Summary:

• UMA leads private sector efforts in Uganda against financial fraud by developing a database to compile profiles of individuals implicated in fraud. This initiative aims to facilitate due diligence for prospective employers and deter fraud by increasing risks for perpetrators.

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Uganda Manufacturers Association (UMA) is leading private sector efforts in a new effort against financial fraud in business operations in the country. Under this approach, a database is being developed to compile and profile any person who has been implicated in any form of financial fraud in any sector they might be in.

This then, will make it easier for prospective employers to do due diligence on professionals before they are hired or are contracted for any work. UMA Board Chairman, Deo Kayemba, said that the sector has suffered severely from fraud to the extent that many companies or investors are scared of hiring financial professionals or even leaving operations in their hands for fear of being defrauded.

He hoped that this new approach would discourage fraud by making it more risky for the perpetrators.

Fraud in Uganda’s business sector has mainly been reported in the financial industry, mainly banks, insurance companies as well as telecommunications companies. Experts, however, say that this is because of the amounts usually involved and the number of people that are affected, among other factors.

Kayemba, for example, said that many manufacturers have reported fraud and sometimes, even when the cases are reported to authorities, they do not come to the public. According to him, most of the members of UMA have at one time lost money to fraudulent people, mainly orchestrated by employees.

Joseline Kateeba, a Non-Executive Director at UMA, added that the problem some fraud cases are not reported on is that some are of a small magnitude at a time. However, these happen over a long period, and by the time the company has enough evidence of a crime committed, billions of shillings have already been lost.

Ms Kateeba, who is also the Managing Director at mattress manufacturer, Crest Form, gave the example of when her company lost 2.5 billion shillings in two years. She said that unfortunately for the victims, the legal processes take too long as the criminals continue rebranding and committing fraud.

Karen Atamba, the Chief Finance Officer of Biyinzika Poultry International Ltd, also blamed the delays by the authorities in processing fraud cases, saying that this makes companies more vulnerable because the suspects continue defrauding others unabated.

She said that it is even worse where the operational systems are not fully digitized, despite having controls in place. Atamba said, for example, that her company deals with cash for almost every transaction because the kind of customers are not yet adapted to cashless transactions.

This makes it hard to even trace a loss of money to a specific person, according to her.

The fraud database will be a company limited by guarantee and owned by members of the private sector who will subscribe to it. Currently, private sector members are being encouraged to register their interests before the database is finally established.

Francis Gimara of ALP Advocates said that the information that goes into the database will be gathered from legal sources including state investigations, court judgments, and any other authoritative source. This, according to Gimara, makes the project a completely legal approach to fighting fraud, which should increase the cost of committing the offense.

The database will also have a mechanism where one feels that they have been unfairly treated by including information on them in the database and this could lead to redress like removal.

Gimara said member companies will have to incorporate an internal policy providing expressly that employees who have been terminated for fraud shall be added to a centralised fraud database.

The company/database is expected to be operational “in a few weeks” according to the promoters.

Gimara said this approach is not the first of its kind in the world because it is already being used in countries like India, South Africa, the United Kingdom, and the USA.