INNOVATION IN INSURANCE TO RECOVER EMBEZZLED MONEY


Brothers and Sisters,

Once again please find below another submission towards the Peoples’ 2016 Manifesto for your value addition and debate; as an innovation the ideas therein might look difficult to grasp but I am sure the Insurance Regulatory Authority of Uganda (IRA) might provide the necessary professional guidance when required; in addition any legislative policy changes directed at the insurance industry resulting from this innovation might become a business opportunity that will create more premium and jobs for the sector. Just last week the CEO of IRA, Al Haji Kaddunabbi Lubega said that, “the insurance potential in the country is still untapped”.

During the State-of-the-Nation address of 2nd June 2010 President Museveni commited himself to end corruption and embezzlement of public funds by suggesting that the corrupt should be tried by court martial; he made these harsh sentiments to fight corruption and embezzlement in barely less than two months after he had signed the Whistleblowers Protection Act on 22nd April 2010.

Either the president probably found himself hostage to the above vices, hence the suggested solutions or he had given up on the entire institutional framework (in place for fighting corruption and embezzlement of public funds) such as the the Leadership Code of Conduct Act 2002, PPDA Act, Budget Monitoring and Accountability Unit, Police CIID, Inspector General of Government (IGG), Director of Public Prosecution (DPP), Anti-Corruption Court, Auditor General’s Reports and the Public Accounts Committee (PAC).

One other smart way (that might aid the above laws and institutions) in the fight against corruption, embezzlement and impunity in public expenditure is in the innovation of an insurance product (maybe to be) called the Public Funds Indemnity (PFI) insurance Policy cover to be taken by all public officers (who authorize use/release of public funds); by designing such a policy with proper supportive legislation in place, any public officer (having taken a PFI Policy cover) implicated in (corruption and) embezzlement by the Auditor General would (at the request of PAC) have his insurer pay the (loss) sums involved thus enabling government recover such embezzled money instantly. A habitual corrupt public officer would thus not get easily insured (the next time) due to the moral hazard he would pose to the insurance industry which could finally lead to change of his official status or termination of services to government; this might finally lead to
having only serious people vie for public offices in Uganda.

To lead by example even the president would have to take the PFI Policy cover to guard himself/herself against allegations of abuse of office (such as in the CHOGM enquiry that alleged that the president sanctioned a certain Bwebajja hotel to be (mis)allocated money only three (3) days before the summit).

The Donors would even benefit more from the proposed PFI Policy cover as they would easily recover their hard earned taxpayers’ monies (embezzled by our public servants) especially when contributed towards our development budgets. To counter any litigation costs (by use of subrogation rights), the Donors would make sure that they always (if government does not) insure both the Auditor General and Public Accounts Committee (PAC) with the PFI Policy cover since the (PFI) Legislative Framework would also give PAC (the constitutional) High Court powers (it already has) to authorize the recovery of public funds from the insurers of the PFI Policy holders. Government would on the other hand insure the Attorney General, DPP and IGG. The rest of the public officers would individually insure themselves; the PFI Policy cover could, therefore, be the first requirement submitted to and kept by the PAC before anyone assumes any public office that authorizes
use/release of public funds.

For example, the President would insure himself/herself up to a limit of say Shs 10 billion, Vice President Shs 8 billion, Ministers and Permanent Secretaries Shs 5 billion, District Accounting Officers Shs 3 billion, etc, etc; to check on influence peddling an “opt out clause” for any of the above officers (in order not to be insured) may be included in the PFI Policy provided that the said officer shall not authorize use/release of public funds during the whole tenure of his office (position/status). If the PFI Policy regime had been in place in 2007, (probably) all the misallocated CHOGM funds would by now have been paid by the insurance companies that insured the public officers who were investigated by PAC (given PAC’s High Court powers). Any public officer who would thus have got dissatisfied would then have sued the PAC and Auditor General (both having PFI Policy covers) to seek redress (by subrogation and recovery). In effect both Government and
Donors would have got back value for their monies.

Similarly (for a PFI Policy cover of say Shs 30 billion taken by the Governor of Bank of Uganda or the NSSF Boss, Government would have recovered the Basajjabalaba bailouts, AGOA monies and probably Temangalo would (by now) have been history or housing NSSF Apartments.

Already there exists in the insurance industry a product almost similar to the proposed PFI Policy cover called Professional Indemnity (PI) Policy for which as professionals we insure ourselves up to a limit of Shs 100 million before the Insurance Regulatory Authority of Uganda issues us a Loss Assessor’s Licence; likewise the Fidelity Guarantee insurance is (also) normally taken by employers (read government?) to provide cover against loss by reason of dishonesty of their employees (read public servants?) holding positions of trust. The only difference this time (with the PFI Policy cover) is to allow the public officer carry his cross by procuring his insurance policy! It might, therefore, be a good reciprical gesture by politicians in addition to the public officers to take up the proposed PFI Policy cover to insure themselves against embezzlement of public funds in their custody should insurers rise to the challenge of designing the PFI Policy
product.


By: Dafala Khalil
via the UMBS forum

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