Daily Nation: How Somalia aid cash funds Al-Shabaab

Donor funds to Somalia are being diverted for personal use or to fund militia, thereby undermining the war-torn country’s reconstruction efforts.

Documents made available to this writer show that millions of dollars in aid to the current government, mostly from Arab countries, have not been deposited in the Central Bank of Somalia, and there is no official record of how the funds were used.

An investigative report by Abdirazak Fartaag, who was head of Somalia’s Public Finance Management Unit under the Transitional Federal Government (TFG) between 2009 and 2011, shows that the United Arab Emirates’ annual budgetary support to Somalia, totalling $48 million in 2013, was not recorded in the Central Bank and that only one-fifth of the $25 million contributed by Qatar was accounted for.

Similarly, Iran’s $20 million cash donation to Somalia in July 2013 has not been deposited in any public financial institution. The report says that some of the diverted/unrecorded funds may have been used to fund Islamic militia linked to politicians or to reward clan-based cartels and cronies.

The diversion of public funds in Somalia is made easier by the fact that most Arab donors prefer to give their aid in cash. On two separate occasions in 2011, when he was head of the Public Finance Management Unit, Fartaag personally deposited cash worth $1 million and $5 million into the Central Bank in Mogadishu.

The cash, which had been collected in suitcases from the United Arab Emirates by senior government officials, was withdrawn almost immediately without due procedure.

“The Central Bank of Somalia operates more like an ATM than a public financial institution,” he claims. The report further shows that Somalia’s public finance management did not improve significantly under the country’s first post-transitional government elected in September 2012; on the contrary, it may have worsened.

It states that the government has failed to put in place institutions that are accountable to the public and has continued to perpetuate the culture of impunity that thrived under previous governments.

The looting of public coffers is not a new phenomenon in Somalia. The report, which is based on analysis and scrutiny of official and unofficial government records and balance sheets, supplemented by interviews with government officials and service providers within Somalia (who chose to remain anonymous), presents a shocking account of “personalisation of public funds” by the transitional governments.

It started with the first Transitional National Government (TNG) established in 2000, the Transitional Federal Government (TFG) from 2004 till 2012 and then the current post-transitional government that assumed office in September 2012.

Nearly $700 million of donor funds, mostly from Arab countries, are unaccounted for during this 13-year period, according to the report.

Lack of transparency in the issuing of government contracts has also been questioned in the report. Last year, the government contracted a Turkish company to manage the Mogadishu port but details of the contract have not been made public, nor was the contract awarded through an open and transparent bidding process.

Such deals, made without public scrutiny, leave Somalia’s public resources open to abuse by vested interests. It is estimated that the port currently generates about $4 million a month in customs taxes.

SUSPENDED PROGRAMME

In recent months, the Somali government has also been criticised by United Nations arms embargo monitors and by key personnel within the administration itself. Last July, the UN Monitoring Group on Somalia and Eritrea revealed misappropriation of public funds by the government, among other irregularities. But the government dismissed the claims by stating that they were based on “gossip and hearsay”.

Interestingly, the government then hired a British consulting company, FTI Consulting, and the US law firm Schulman and Rogers to discredit the UN Monitoring Group’s report and to clear its name prior to an important donors’ meeting that was to be held in Brussels in September 2013 and which was to pledge 1.8 billion euro to the Somali government.

The lobbyists were also given a contract to “unfreeze” Somali assets abroad.

Following pressure from the international community, President Hassan Sheikh Mohamud finally agreed to sack the Governor of the Central Bank of Somalia, Abdulsalam Omer, who was singled out by the UN monitors as a key figure in the financial irregularities. He was replaced by Yussur Abrar, Somalia’s first female Central Bank Governor.

However, Abrar resigned in November last year after just seven weeks in the job on the grounds that she was being continuously asked to sanction deals and transactions that violated her responsibilities as governor.

In her resignation letter, she stated that she had refused to sanction a contract with Schulman and Rogers regarding the recovery of Somali assets because she believed that the contract did not “serve the interest of the Somali nation” and “put the frozen assets at risk and open the door to corruption”.

Last year, Norway created a special financing facility to manage its aid to Somalia. However, by December, it had suspended its aid programme to Somalia through this facility, citing the lack of a functioning Central Bank.

The allegations contained in Fartaag’s report come hot on the heels of another confidential report leaked to the media by the United Nations Monitoring Group on Somalia and Eritrea last month which states that some of the weapons purchased by the government have been diverted to “parallel security forces and clan militia that are not part of the Somali security forces”, including Al Shabaab leader Sheikh Yusuf Isse.

The UN Security Council partially lifted the 1992 arms embargo on Somalia in March last year after the Somali government requested that it be lifted to enable the government to better equip Somali soldiers.

The UN monitors say that parts of shipments of weapons, including assault rifles, rocket launchers, grenades and ammunition, “could not be accounted for”.

The Somali mission to the United Nations, however, has questioned the validity of the UN Monitoring Group’s report. Meanwhile, President Mohamud, who narrowly escaped a suicide attack on the presidential palace in Mogadishu last month, has publicly declared his government’s commitment to fighting Al Shabaab.

The picture that is emerging from all these revelations is of an intricate web linking former members of the ousted Islamic Courts Union (ICU) with forces within government. Various current and former politicians are still linked to the ICU through various moderate Islamic militia, such as Al-Islah, Al-Itihad, Al-Sunna Waljama and Al-Sheikh, which compete with each other to gain access to power and resources.

ISLAMIC STATE

The military wing of the ICU re-grouped under the umbrella of the Alliance for the Re-liberation of Somalia, which was formed soon after US-backed Ethiopian forces drove ICU out of Mogadishu in 2006/7. This group is still active and aims to make Somalia an Islamic state.

It is rumoured that some politicians may also be linked to the more radical Al Shabaab, a terrorist militia that until recently controlled most of south and central Somalia.

The ICU’s ouster in 2007 led to a process headed by the United Nations Political Office for Somalia (UNPOS) that, ironically, installed former ICU members within the government (so-called moderates), who were then entrusted with eradicating Al Shabaab or co-opting former allies.

This has created a situation where politicians are actively engaged with Islamic militia, not necessarily as adversaries, but as a significant support base. It is therefore not inconceivable that some of the unaccounted-for-funds may have been diverted to these militia.

A recent report found that even humanitarian organisations have been engaging with Al Shabaab in areas controlled by the militant groups. The report by the Mogadishu-based Heritage Institute for Policy Studies revealed that many UN agencies were secretly paying “taxes” (or protection money) to Al Shabaab to negotiate access in areas controlled by the militant group.

“Both the Somali politicians and the international community have been hoodwinking each other,” says Fartaag. “By not demanding more accountability from the TFG, the UN inadvertently ended up endorsing politicians who were known to be corrupt and who had links with extremist Islamic groups.

By claiming to co-opt so-called moderate Islamic elements into government, ostensibly to bring about political stability and reconciliation, UNPOS gave a nod to disruptive forces within and outside government.

“Meanwhile, foreigners, including so-called Somalia experts and journalists, have failed to understand the clan-based dynamics of Somali society. This has led to a fictionalised account of Somalia.” 
CLAN BASED POLITICS

To understand the political, economic and social dynamics that influenced Somali society during the two decades of civil war, it is important to note that the ICU came about in response to anarchy and lawlessness.

During its tenure from 2004 till 2012, the Transitional Federal Government had no capacity to govern, and its members spent a large proportion of their time outside the country (mainly in Nairobi).

The ICU promised to change all that by not just uniting the country (albeit under the banner of Islam) but also by providing essential services, such as security.

When the ICU took control over Mogadishu in 2006, the country was being run by warlords and clan-based fiefdoms. As public institutions collapsed or became dysfunctional, traditional governance systems, such as customary laws (known as Xeer), became more important.

In the absence of a functioning judicial system, justice was dispensed through Sharia law by elders. Somali entrepreneurs took on the role of government by providing services, such as water and electricity, and remittances from Somalis living abroad kept many establishments and communities afloat.

The hawala money transfer system took over formal banking systems, while militia collected “taxes” from people in territories they controlled. Many educational institutions, such as schools and universities, were underwritten by individual donors, mainly from Arab countries.

The report proposes that donors, the international community, along with the Somali government and the newly formed federal states, set up a Joint Financial Management Board to oversee public funds, as was muted by Britain and other donors at the London Conference on Somalia two years ago, but which has never been realised.

It also calls for more transparency in the issuing of contracts and the re-building of integrity institutions and the judiciary. In the absence of such institutions, it warns, it is likely that Somalia will continue to be controlled by militia and clan-based fiefdoms and cartels.

However, in a country where informal governance systems based on trust, clan loyalty, customs and Islamic law have usurped the role of government (and in many cases, define how the government functions), it will be an uphill task to re-establish finance institutions that are accountable to both donors and the Somali public.





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