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Central Bank of Somalia slams allegations of corruption

Saturday, July 27, 2013

UN monitoring group accuses institution of allowing private individuals to steal $12 billion of public funds; central bank hits back against 'unsubstantiated' claims.

The Central Bank of Somalia has robustly denied allegations that it is "at the heart" of a system of "misappropriation, embezzlement and outright theft of public resources".

Earlier this month, the United Nations monitoring group on Somalia and Eritrea released a report condemning the handling of public funds in the country, on the grounds that around 80% of withdrawals from the central bank "are made for private purposes and not for the running of government".

Between 2010 and 2012, the Arab League, China, Germany and South Sudan provided Somalia with $16.9 million. Of this, the group said, $12 million could not be traced. The central bank's governor, Abdusalam Omer, was "key to these irregularities", the report said.

The central bank has issued a fiery response, describing the allegations as "completely unfounded, unsubstantiated, defamatory and reckless" and accusing the monitoring group of "extremely poor research and substandard investigative techniques".

Had the monitors "bothered to review the actual evidence", it went on, they "would have learned that every single dollar flowing through the central bank is accounted for and was paid to an authorised government official or third-party vendor for legitimate governmental purposes".

The UN monitors believe the Somalian political system is built on a patronage network where private individuals make requests of government leaders that "cannot be resisted for personal or other reasons".

They praised the minister of finance for attempting to rein in this practice, but said it was "endemic" in both past and current administrations. "The [central bank] accounts are effectively a snapshot of a patronage network and social relations that defy the institutionalisation of the state".

The central bank insisted that every individual who received money used it for government purposes, ranging from ministerial wages to the provision of food and fuel to the country's armed forces.

This is a symptom, it said, of all transactions and payments in Somalia's economy – be they for goods, services and salaries – being executed solely in cash.

One of the UN monitors' main contentions was that the government's income and expenditure bore "no resemblance" to the deposits and withdrawals made at the central bank.

For its part, the central bank refused to comment on the government's accounts, and instead repeated its claim that every cent of its own finances could be accounted for. Its response included a public offering to open its books "to any objective auditor interested in confirming these facts".

It also sought to defend the reputation of its governor, Abdusalam Omer, whom it deemed an "outstanding citizen". Omer, the response said, has led a reform programme "with the sole intended outcome of reviving the bank as a trusted public institution, building it on principles of efficiency and transparency".


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