In a decisive move to uphold public accountability and protect state reform, the Ministry of Finance of the Federal Government of Somalia terminated its concession agreement with MGS Soft Inc., the company contracted to manage the rental income tax system in Mogadishu. This action, grounded in documented violations and ethical misconduct, sends a clear message: corruption and mismanagement will not be tolerated in Somalia’s fiscal reform agenda.
The termination follows a months-long internal investigation into the actions of MGS Soft’s CEO, Abdirisaq Hersi Mohamed. What started as a promising public-private partnership soon unraveled due to breaches of contract, hidden ownership changes, data manipulation, and misuse of public funds.
The agreement between the Ministry and MGS Soft was signed in early 2024, as part of an effort to introduce structure, accountability, and digital infrastructure to rental tax collection. At the time, MGS Soft (then operating as Mogadishu General Service) offered access to an existing database and a prebuilt system. The Ministry opted for a revenue-sharing model, ensuring that public funds would only be used when performance targets were met. It was seen as a cost-effective approach that aligned with Somalia’s push for modern fiscal governance.
However, behind this optimistic facade, the company’s leadership began to operate outside the agreed terms.
The first major red flag emerged when it was discovered that Abdirisaq had quietly re-registered the company under the new name “MGS Soft Inc.” and removed his original co-founders from the business. The Ministry was never informed of this change, a clear breach of the contract’s ownership disclosure clauses. A formal letter of complaint later confirmed that his partners had been misled and deliberately excluded.
Things escalated on February 6, 2025, when Ministry officials were abruptly locked out of the tax collection platform. System passwords were changed, access was restricted to business hours, and key oversight features were disabled. This obstruction violated the agreement’s Article 4.4, which guarantees the Ministry full, real-time access to the system. Investigators determined that this was a calculated effort to obscure financial activity and limit government monitoring.
The most damaging violation came in the form of diverted tax funds. Instead of depositing rental tax collections into the designated government account, MGS Soft directed payments into personal or third-party accounts. This not only breached Article 3.3 of the agreement but also violated Somalia’s Public Finance Management Act of 2019. When confronted, Abdirisaq admitted to the diversion but attempted to cover it up by claiming he had since repaid the funds into the treasury. The Ministry rejected this justification, making clear that public money must be traceable, deposited correctly, and handled within legal timelines.
Further investigation revealed that the company underwent a complete ownership transfer during the contract period—again, without informing the Ministry. This raised serious questions about who now controlled access to taxpayer information, and whether national data had been exposed to unverified parties. It also represented another breach of Article 12.1, which prohibits changes in ownership without written Ministry consent.
As the situation deteriorated, MGS Soft laid off more than 200 employees—most of them young professionals recruited to support the rental tax program. These mass firings disrupted operations and contradicted the stated goal of using private sector partnerships to promote local employment and economic development, as outlined in Article 109(1)(a) of Somalia’s Public Procurement Act of 2016.
Faced with this chain of misconduct, the Ministry acted firmly. On March 25, 2025, it issued an official Termination Letter to MGS Soft, with copies shared with the Office of the Auditor General, the Accountant General, and senior Ministry leadership. The letter cited all the violations, demanded a full and immediate handover of the system and all data, and confirmed that no further payments would be made until full compliance was achieved.
With the contract canceled, the Ministry is now preparing to advertise the rental tax system contract to new, qualified service providers. These candidates will be assessed based on their capacity to meet strict standards for transparency, data security, technical reliability, and ethical governance. The goal isn’t just to replace MGS Soft—it’s to reset the system with stronger controls and public safeguards.
This case is a warning for all stakeholders involved in Somalia’s reform process. Even well-intentioned public-private partnerships can collapse when trust is broken and accountability is ignored. But it is also proof that Somalia’s public institutions are learning to act, enforce, and correct course.
By exposing the misconduct of Abdirisaq Hersi Mohamed and terminating the flawed contract, the Ministry of Finance has defended the public interest and reasserted the rule of law. This investigation is not just a story of what went wrong—it is a demonstration of what it looks like when government stands up for the right thing.
As the Ministry moves forward with new reforms, the Somali public can take one lesson to heart: corruption was confronted, and accountability won.
Evidence Dossier (Attached):
✅ Official Termination Letter issued by the Ministry of Finance
✅ Audit records showing diverted revenue
✅ Letter of complaint from MGS co-founders
