By HEIDI VOGT
The almost one-year-old Somali government still controls only sections of the country around the capital of Mogadishu and the southern border with Kenya. But even this has been seen as tremendous progress in a country that hasn't had a functioning state in decades.
And Western countries have been quick with funds to back the administration of President Hassan Sheikh Mohamud, elected by parliament in September. Britain, the European Union and the U.S. committed more than $350 million in May to finance the bulk of Somalia's federal budget this year.
The report by the U.N. Monitoring Group on Somalia and Eritrea is a harsh reminder that the installation of a formal government did little to change a system of patronage and off-the-book deals that has long characterized the country's economy.
"Despite the change in leadership in Mogadishu, the misappropriation of public resources continues in line with past practices," the report said.
Somalia's central bank has essentially become a "slush fund" for patronage networks with 80% of withdrawals made for private purposes rather than running government programs and much of the funds transferred into the bank not traceable at all, the report said.
In one of the largest documented cases, a cashier at the Finance Ministry named Shir Axmed Jumcaale withdrew $20.5 million in his name between 2010 and 2013. He then used those funds to make untracked payments for ministry officials.
Central Bank Governor Abdusalam Omer said in a phone interview that every withdrawal had a name attached to it and that he wasn't responsible for how those funds were later disbursed.
"What I can tell you 100% is that the money that came to the central bank left it in a legal way. It went to the departments and the agencies that are supposed to get it," Mr. Omer said.
Meanwhile, plenty of revenue isn't making it to the central bank at all. Customs and ports fees deposited are much lower than would be expected given the increase in shipping traffic and about 33% of these funds can't be accounted for, the report said.
It is a situation that could complicate coming requests for more funding from Western donors who are leery of pouring money into a country where there is little hope of finding out where funds end up.
"The various spoilers identified by the Monitoring Group threaten to undermine legitimate authority in the country as well as international assistance efforts," the report said.
While this year's budget has already been shored up, the Somali government is expected to be looking for more funding at a conference with the EU in Brussels in September.
The monitoring group recommended that the U.N. Security Council take back under consideration a plan for joint international and Somali oversight of the management of public resources. The report didn't provide details on how this joint oversight system would operate.
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