How Bank of Uganda was Instructed to Pay UGX 60Bn to Fraudsters

Summary:

• The Bank of Uganda (BoU) clarified that it was not responsible for the Shs 60 billion fraud, stating it was instructed to make the payments, which were diverted outside its IT systems. The fraud involved two transactions: one payment of USD 6.134 million to Roadway Company Limited in Japan and another of USD 8.596 million to MJS International in London.

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The Bank of Uganda (BoU) has responded to the recent fraud that resulted in the diversion of over Shs 60 billion of taxpayer funds, clarifying that it was not responsible for initiating the fraudulent transactions. Instead, the Central Bank was acting on external instructions when the funds were diverted to fraudsters.

In a statement today, Deputy Governor Michael Atingi-Ego confirmed that the fraud was perpetrated outside BoU’s IT systems. He emphasized that BoU was merely the executing entity, carrying out payment instructions it received. “These fraud incidents were initiated outside the Bank of Uganda IT systems to divert the funds. Bank of Uganda is a paying entity. You get instructions to pay, and we pay as instructed,” Atingi-Ego explained.

While Atingi-Ego did not specify who issued the payment instructions, such directives typically come from the Ministry of Finance. He also made it clear that the ongoing investigations will determine how the fraud occurred, where it took place, and who was involved.

Fraudulent Transactions Uncovered

The fraud involved two separate transactions related to Uganda’s debt service payments. On September 12, 2024, a payment of USD 6.134 million that was intended for the World Bank was instead sent to Roadway Company Limited, a company that appeared to be a fraudster, via MUFG Bank in Japan. A second fraudulent payment occurred on September 28, 2024, when USD 8.596 million meant for the African Development Fund was diverted to MJS International in London.

Upon discovering the misdirected payments, the Bank of Uganda immediately launched internal investigations and reported the matter to relevant authorities, including the Criminal Investigations Directorate (CID) and the Financial Intelligence Authority (FIA), in order to recover the diverted funds.

Partial Recovery and Ongoing Efforts

The Deputy Governor revealed that, as of now, the Bank of Uganda has successfully recovered USD 8.205 million of the diverted funds. These funds, which had been sent to MJS International in London, have been credited back to Uganda’s government account.

“That was our key priority: to recover the funds. We instructed our correspondent bank, Citi Bank, and the banks where the fraudsters held accounts to freeze the funds,” Atingi-Ego said.

However, he noted that there has been no cooperation from MUFG Bank in Japan, which has hindered the recovery of the payment made to Roadway Company. Despite these challenges, BoU continues to work with domestic and international partners, including the Financial Intelligence Authority, to trace and recover the remaining funds.

BoU Denies Hacking Claims

In response to rumors suggesting that the Bank of Uganda’s IT systems were hacked, Atingi-Ego firmly denied the claims. He stated, “It is absolutely not correct that the BoU IT systems were hacked. Hacking involves unauthorized access to computer systems, and there is no evidence that this occurred in this case.”

Furthermore, the Deputy Governor confirmed that no BoU staff members have been implicated in the fraud.

Investigations Continue

The Bank of Uganda has also cooperated with the Office of the Auditor General, which is conducting independent investigations into the incident. BoU is hopeful that the ongoing inquiries will not only help recover the remaining funds but also shed light on the full extent of the fraudulent activities and identify those responsible.

As investigations progress, the Bank of Uganda remains focused on recovering the remaining USD 391,000 and ensuring that all funds are returned to the government’s coffers.