Two audit reports have unearthed irregularities at the National Social Security Fund, but the fund’s top executive tells The Observer that workers’ savings are in safe hands.
The NSSF is accused of fraud and management misconduct in separate reports from the Inspector General of Government and the Public Procurement and Disposal of Public Assets Authority.
According to the IGG’s report of November 2013, hundreds of millions of shillings were lost, after various companies did not remit statutory contributions to the fund. The report pins a one Hez Alinda, then a contributions manager at NSSF, for irregularly waiving the money.
“All the funds waived, totalling to Shs 664,156,362, constituted income of the fund, which was lost,” the report says.
By law, Ugandan employers with more than five workers must remit 15 per cent of each employee’s monthly salary to NSSF as social security savings redeemable upon retirement at 55 years. Some employers, however, break this law.
The IGG’s report shows that contributions worth hundreds of millions of Shillings were waived from Reynolds Construction Company and Soleh Boneh International Holdings Uganda (SBI). Other companies that benefited from Alinda’s generosity, according to the report, include Speke Resort Munyonyo.
“Early 2012, NSSF audited M/S Speke Resort Munyonyo hotel and discovered Shs 1.2bn in unpaid contributions,” the report notes. “After negotiations with the management of the hotel, Alinda reduced the figure to Shs 400m.”
Alinda’s generosity towards SBI and RCC cost NSSF at least Shs 300m.
“Within the same period [2012] an audit was carried out at the M/S Soleh Boneh International Holdings AG Uganda [SBI]/ Reynolds Construction Co. Ltd [RCC] that revealed that Shs 360m was unpaid contributions,” the report says.
“Alinda again fraudulently reduced the amount to Shs 60m after excluding the expatriates from the report,” the report adds.
Alinda invests
The IGG says Alinda has since become an investor in real estate. He is said to be constructing a “huge” hotel in Hoima, after getting a Shs 40m mortgage from Housing Finance bank.
The report points out that control measures at NSSF remain weak.
“There were minor controls in the process of compliance audits done at NSSF especially by top management,” the report noted.
“It was observed that the reconciliation team at the head office only does arithmetic check which offers no or dismal value addition aspect. The process is, therefore, prone to abuse,” the IGG said.
“It was observed that by instructing the auditors for SBI/RCC to create a separate column for special contributions arrears... Hez K. Alinda had an ill intention to consume this information to his advantage,” the report notes. “Though he was well aware that no one had the authority to waive this contribution, he did not seek guidance from the relevant authorities.”
Consequently, the report recommended that NSSF should recover unremitted contributions from all companies that failed to meet their obligation in the period audited.
Managing director
On the other hand, Geraldine Ssali, the deputy managing director of NSSF then, and now the acting MD, was found culpable of flouting the PPDA Act in the procurement of air conditioners, according to an audit of NSSF during the 2011/2012 financial year.
“Though the contracts committee rejected the approval of this procurement on justification that it was retrospectively procured, Mrs Geraldine Ssali [deputy MD] instructed the PDU to go ahead with the process and this contravenes Reg. 223,” reads the report.
“This practice affected the independence in the procurement system,” the report noted.
People first
Contacted for a comment, Ssali defended her decision, maintaining that she could not sit back and watch her staff work in a risky environment.
“I did not contravene the PPDA Act, because it allows for emergency procurement, which we did because it had taken [us] five months without air conditioners. And my staff was being roasted in the building. That is why I asked the head of PDU [Procurement and Disposal Unit] to procure the ACs,” she told us in a telephone interview.
“I could not wait for the notice of the best bidder for the period of 10 days to elapse when my people [staff] were suffering,” she said. “Procedure can’t come first before people’s lives.”
On Alinda’s irregular conduct of waiving money from some companies, Ssali said: “I have very many officers who are doing their work as Alinda, but it can’t be taken to be fraud and I can’t just allow to be overseeing a company where there is misappropriation of the workers’ money. And that guy is no longer with us. He has a better job at the ministry of Internal Affairs.”
She added: “I have done my best to see that we raise our collections because we were collecting Shs 28bn, but we are now collecting [Shs] 57bn, but workers should have trust in us.”