Auditor General Pins National Medical Stores Bosses in Shs6Bn Scam

Auditor General (AG) John Muwanga

Officials at the National Medical Stores (NMS) in Entebbe, are in trouble over allegations of causing financial loss to the government worth over Shs6.5Bn, well knowing that it is an act tantamount to abuse of office and liable to criminal litigation.

The office of the Auditor General (AG) John Muwanga has compiled a report that exposes the rot at NMS, which is headed by Moses Kamabare as the Accounting Officer along with the Managing Director, although the for a long time has been hidden.

According to the AG’s report for the Financial Year 2018/2019, officials at NMS were cited in insider trading, whereby they allegedly colluded with suppliers to supply medicine and medical equipment at inflated dollar rates, so as to pocket kickbacks.

The AG Muwanga faults NMS officials, Kamabare inclusive, of failing to hedge the Shilling against the Dollar while executing their procurements, well-knowing that their acts would cause financial losses to the government worth billions of shillings.

Muwanga’s report states in part thus; “Section 45(2) of the Public Finance Management Act 2015 requires an Accounting Officer to put in place effective systems of risk management, internal control and internal audit.
However, audit noted that although NMS procures medicines and other health equipment largely using foreign currency, it did not put in place mitigation measures against currency
fluctuation risks (hedging).

Consequently, UGX. 6,631,542,000 was disclosed in Note 26 as a net foreign exchange loss. The lost funds would have been spent on service delivery if the risk of loss was mitigated.”

The report adds that; “In response, the Accounting Officer explained that by government policy, all vote funds were managed and controlled by the Accountant General and therefore NMS did not have access to the funds for hedging.”

After noticing the anomaly, the Attorney General advised the Accounting Officer (Kamabare) to liaise with the Ministry of Finance, Planning and
Economic Development and explore possibilities of undertaking hedging against foreign currency fluctuation risks in order to minimize loss of funds.

The Auditor General also faulted NMS bosses for making fixed allocations for medical supplies which are way below the demand by health facilities across the country.

In the segment titled ‘Fixed Budget Allocation for Essential Medicines and Health Supplies’, the report states in part thus;
“The budget allocation of UGX 219Bn as government contribution to essential medicines and health supplies for various health centres and hospitals has been fixed since financial year
2011/2012. This is against the increased number of patients and the depreciated local currency over the years. For instance, patients registered at Mulago National Referral
Hospital increased from 1,356,870 to 1,641,390 (21%) while China Uganda Naguru Hospital registered an increase of 704,947(29%) during the above period. The budget is not backed by statistics from the health facilities, who are the ultimate beneficiaries of the medicines.”

The report noted that; “A fixed budget allocation for essential medicines and health supplies against an increasing population of patients and depreciating shilling leads to declining quality of the health care by increasing the stock outs of medicines in the health facilities.”

However, the Accounting Officer explained that NMS had on previous occasions requested for
additional funds through the ministerial policy statement and the requests put under unfunded priorities. He further indicated that under the Laboratory budget line, NMS
requested for UGX 50Bn but no funds were availed and the Corporation had to reallocate UGX5Bn from the available resources.

But the AG advised the Accounting Officer to liaise with the respective stakeholders like Ministry of Finance and Ministry of Health, among others, so that the budget allocation for essential medicines and health supplies is increased to meet the increased demand.

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