Friday, November 24, 2017
Wardheer News
  • Opinion

UN Monitoring Group for Somalia and Eritrea Report

UN Monitoring Group for Somalia and Eritrea 

Summary

After a prolonged and problematic electoral process, a new president of the Federal Government of Somalia, Abdullahi Mohamed Abdullahi “Farmaajo”, was selected by Members of Parliament in Mogadishu on 8 February 2017. A new Prime Minister, Hassan Ali Khaire, and cabinet were appointed by late March. Throughout its first six months in office, the administration has faced multiple challenges.

Relations between the Federal Government and the country’s regional administrations have been strained by the Government’s apparent backtracking on commitments to devolve power to the regions under a new national security architecture and by a continuing lack of consensus regarding aspects of resource governance. Meanwhile, regional administrations have continued negotiating unilaterally with foreign entities regarding ports, military installations and natural resources.

These strains were exacerbated by growing tensions among members of the Gulf Cooperation Council. As various Member States in the region were compelled to take sides in the Gulf crisis of June 2017, the Farmaajo administration has found itself increasingly isolated by its decision to remain neutral. Regional administrations, numerous Members of Parliament and parts of the influential Mogadishu business community have openly opposed this stance.

Meanwhile, the militant group Harakaat al-Shabaab al-Mujaahidiin (Al-Shabaab) continues to pose the most immediate threat to peace and security in Somalia. Over the course of the mandate, little if any progress has been made to mitigate that threat. Al-Shabaab maintains control over a large proportion of rural territory, and remains in control of certain urban centres in southern and central Somalia. On 2 January 2017, in Mogadishu, Al-Shabaab detonated what was likely the largest improvised explosive device in the group’s history. Laboratory analysis of the blast revealed traces of potassium nitrate, suggesting that Al-Shabaab may have begun to manufacture home-made explosives….

Currency management

The Monitoring Group reported its concerns regarding the unregulated printing of the Somali shilling in its previous report (see S/2016/919, annex 4.1). Over the course of the present mandate, the Group has continued to document the unregulated printing of 1,000 Somali shilling notes by the State Bank of Puntland in Bosaso, with the involvement of the Puntland authorities. During the current mandate, the distribution of counterfeit currency and the corresponding inflation and civil unrest intensified and spread from Puntland into Hiran region and Somaliland. The local authorities in Puntland have both denied printing currency and blamed Al-Shabaab for the consequences. The countermeasures taken by the local authorities include the introduction of fixed exchange rates and mass detentions of currency brokers.

See annex 4.1 for further information on the impact of the unregulated printing of Somali currency.

Public contracts and concessions

Over the course of the mandate, the Monitoring Group has continued to seek information on various public contracts and concessions. In response to correspondence seeking information on several Federal Government contracts and the ownership of various companies, the Federal Government stated on 5 September 2017 that it was apparent that it had inherited contracts from the previous administration that were opaque in terms of how contracts were issued and lacked data on the ownership of companies, and included other issues such as a lack of effectiveness or value for money.

At the federal level, the Monitoring Group relayed its particular concerns to the Federal Government regarding contracts and agreements with two companies, as described below.

Bukhari Logistics East Africa

According to reports received by the Monitoring Group, Bukhari Logistics East Africa was contracted by the Federal Government to provide rations to its Custodial Corps.

The contract was awarded without review by the Financial Governance Committee or Interim National Procurement Board. According to the Central Bank of Somalia Treasury Single Account records, between November 2016 and January 2017, approximately $740,000 was transferred to an account at Salaam Somali Bank held by Bukhari Logistics East Africa, indicating an annual transfer of approximately $3 million.

The Monitoring Group sought information regarding Bukhari Logistics East Africa, including details of the contract and ownership of the company, from the current Federal Government on 31 July 2017. In its response, dated 18 August, the Federal Government informed the Group that the Ministry of Finance was not aware of any contracts with Bukhari Logistics East Africa, and would appreciate further information from the Group in order to enable the Ministry to look into the issue further.

The Monitoring Group shared available information with the Federal Government through correspondence on 23 August. At the time of writing, the Group had not received any further information on the company’s ownership or its contract with the Federal Government.

Smart General Services, Ltd.

In September 2015, the Ministry of Finance contracted Smart General Services, Ltd., to collect road taxes and vehicle registration fees on behalf of the Federal Government. Despite a standing Government directive that all State revenue be routed to the Treasury Single Account at the Central Bank of Somalia, the taxes and fees generated by Smart General Services were deposited into a private account at Salaam Somali Bank in Mogadishu. As such, Smart General Services provides an example of a parallel revenue collection system, using private bank accounts, or unofficial accounts within the Central Bank of Somalia, in order to circumvent the oversight of the Ministry of Finance.

In accordance with the terms of the original agreement between the Ministry of Finance and Smart General Services, 60 per cent of all revenues generated by the company were to accrue to the Federal Government.48 The net revenue, once the company had deducted its 40 per cent share, was intended to be transferred from Salaam Somali Bank to the Treasury Single Account every 15 days. However, financial statements from the company’s account at Salaam Somali Bank, obtained by the Monitoring Group, demonstrate that only $62,648 (4.2 per cent) of the $1,481,695 generated by Smart General Services from August 2016 to May 2017 was ever transferred to the Treasury Single Account. Moreover, revenue was transferred inconsistently and with irregularities.

The Monitoring Group observed further irregularities in the accounting, including a $275,000 withdrawal on 19 October 2016 that was itemized simply as maal galin (“investment”). In addition, over 40 per cent of the revenue of Smart General Services ($600,187) was paid directly to Kulmiye General Services, a Mogadishu-based construction company managed by Abdulkadir Abukar Omar “Adaani”, the son and business associate of former World Food Programme contractor Abukar Omar “Adaani”, whose role in destabilizing Somalia has been documented in numerous Group reports.52 These funds were ostensibly in payment for the construction of roads in Mogadishu by Kulmiye General Services pursuant to a contract with the Benadir Regional Administration, which had been awarded without due process.

The Monitoring Group sought clarification on the ownership of both Smart General Services and Kulmiye General Services from the Federal Government but received insufficient details to determine the true ownership of either company. The Monitoring Group also requested confirmation of the roads constructed by Kulmiye General Services but did not receive a response to this request.  On 29 July 2017, the Ministry of Finance cancelled the contract held by Smart General Services through a decree forbidding private companies from collecting revenue on behalf of the Federal Government.

Misappropriation of public land in and around the Mogadishu airport complex.

The Monitoring Group has continued to investigate the appropriation of public land in Mogadishu since it reported on the issue in 2016 (see S/2016/919, paras. 79–80 and annex 4.6). On 31 July 2017, the Group sent official correspondence to the Federal Government requesting copies of lease agreements between the Government and 22 companies operating within the greater airport compound in Mogadishu. In a reply dated 18 August, the Federal Government stated that only two of these companies, SKA International Group and RA International FZE, currently pay rent to the Central Bank of Somalia. The Federal Government acknowledged that public lands are being contracted out by “localized entities” without due process, further arguing that the practice may become a threat to peace, security and stability.

During the present mandate, the Monitoring Group has identified two cases of the potential misuse of public land involving Abdullahi Abdullahi Mohamed Nor, the former Federal Government State Minister for Finance and a current Member of Parliament. In February 2013, Nor secured access to 344 hectares of seaside public land adjacent to the airport complex for the construction of a private luxury hotel. Pursuant to a request by the Prime Minister on 10 August 2017, the Benadir Regional Administration requested Nor to cease construction and produce documentation demonstrating his rights to the plot. The Federal Government told the Group that Nor refused to cooperate. According to multiple Federal Government officials, Nor has mobilized elements of the Somali National Army, particularly a senior commander who is a close relative, to forcibly defend his claim to the plot. Nor denied using Somali National Army soldiers to assert his rights to the land, and has accused the Benadir Regional Administration of attempting to unlawfully use police and National Intelligence and Security Agency officers to effect a takeover of the plot.

In addition, in 2016, Nor’s company, East Africa Brothers Company, solicited payoffs totalling at least $250,000 from the Singapore-based CADG Engineering Pte., Ltd., in exchange for gaining that company access to a plot of land within the airport complex. At the time of writing, rent on the plot continues to be paid directly to the Federal Government’s Ministry of Transport and Civil Aviation, circumventing the oversight of Federal Government fiscal authorities.

These two case studies are presented in their entirety in annex 4.2.

In its letter of 18 August, the Federal Government stated that the Public Properties Commission, established by former Prime Minister Omar Sharmarke in July 2016 to collect data on unlawfully appropriated public land, had not convened since 2016 and furthermore had “not been effective”. However, the Federal Government has also affirmed that it considers the management of public lands to be a “priority”, and expressed its willingness to cooperate with the Monitoring Group and other international bodies, including the Financial Governance Committee, to clarify the status of land within the airport complex.

Read more: UN Monitoring Group for Somalia and Eritrea Report

 


We welcome the submission of all articles for possible publication on WardheerNews.com. WardheerNews will only consider articles sent exclusively. Please email your article today . Opinions expressed in this article are those of the author and do not necessarily reflect the views of WardheerNews.

WardheerNew’s tolerance platform is engaging with diversity of opinion, political ideology and self-expression. Tolerance is a necessary ingredient for creativity and civility.Tolerance fuels tenacity and audacity.

WardheerNews waxay tixgelin gaara siinaysaa maqaaladaha sida gaarka ah loogu soo diro ee aan lagu daabicin goobo kale. Maqaalkani wuxuu ka turjumayaa aragtida Qoraaga loomana fasiran karo tan WardheerNews.

Copyright © 2017 WardheerNews, All rights reserved

Leave a Reply

You must be logged in to post a comment.