The Inspectorate of Government (IG) has ordered former Managing Director of the National Social Security Fund (NSSF), Richard Byarugaba and former Director of Finance, Stevens Mwanje to jointly refund 5 billion shillings’ loss they caused to the Fund.
On January 5, 2023, the Minister of Gender, Labour and Social Development, Betty Amongi wrote to the Inspectorate of Government and the Auditor General, calling for joint investigations into allegations of mismanagement, abuse of office and corruption by the former NSSF Managing Director, Richard Byarugaba.
Amongi raised over 25 concerns that her Ministry which supervises NSSF, wanted investigated, following a report from Parliament and a petition by representatives of workers, NSSF savers and labor unions.
The Inspectorate of Government took up the probe as asked by Gender Minister, and on Friday, June 30, 2023, the Inspector General of Government (IGG), Betty Kamya released the report.
The IGG’s investigation noted financial losses incurred by the Fund under the stewardship of the former Managing Director, Byarugaba.
FINANCIAL LOSS OF 687 MILLION SHILLINGS
The report pins Byarugaba and then Director of Finance, Stevens Mwanje for illegally engineering the resignation of two NSSF Board members at a cost of 687 million shillings.
“The Managing Director illegally engineered the resignation of two Board members from the Board to accommodate the Minister’s directive at the cost to the Fund of UGX 687,257,226 (Six hundred eighty-seven million two hundred fifty-seven thousand two hundred twenty-six shillings).
Mr. Byarugaba and Mr. Stevens Mwanje the Director of Finance ought to have advised the Minister that the only way the Board could be reconstituted was if a vacancy on the Board occurred through Section 3 (3)(4) of the Act,” the report reads in part.
It adds, “they (Byarugaba and Mwanje) should therefore jointly refund the money paid to 2 Board members who resigned from the Board on their own volition.”
Kamya while addressing reporters about the matter on Friday, said, there is no provision in NSSF Act that if someone resigned from the Board, they should be paid for the time they would have stayed serving on the Board.
“And this is what happened, and caused that loss, and that loss has to be paid for,” she said.
FINANCIAL LOSS OF 4.4 BILLION SHILLINGS
The report further notes that Byarugaba and Mwanje caused NSSF, a financial loss of 4,400,854,827 shillings when they authorized irregular payments to staff who exited under voluntary early retirement.
“Mr. Richard Byarugaba and the Director for Finance, Mr. Stevens Mwanje caused the Fund a financial loss of UGX 4,400,854,827 (Four billion, four hundred million, eight hundred fifty four thousand, eight hundred twenty seven shillings) when they authorized irregular payments to staff who exited under voluntary early retirement, an exit package not backed by law and outside the provisions of Sections 87 of the Employment Act and Section 23.12 of the NSSF Human Resources Policy Manual, 2017. They should jointly refund this money,” the report reads.
Kamya while speaking to reporters said that an exit package was not backed by law, and outside provisions of Section 7(8) of the Employment Act.
She added that some of them had about only three months left to the end of their contracts, but they were paid “hefty sums of money as if they still had their contract running.”
The IGG’s report is calling for Byarugaba and Mwanje to jointly refund the money for the two financial losses caused.
“We direct that both Mr. Byarugaba and the Director for Finance, Mr. Stevens, jointly refund this money,” Kamya said.
In releasing the report, the IGG pledged not to prosecute the two unless they refuse to refund the money.
“We are going to write to Mr Byarugaba and Mr Mwanje,asking them to refund the money. I am sure that they will respond. Normally we do give people some timeline, but we haven’t come to that yet,” she said.
CONTROVERSIAL 6 BILLION SHILLINGS
It is worth noting that while appearing before the Parliament select committee appointed by Speaker Anita Among specifically to probe the same matter (mismanagement of funds at NSSF), the Fund’s Board Chairperson, Peter Kimbowa claimed that Minister Amongi irregularly and unlawfully requested for 6 billion shillings from NSSF coffers.
On February 2, 2023, a day after Kimbowa’s allegation before the select committee, Amongi also appeared before the same Committee and rejected the claim by the NSSF Board Chairperson.
Kimbowa had told the committee that the 6 billion shillings under the 2022/2023 budget was not approved by the Board because it did not have a work plan.
Amongi told the committee that her decision was guided by Section 29 of the NSSF Act which mandates her to amend the NSSF budget, as deemed necessary.
Amongi said that she requested for the funds after she identified that the Fund’s 2022/2023 budget did not provide for activities to implement the amended NSSF Act which introduced voluntary contributions, among others.
NSSF rejected Minister Amongi’s request, and the 6 billion shillings was not approved.
The IGG report now highlights that Byarugaba’s refusal to implement the Minister’s directive to amend the NSSF budget to include 6 billion shillings for purposes of strengthening compliance and enhancing partnerships was an act of insubordination.
“The Minister was within her rights to direct amendment of the budget. We therefore recommend that regulations need to be developed, or Section 29(3) amended to regulate the Minister’s power over the budget,” Kamya said.
However, despite some costly management and financial decisions, the IGGs report commends the pair compared to the robust status of the fund during Byarugaba’s 12 year tenure.
“The Fund recorded remarkable growth of accumulated contributions and net worth from 1.7 trillion to approximately 17 trillion, which is a key performance indicator of the the CEO of the Fund.”
Byarugaba said he will not appeal the IGG’s order to refund the money.