The Ministry of Finance has been directed to scrutinize all Accounting Officers as well as government Ministries, Departments and Agencies (MDAs) to ensure that projects funded by foreign investors undergo due diligence.
This, government believes will minimize risks of the so-called foreign investors defrauding government agencies or laundering money for other motives.
The directive to the Ministry of Finance was issued following the Cabinet meeting held on Monday at State House Entebbe.
“Cabinet directed the Minister of Finance to ensure all Accounting Officers of MDAs undertake due diligence on all foreign investors who intend to partner with their agencies to undertake investment projects, with the Financial Intelligence Authority (FIA) before any project proposals are submitted to the Public Private Partnership Committee for consideration,” the Deputy Government Spokesperson, Col (Rtd) Shaban Bantariza told journalists on Tuesday.
This was during a press briefing at Uganda Media Centre on the decisions passed by Cabinet yesterday.
Bantariza said the move will help detect entities or individuals who may attempt to defraud government MDAs by purporting to have huge sums of money that they intend to transfer to Uganda to finance various investment projects. Some of the said investors proceed to seek letters of introduction to open bank accounts which he said are used for money laundering.
“FIA follows every money. So, MDAs should undertake projects in consultation with FIA because they (FIA) have the competencies to detect who has brought in how much money and whether this amount of money is appropriate for the proposed project,” he said.
He explained that the decision is informed by previous events where many foreigners have brought in “fake projects”, some of which have collapsed half way and others have left no socioeconomic impact.
“There is also evidence that half of the money goes back to the donors through those who are implementing,” Bantariza noted.
“We know we have an anti-money laundering act which arose from the threat of terror and terrorist cells that were receiving funding from their foreign collaborators. A stitch in time saves nine. That’s why we are being proactive”.
The debate on fake foreign investors has been in the public realm for a long time, with many critics calling on government to play a bigger regulatory role. Some say that the incentives and concessions that many of these investors enjoy have not translated into the expected impact on the economy.