UN experts say corruption still rampant in Somalia

UNITED NATIONS (AP) Corruption in Somalia remains rampant despite the country's new leadership, with 80 percent of withdrawals from the Central Bank made for private purposes and at least 33 percent of monthly revenues from port operations unaccounted for, U.N. experts said.

In a report to the U.N. Security Council obtained Friday, the panel of experts monitoring sanctions against Somalia said a key to irregularities has been the current governor of the Central Bank, where US$12 million of US$16.9 million transferred by PricewaterhouseCoopers could not be traced.

The report also said only 4 percent of the estimated revenue from issuing passports reaches government coffers. In the past

Depite the good-faith efforts of Finance Minister Mohamud Hassan Suleiman, the panel said the system inherited by the new government "is in many ways beyond its control, while at times political decisions and appointments have exacerbated conditions of corruption."

Somalia had not had a functioning central government since 1991, when warlords overthrew a longtime dictator and turned on each other, plunging the impoverished East African nation into chaos. But since African Union forces ousted al-Shabab fighters from the war-battered capital, Mogadishu, in August 2011, a relative peace has returned, creating a new sense of hope and opportunity.

Last year, a new interim constitution was approved, a new parliament was seated, a new president was elected and a new government and Cabinet started work, replacing a weak and largely ineffective transitional government.

The panel said the election of President Hassan Sheikh Mohamud "presented an opportunity for a new kind of leadership in the country," but he inherited a system in which he controls neither the flow of money nor security institutions.

While struggling to extend the government's reach, the panel said the president has had to seek external funds and arrange security relations inside and outside of government.

These limitations, along with events in past months, notably in southern Somalia which is controlled by al-Shabab militants, threaten to undermine the government "and the current peace and reconciliation process in the country," the panel said.

It said that "ferocious competition" for control of the new government at the end of the transition last summer contributed to the mismanagement of the country's finances. The efforts of donors to encourage the deposit of government revenues in the Central Bank may have been the right objective but it proved to be flawed, the panel said.

"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 the institutionalization of the state," it said.

The panel explained that in Somalia, key leaders authorize individual payments from public funds, which contradicts national budgeting or structured spending for official bodies.

"It is not a system that can be changed easily given the breadth of interests at stake at the center of power and has simply become the way of doing government business," the panel said. "However, without a legitimate repository for internal and external revenue, efforts to build an effective public financial management system will be undermined."

Income from the port of Mogadishu constitutes the government's largest internal revenue stream, but the panel said these customs and port fees have historically been diverted at the source.

The panel said it has documented at least one case in which then port manager, Sayid Ali Moalim Abdulle, diverted US$3.4 million from humanitarian shipments during the Somali famine in 2011.

"Based on analysis of activity at Mogadishu port, the monthly revenue potential from import customs alone is in excess of US$ 3.8 million per month," the panel said. "However, the average monthly deposit in the Central Bank from the port between August 2012 and March 2013 was US$ 2.7 million in total."

A call to Somalia's U.N. Mission Friday afternoon seeking comment on the report was not answered.