and the Ministry of Labor. These ghost workers are paid a total US54, 200.00/month or $650,400.00 a year (See attachment 4)

Conclusion:

Given the massive public theft and mismanagement of public funds and the imprudent stewardship of these scare resource, Somalia and its suffering citizens deserve and are entitled to get a new minister to manage their public funds. It is very clear that the Minister is unfit to do this important job, incompetent, morally corrupt, unworthy of the public trust and cannot lead this Ministry or any other public institutions and should be held accountable for all the above stated financial and administrative corruption cases.

We urge the Federal Government of Somalia to take appropriate measures, as well as relevant authorities to investigate these financial and administrative corruption cases. That Somalia is serially ranked by Transparency International as the most corrupt nation on earth cannot be gainsaid. We strongly appeal to the President and Prime Minister to take immediate action against minister Beileh or the Somali citizens who entrusted them to manage these resources on their behalf will take back that authority.

Evidence collected MOL – see Attachments