Uganda Airlines Audit Uncovers Shs 1.6 Billion Financial Irregularities

An internal audit report has cast a harsh light on Uganda Airlines, exposing a syndicate that has allegedly cost the national carrier a staggering Shs 1.6 billion in the 2024/2025 financial year. The comprehensive report, authored by Internal Auditor Ronald Otukol, points to systemic issues including poor planning, flawed needs assessments, and resources being misallocated.

The audit highlights several critical failings, such as undelivered contracted items, budget overruns, expenditures lacking proper justification, payments made without the required purchase orders, and procurements conducted without valid contracts. A central element of the alleged scam appears to involve a dispute between two advertising agencies, Metropolitan Republic Uganda Ltd and TBH Holding Ltd.

The report specifically flags the process for brand and image improvement, where a budget of $300,000 (approximately Shs 1.1 billion) was allocated. While Metropolitan Republic submitted a bid within budget, the evaluation committee controversially split the work between them and TBH Holding Ltd, even though the latter’s bid significantly exceeded the allocated funds. This division, according to the auditor, deviated from the original terms of reference.

Further scrutiny revealed that despite the procurement’s global scope outlined in the terms of reference, activities largely remained confined to the Ugandan market. The audit also questions the necessity of outsourcing services like creative and brand designs when the airline has in-house staff capable of performing these roles, resulting in an unjustified expenditure of Shs 258 million.

Key figures implicated include the chairperson of the contracts committee, Shakila Rahim Lamar (Manager Corporate Affairs and PR), and Allan Kyeyune (Chief Finance Officer), who the report suggests should face disciplinary action. The audit also raises concerns about payments totaling Shs 164 million made to TBH Holdings without purchase orders and transactions worth Shs 778 million conducted after TBH Holdings’ contract had officially expired, without documented extension approvals.

Compounding these issues, the report notes a severe lack of evidence for the delivery of services or any form of contract management reports for the Shs 1.6 billion spent. This points to a significant risk of financial mismanagement and a failure in oversight.

Source: https://observer.ug/news/audit-exposes-shs-1-6bn-scam-at-uganda-airlines