Mr. David Cooney:

In general terms, this fraud has created an extraordinary storm in Uganda and has convulsed the political system there. I am sorry to say that this €4 million may have had the greatest impact on Uganda, not for the reasons we would have wished but because the exposure of this fraud perpetrated by the Ugandan system has forced the whole country to face up to the existence of corruption in high places there. It has also been extremely traumatic for the Irish Aid programme and for my Department and most particularly for the embassy in Uganda. The extent of collusion at the highest levels of the public service and the exposure of the fraud was unprecedented in our experience for an aid programme. We have been asking ourselves how this could happen. Obviously the evaluation and audit report has identified some weaknesses in our system. I believe it happened primarily because we were focused on the delivery end, where fraud is most likely to take place. When the money reaches the ground it is most vulnerable to misappropriation. The World Bank and the British Department for International Development, DFID, had made some quite detailed examinations of the Ugandan public financial management system and had expressed themselves satisfied with the procedures in the Bank of Uganda.

In common with the entire donor community, perhaps we were not as alert to the possibility of this type of fraud as we should have been and as we will be in future. In terms of what went wrong in Irish Aid, or more appropriately, in the roll-out of the programme in the embassy in Uganda, arrangements under the memorandum of understanding governing the programme which should have involved the money being tracked through the system were not implemented by our embassy or by the donors as a group. We were all caught out. This is something that should have been done but was not and needs to be done systematically.

When we paid the €4 million into the account in the Bank of Uganda it was not transferred from that account into the account it should have been and, frankly, this should have been tracked. There should be a way of tracking the money to ensure it ends up in the correct account. Once money is put into an account into which many other donors also lodge money there is no way of dyeing it green and tracking through the system as it has become part of the wider pool. However, we should have tracked it to its destination in the appropriate account. We did not do so and we must look very seriously at this. Management failures occurred in this regard.

When I wrote to all of the ambassadors I set out a series of questions I wanted them to answer, including whether we received receipts and whether money was being tracked. This will be an essential part of our follow up. The responses I have received are very reassuring, but we will not leave it there. The evaluation and audit unit will investigate this very thoroughly, after which we will have a follow-up meeting.