Somalia has hired British and US consultants to discredit a UN report that claims rampant corruption in Mogadishu because it threatens to imperil donor funding and the return of foreign-held assets, including gold, totalling billions of dollars.
The report, commissioned by Somalia’s president and seen by the
Financial Times ahead of its release, accuses UN investigators of being
“factually inaccurate and inexplicably biased” and refutes claims that
the central bank doubles as a corrupt slush fund and that $12m
transferred to the bank by accountancy firm PwC “could not be traced”.
“We
are not claiming that this is a perfect government after 22 years of
statelessness, mistakes can happen [but] we want to show the world we
are not hiding anything — we have zero tolerance of corruption and the top priority of this government is reform of financial
institutions,” President Hassan Sheikh Mohamud told the FT ahead of the
report’s release.
Years of corruption and financial mismanagement in Mogadishu, which has yet to recover from decades of instability and still faces terrorist attacks,
have left donors worried that aid is regularly diverted, but many hoped
they could work with a promising new government formed in Mogadishu
last year.
But Mogadishu officials are concerned the UN report will undermine
Somalia’s appeal to donors ahead of an aid conference later this month.
“Despite the change in leadership in Mogadishu, the misappropriation of
public resources continues in line with past practices,” said the report
from the UN panel of experts, published earlier this year.
Mr Mohamud, who survived an assassination attempt this week, said he
wants to assure donors that Somalia has a “very transparent and
accountable government” and said he is expecting pledges of “more than
$1bn, more than $2bn even” at an EU-sponsored development conference in
Brussels at the end of September.
Jarat Chopra, co-ordinator of the UN report, said he and his team of
seven experts stand by their findings. He has not seen the government’s
rebuttal but said the two firms that prepared it may have “ulterior
motives and vested financial interests” because they are also involved
in other commercial projects in Somalia whose contracts have not been
published.
“It would be a basic conflict of interest for a firm to be secretly
under contract pursuing Somalia’s overseas assets while pronouncing
conclusions on the transparency, accountability and effectiveness of
public financial management,” said Mr Chopra.
Premjit Dass of FTI Consulting worked
as the forensic accountant on the rebuttal. FTI, whose Africa
department is headed by Lord Mark Malloch-Brown, a former UK cabinet
minister, also promoted an unpublished oil exploration deal between
Mogadishu and Soma, a new UK company headed by former Tory leader Michael Howard, which was criticised for its lack of transparency.
FTI said it believes the Soma oil deal is transparent.
US law firm Shulman Rogers, the other firm that prepared the
rebuttal, is also mandated by Mogadishu to recover Somali assets held
overseas that have been rendered inaccessible since civil war began 22
years ago. Diplomats say millions of dollars in cash is thought to be
held in private bank accounts in Dubai, Italy, Kenya, Switzerland and
the US.
“Every other month we’re getting new information on bank accounts in
all corners [of the world] -- we want to recover that money,” said Mr
Mohamud.
In 2009 Shulman Rogers signed an asset recovery deal with the
previous transitional government for fees of $50,000 a month and 3.5 per
cent of any assets recovered, but the company said the government did
not pay in full. Jeremy Schulman, of Shulman Rogers, this year
negotiated a new contract with the Mogadishu government that has not
been published but is, he said, “significantly discounted from [the
2009] arrangement”.
“We are trying to help them recover Somalia’s state assets and their
gold so they can use that as the foundation for printing new currency,”
said Mr Schulman, who denied any conflict of interest, saying Mr Chopra
had made “unfounded allegations”.
Although the World Bank has a programme that tracks and recovers assets for free, it is not providing this service to Somalia.
Many financial institutions have been reluctant in the past to return
the money to a makeshift government in charge of a failed state
regularly accused of embezzlement, but US and IMF recognition of
Somali’s new Mogadishu government this year — the first such recognition
in more than 20 years — is likely to trigger the return of the money.
A US government official told the FT that gold belonging to Somalia
worth an estimated $25m is stored at the US Federal Reserve, along with
cash and property worth millions of dollars, and it is expected to be
signed back over to Mogadishu in the coming weeks.
Diplomats say international financial institutions would be less likely to co-operate if allegations of corruption persist.
source:ft.com
news@qalin.net
Somalia moves to discredit UN report over funding fears
Somalia has hired British and US consultants to discredit a UN report that claims rampant corruption in Mogadishu because it threatens to imperil donor funding and the return of foreign-held assets, including gold, totalling billions of dollars.