Uganda Now the Fraud Capital of Africa

Uganda Now the Fraud Capital of Africa


Once the darling of Western donor nations, Uganda now outranks Nigeria, Africa’s most infamously criminal country, in terms of fraud.

By Tanu T. Henry
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First published: May 12, 2005


Beating Nigeria in crime statistics is no easy feat. Monitored by international law enforcement agencies – from Scotland Yard to the FBI – and blacklisted by immigration authorities from Tacoma, Washington to Taipei, Nigerian crime networks reach far. Every year, the private and public sectors of the West African nation lose $40 billion (U.S.) to corruption. And every day the oil-rich nation loses 100,000 barrels of crude to thieves, many of them government employees.


Now, Uganda, once hailed as the model emerging economy in Africa and one of the standards for financial transparency on the continent, is racked by a growing scandal: check fraud. Whether the spike in financial crime is a sign of a population increasingly seduced by material wealth, or if it is a reflection of a desperate public striving to get along by whatever means it can, the statistics make for bad public relations. For a nation dedicating a sizeable share of its resources to attracting international investment, the news of fraud is even more threatening. Hung in the balance between steady economic growth and what many suspect may be a creeping downturn, Uganda is a nation of many faces. The rising fraud is one of its ugliest.

“Fraud has nothing to do with the country or ethnicity. It is the individuals who defraud banks and international businesses. Of recent, Uganda has recorded more fraud attempts than Nigeria in sub-Saharan Africa,” said Johan Hartman, Citigroup fraud manager for Europe, Middle East and Africa. Speaking last week at a seminar on fraud management at the Grand Imperial Hotel in Kampala, Hartman said his firm, working with others, is organizing to stamp out the growing theft problem.

Local authorities have also adapted a more aggressive stance to the corruption. Justine Bagyenda, a director at the Bank of Uganda, said committees have been formed to study the nature of the schemes and identify its perpetrators. She also instructed banks and other financial institutions to be vigilant in checking the backgrounds of people they hire. “Some people have bad track records," she warned.

Meanwhile on the streets of Kampala, a loose network of criminals, savvy on the Internet, familiar with international financial networks, aligned with Ugandans abroad, and plugged into financial industry insiders, are forging checks and enjoying the spoils. The criminals illegally pull money from bank accounts in Europe and the United States by using routing numbers and dummy checks. They also write bad checks for trophy automobiles, electronics and other goods in Asia.

United Nations groups have also stepped up their investigation of the scandals, not only in Uganda but also in a broader region of countries that include South Africa and Botswana. But the informality of the criminal networks makes spotting the schemes difficult. And the criminals take advantage of an unsophisticated law enforcement infrastructure unaccustomed to fighting “white collar crime.”

Also, increasingly becoming a hub of international money laundering, Uganda faces pressure from the international community to play an active role in stemming the corruption at home. Right now, a law against money laundering is making its way through the Ugandan legislature. The government response has been positive and swift but what impact the laws will have on the disorderly and erratic nature of the scams, has yet to be seen.

In a globalizing Africa where the public access to technology is outpacing the governmental cyber-defense mechanisms in place to regulate it, expect to see these problems grow -- and spread. It will require broad-based international cooperation, both private and governmental, to tackle and hold down this growing wave of crime. How this will affect the continent’s individual economies has yet to be calculated.

By Tanu T. Henry
more from author >>
First published: May 12, 2005
Tanu Henry is a freelance writer living in Virginia and an editor at America Online. A graduate of Wilberforce University in Ohio, he also has a master's from Harvard University in Cambridge, Ma.