Allegations made in a Reuters article against the Central Bank of Somalia as being a ‘’slush fun

Allegations made in a Reuters article dated 02/07/2013 against the Central Bank of Somalia as being a ‘’slush fund’’ for private payments, citing a leaked UN Monitoring Group report.

Article Keydmedia Online
5 July 2013

The Central Bank of Somalia refutes in the strongest terms the allegations made in a Reuters article dated 2nd July 2013 citing a UN Monitoring Groups report with the headline ‘’ Somalia Central Bank a slush fund for private payments - U.N.” These baseless allegations leveled against Governor Abdusalam Omer and the Bank is tarnishing the view of the Central Bank as a professional and transparent institution.

Let’s address one allegation at a time firstly:

1) Alleged ‘’ Khaki envelope’’ practice of managing Somali public funds:

The Central Bank of Somalia has a deposit, transfer and withdrawal management services with full documentation in regards to the running of the governments Single Treasury Account.

2) ‘’$12 million USD could not be traced out of the $16.9 million USD that was transferred from PwC to the Central Bank of Somalia’’.

No single dollar has been diverted from the Central Bank of Somalia. The total sum of 16.9 million dollars was received at the Central Bank of Somalia with four representatives, including the Central Bank, Ministry of Finance, Representative from PwC and the transfer agent, present as well as signing a declaration of proof of receipt. Included in this response will be the various documentations proving otherwise including spreadsheets detailing the fund transfers.

3) "On average, some 80 percent of withdrawals from the Central Bank are made for private purposes and not for the running of government, representing a patronage system and a set of social relations that defy institutionalization of the state,"

The Central Bank of Somalia does not execute transactions nor approve withdrawals on behalf of the Government from the Single Government Account (Treasury Account) by private individuals. Every withdrawal from the account is made by a designated Government employee with a Ministry of Finance voucher which is duly signed by that Ministry of Finance and the Accounting General of the Federal Republic of Somalia. It is not in the mandate of the Bank nor any of its statutory obligations to determine where expenditure is directed to or which Ministry or public office should receive money from the Government funds. This is a budgetary issue of which the prerogative lays with the Ministry of Finance. The Central Bank will execute withdrawals based on authorization from the Ministry of Finance in a lawful manner and according to the Ministry’s budget directive.

Documentation of expenditures from these funds is available at CBS and all records will be included in a more detailed report to be published by the Bank in the following days. The Central Bank will also provide and furnish any relevant information requested or deemed necessary by any other independent auditors or authorities.

4) ‘’The U.N. report said all bank decisions were made by Omer because there were no board members in place and the bank does not operate as a government body subject to policy decisions or oversight from integrity institutions and parliament’’.

This is yet another indication of the lack of vetting performed by the UN Monitoring Group, producing a report that is littered with misinformation. Governor Abdusalam was appointed on the 13th January 2013 and started his role at the Bank on the 13th February 2013. The last disbursement and transfer from the PwC account to the Transitional Federal Government of Somalia was on 26th March 2012. As such Dr. Omer could not have made any decisions on behalf of the Central Bank of Somalia.

On the note of public oversight of the Central Bank of Somalia, the Governor of the bank has had a very close working relationship with the Federal Parliament and specifically with the Parliamentary Sub-Committee for Financial Affairs and has appeared on the committee to answer questions directly from the honorable Members of Parliament in an open and transparent manner. The Central Bank of Somalia is resolute in continuing to working closely with the Parliament.

On the note of the Board of Directors to the Bank, there was no functioning board for CBS at the time of Dr. Omer’s appointment. This is a political decision of which the Government of the Federal Republic of Somalia has to appoint the individuals who will serve on the Board. A list of highly qualified candidates has been prepared and sent by the Central Bank of Somalia and discussions are underway to complete the appointments.

4) ‘’The report noted that Mohamud