Mogadishu (RBC) The Monitoring Group is particularly concerned about the phenomenon of “secret contracting”, which has become a way of doing business for the Federal Government since at least mid-2013 and creates the opportunity for misappropriation. Contracts regarding national public assets affecting the public interest have been signed by government officials but kept highly confidential — from the Somali population, the parliament and, until now, international donors.

According to its latest report released to the UN Security Council, the group says neither the process of signing the contracts nor their implementation, including the transparency and accountability of their revenue streams, is subject to public scrutiny or parliamentary oversight. While the Transitional Federal Government regularly entered into contracts of one kind or another, the political recognition accorded to the Federal Government has enabled it to enter into contracts of considerably greater value than could the Transitional Federal Government. One particular contract alone constitutes a value greater than the national budget. Abuse of the legitimacy of the Federal Government to enter into contracts that operate in the same way as private contracts outside the institutions of government has effectively created a parallel system of finances beyond and much greater than the realm of public financial management.

None of the contracts regarding national assets entered into in the name of the Federal Government have to date been officially published. Some have been shared for review by the Financial Governance Committee, which includes representatives of the Federal Government and international financial institutions.

The Financial Governance Committee confidentially reviewed seven contracts for seismic data processing and marketing, Mogadishu port development and operations, Mogadishu airport development and operations, Mogadishu container port operations, oil and gas exploration and development, the construction of offshore patrol vessels and fisheries management and protection. According to the Financial Governance Committee, “the confidential reviews have established that all of the contracts/ concessions reviewed suffer from two important omissions: lack of clear [Federal Government of Somalia] specifications/[terms of reference], and the absence of any competitive tendering process”.

Another significant problem is that the secrecy of contracts creates mistrust and uncertainty in the various regions of Somalia in terms of sharing of natural resources, which will be exacerbated with the prospects of oil contracts, marine resources and other potential mineral extraction from Somali soil. This can have detrimental effects, not least for the process of federalization.

Other problems, given the secrecy of the contracts, are simply knowing how many there are, obtaining copies of them and determining who is actually involved and how. Sources have informed the Monitoring Group that dozens of contracts have been signed. For an overview of several contracts.

In this context, the Monitoring Group obtained documentary evidence that demonstrates that individuals close to the presidency are conspiring to take private control of recovered overseas assets, which should be under the fiduciary control of the Central Bank upon recovery. The effort was undertaken pursuant to a contract signed in July 2013 between the Federal Government and the United States law firm of Shulman, Rogers, Gandal, Pordy and Ecker, P.A., and led to the resignation of Yussur Abrar as Governor of the Bank. Her successor, Bashir Issa Ali, revoked the power of attorney associated with the contract on 13 May 2014 and terminated the contract itself on 14 July. The Group further investigated one of the key individuals involved in the overseas recovery effort, Musa Haji Mohamed “Ganjab”, who has past connections to Al-Shabaab and was involved in the diversion of official army weapons stocks.

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