Review of Abdirazak Fartaag’s Report on Somalia’s 2000-2013 PFM

By Asad Cabdullahi Mataan

On November 15, 2014, Abdirazak Fartaag, former Director of Public Financial Management (PFM) between 2009 and 2011 at the Office of the Prime Minister of the Transitional Federal Government of Somalia (TFG), released 131 pages report titled, Their Own Worst Enemy.  How successive governments plundered Somalia’s public resources and why the world looked on at a well-attended one day conference in Nairobi, Kenya. The report on Somalia’s 2000-2013 PFM presents  distressing information that deserve serious attention, but it also contains insinuation, personal antagonism, and political manifesto. In overall, the report questions the integrity, will, and ability of Somali leaders to lead responsibly the Statebuilding process of their country and suggests putting Somalia under International Advisory Board until 2020.

The self-described Anti-corruption crusader, Abdirazak Fartaag, accuses former Somali Presidents, Prime Ministers, Finance Ministers, Foreign Ministers, Posts and Telecommunications Ministers, Sea Transportation and Ports Ministers, Constitution and Reconciliation Minister, Central Bank of Somalia (CBS) Governors, and Diplomats for misappropriation of millions of dollars of public funds. In addition of specific financial fraud, his main accusation is based on the argument that successive Somali governments from 2000 to 2013- Transitional National Government (TNG), TFG, and Federal Government of Somalia (FGS) – received more money than they accounted for. He calculated that, in 13 years, the Somali Governments received $1,106,705,513 and accounted only for $ 302,857,260. The difference which is $ 803,848,253 is considered as misappropriated money. 95 % of the misappropriation occurred between 2009 and 2013.

For example, Abdirazak Fartaag recorded that between 2009 and 2013 a total amount of $ 57,837,183 was paid through the “fadlan” system (no traceable expenditure). Additionally, he noted that in 2013, an amount of $2,795,228 was paid to IGAD by Somali entities in favor of General Gabre.

Mr. Abdirazak Fartaag claims that former advisors of President Sheikh Sharif Sheikh Ahmed and PM Mohamed Abdullahi Formajo devised travel scheme in which they defrauded $ 13,444,000 from government treasury. Moreover, President Sharif, Speaker Sharif Hassan Sheikh Adan (president of Southwest State), and Hussein Abdi Halane, Minister of Finance paid $ 10,000 to each 276 Members of Parliament totaling $ 2,760,000 as “bribe” disguised as salary to oust former PM Omar Abdirashid Ali Sharmarke for incompetence. Mr. Abdirazak criticizes former PM Abdiweli Mohamed Ali Gas for poor performance and development of new budget that facilitated misappropriation of funds.

The report makes the allegation that President Hassan Sheikh Mohamud of the TFG has secret account (discretionary fund) funded by Somali Private Companies in exchange for paying less tax and in support of his policy to derail the federal process. Abdirazak Fartaag (Marehan Darod clan) speculates that Hawiye and Isaq clans fear the domination of Darod clan should federalism be successful.

The author asserts that “despite donor assistance and various peace and reconciliation efforts by the international community, the country is still fragmented along clan lines, and has been unable to reconstitute viable governance structures both at national and state levels.”  Nevertheless, he ignored to apply this conclusion to the investigation of different circumstances and conditions between the periods 2000-2004, 2005-2006, and 2007-2013. He also neglected to outline the investments and other measures necessary for establishing a functional Central Bank in post conflict Somalia.

Besides his true assertion that each successive government isolated the CBS’s restructuring for their own benefits, Abdirazak Fartaag accuses me (one of three TNG Governors) that I didn’t apply financial regulations inherited from Siad Barre regime to the CBS’s operations.  Leaving aside the wholesale suitability of the financial regulations of the military regime; this bombastic frivolous claim contradicts his findings and other omitted information. I strongly believe that Abdirazak Fartaag didn’t care to investigate CBS status and extent of involvement in PFM during my time. Otherwise, he would have discovered the sacrifices I made for the “speedy” launch of nascent CBS institution that could act as a banker, agent and advisor to the government.

In Particular, Abdirazak Fartaag omitted to report the administrative structure I established, the manual prepared to describe the operational relationship between the CBS and other government institutions like the Ministry of Finance, from get go crisis sparked off by the dispute over the responsibility of the CBS as a cashier and use of voucher payment system, and the well received but short-lived foreign currency sale auctions in exchange for local currency to be used for salary payments. Furthermore, Abdirazak Fartaag deliberately omitted to explain the circumstance and reasons behind the parliamentary debate over PM Dr. Ali Khalif Galeyr’s financial statement for the period February-September 2001 and the story behind the one-million check (cheque) he took out from his pocket in front of the parliament as quoted in page 13 of the report.

The author should have known that PM Ali Khalif was struggling to assure the parliament and public the legitimacy of government expenditures under his control and that the check was not chased (stolen) after I refused to co-sign that check and many other checks for not compromising the role of the Central Bank. My efforts were aimed at separating the responsibility for expenditure legitimacy and authorization delegated to other government institutions from the fiduciary and cash management responsibility delegated to the Central Bank through the authentication of payments (withdrawals) of funds held as custodian in accordance with clear financial laws and procedures. So, after deliberate marginalization I was replaced in an unprecedented manner. The Minister of Finance was the cashier and authorizing authority of Government Finance. There were plenty of stories that the author could have known directly from many informed people involved in the re-launch of CBS at a time there was no political support for CBS.

The report confirms that TNG (2000-2004) and TFG-I (2005-2008) accounted about 96.4 % and 94.5% of their revenues respectively, while TFG-II (2009-2012) and FGS (2013) accounted 31.25% and 65% of their revenues respectively. 2013 UN Somalia and Eritrea Monitoring Report stated that TFG accounted only 20% of domestic revenue. Beyond PFM investigation, Abdirazak Fartaag recycles the false propaganda of an alliance between TNG and Islamic Courts fabricated by Ethiopia and Somalia’s Reconciliation and Restoration Council (SRRC) created to destroy TNG.

More surprisingly, the author skipped to talk about my governorship during the first year of TFG-I. In this period, UNDP Somalia had the responsibility to manage the financial resources donated to the TFGS through Somalia Emergency Budgetary Support Project (SEBSP). A Director of Finance attached to the Office of the PM had the authority to submit requests to UNDP for approval and payment. The Governor of CBS was figurehead. My advice about the negative implications of the exclusion of the CBS from the financial management fell on deaf ears. For further abuse, UNDP unilaterally decided to transfer start-up fund budgeted for CBS to PricewaterhouseCoopers (PwC) for low-priority study to undermine CBS relevance.

At that time, TFG split into Jowhar and Mogadishu factions. Incidentally, before the split, I and other three friends proposed in writing to the TFG-I leaders to respect the constitution and relocate to Mogadishu with the caveat to mobilize about 500 to 1,000 foreign protection forces but TFG President and PM rejected our proposal.

I remained in Nairobi because there were no functions for the CBS in Jowhar and in Mogadishu except a scheme for printing So Sh. 500 billion of 1,000 banknote. I refused to go along with the scheme for objective reasons. Staying in Nairobi, I opened discussion with the International Monetary Fund (IMF) and World Bank (WB) representatives. For the first time after 15 years, IMF accepted to work with the TFG through the CBS and formally invited me as Governor to attend the 2005 annual IMF-WB meeting in Washington, D. C. This was an important event for the revival of Somali state. But, I was sacked few days before the meeting. For the record, I wrote a press release with annex.

With the exception of governor Yussur Abrar who resigned after seven weeks in office for protest against corruption, other governors chose to minimize if not abandon advocacy and willingness for the exercise of the rights and duties of CBS, an independent institution established by the provisional constitution for purpose. Thus, the international community sought the establishment of Financial Governance Committee with the responsibility to ensure transparency, accountability, and integrity in PFM.

Mr. Mohamud Uluso